FERC Order 1000 preserves flexibility for regions to determine benefits, FERC Chairman Jon Wellinghoff said Oct. 13.
The order was “structured for maximum flexibility,” he said, acknowledging some industry criticisms that it is too flexible.
“Some people think there’s not enough clarity, others think there’s not enough flexibility,” he said. “We wanted to preserve flexibility for regions to determine benefits for their particular region.”
“We tried to strike a balance to give regions the balance they need to do what they need to do,” he said.
Wellinghoff appeared before the House Energy and Commerce Subcommittee on Energy and Power to address representatives’ concerns and questions about FERC Order 1000.
The order aligns transmission planning and cost allocation to ensure that, when a region identifies transmission projects as needed and desired by that region, the region will have a method in place for allocating the costs of those projects, Wellinghoff said in testimony filed before the hearing.
The chairman vetted a variety of questions of varying degrees of difficulty, ranging from how the order will affect areas that don’t have regional transmission organizations, such as the Northwest and Southeast, and to what state regulators’ roles will be in determining what a region will be.
He noted that though there are no RTOs in some areas in the U.S., those areas do have regional planning authorities.
“To my knowledge, I believe they are already set up. Where they aren’t set up, they have the states, utilities, the transmission owners, and other stakeholders that have already formed themselves largely into regions,” he said.
A region ideally can be as large as PJM, or as small as two utilities, Wellinghoff said. The minimum requirement for a region is that it has to comprise at least two utilities.
The chairman also emphasized that the order is not intended to preempt state authority. The order provides for a “robust” role for state regulators, he said. In fact, state regulators can partake in determining how regions are formed, he said.
State regulators in the West are enthusiastic about the order “because they have flexible regions, so it’s an opportunity for regulators to take hold,” he said.
A recurring question was whether Order 1000 will subsidize renewable energy development. Wellinghoff stressed several times that the order does not contain provisions for renewable energy development.
Wellinghoff in his testimony said the order is “technology neutral,” adding that the commission is not creating or choosing the public policy requirements to be considered. It acknowledges that public policy requirements may affect the need for new transmission facilities and requires that such needs be considered in transmission planning processes, he said.
Regions will determine how to plan for transmission, and the need for transmission will be determined by market forces, such as fuel prices and also by state and federal public policies, Wellinghoff said. He noted that over 30 states have renewable portfolio standards.
“Effective regional transmission planning and interregional transmission coordination, along with cost allocation reforms, as required by Order No. 1000, will help improve reliability, reduce congestion, increase the deliverability of existing power supplies, allow new domestic power supplies to be developed, and help ensure that consumers have greater access to efficient, lower cost electricity at just and reasonable rates,” he said.