Compliance with Order 1000 likened to corporate game of futility

Regional compliance filings with FERC Order 1000 will likely vary widely from one another, given lack of clarity in the majority of the order’s requirements, according to Jim Hoecker, adviser to the WIRES group.

“The order is probably the biggest transmission-related FERC order to come down road in a decade,” Hoecker said at the Gulf Coast Power Association conference in Houston on April 4. “Consequences are conceivably pretty sweeping but indeterminate, given the fact the commission has ordered so few things in it. The compliance phase is going to be critical.” 

Come October, when regional compliance filings are due, that ambiguity will put FERC in a position of having to reject proposed tariffs, Hoecker speculated.

“FERC has put itself in a position of having said, ‘Bring me a rock,’” Hoecker said, referring to the corporate game in which an employee attempts to guess the requirements of a manager, to much frustration and futility. 

FERC Order 1000 attempts to reform transmission planning and requires regional and interregional cost allocation coordination, but does not outline how such coordination should be executed. Hoecker said the only specific requirement in the order was removing the right of first refusal (ROFR) from incumbent utilities to build transmission. 

“I can’t imagine that there’s a whole lot else to appeal in Order 1000 simply because FERC was very deferential and open-ended about what they wanted public utilities to come in and tell them in their new tariffs,” Hoecker said. “As a matter of fact, I think they were a little too ambiguous on a number of issues.”

“I’m hoping and WIRES is hoping that on rehearing, which is still pending, the commission will decide to be more specific on some aspects of the rule,” Hoecker said. 

One of the more difficult requirements is cost allocation, Hoecker said. Though it has been a long-standing principle that beneficiaries should pay for investments in utility assets used by the public, deciding who the beneficiaries are is difficult to ascertain, he said.

“They are assets that will exist for 40, 50, 60 years,” Hoecker said. “It’s hard to tell in a changing environment, especially like ours, who will use the facilities over time. The benefits of transmission, which used to be thought very simply of as reliability or economic benefits, turn out to be more complicated than that. There are a lot of benefits that now exist because of the integrated nature of the transmission network that we weren’t thinking about 50 years ago – market benefits, operational, capacity benefits, economy-wide benefits,” he said.

Hoecker also commented on FERC’s backstop siting authority as “an interesting idea whose time may never come,” and said the DOE has disappointed with respect to its right, according to the second part of section 216 of the Federal Power Act, to assert leadership over the other federal agencies in siting transmission.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.