The decisions FERC made in four cases on July 19 underscore the importance of the removal of right of first refusal (ROFR) language from transmission tariffs in order to promote more competition among transmission projects, FERC Chairman Jon Wellinghoff said in a statement.
The four separate cases involve Xcel Energy (NYSE:XEL) and American Transmission Co. (Docket No. EL12-28); Pioneer Transmission and Northern Indiana Public Service Co. (NIPSCO) (Docket No. EL12-24); Primary Power and PJM Interconnection (PJM) (Docket No. EL12-69); and Central Transmission vs. PJM (Docket No. EL10-52).
“[T]he commission denies requests for rehearing in the complaints filed by Primary Power and Central Transmission, respectively, against PJM,” Wellinghoff said in the statement. “In those cases, we find that PJM’s transmission owners agreement does not establish a ROFR as to economic projects and that non-incumbent providers can seek cost recovery under PJM’s tariff for those projects.”
In contrast, in Pioneer v. NIPSCO and Xcel v. ATC, FERC found that the Midwest ISO’s (MISO) transmission owners agreement (TOA) currently includes a ROFR, and that a proposed transmission line that connects the facilities of two transmission owners will be shared equally by those owners under MISO’s TOA, regardless of who initially proposed the line, the chairman said.
“Although the complainants argued that application of a ROFR in MISO’s planning process would be inconsistent with the commission’s findings in Order No. 1000 that it is not just and reasonable, we note that Order No. 1000 applies prospectively, upon acceptance of the parties’ compliance filings, which are due in October of this year,” Wellinghoff said.
In the denial of Primary Power’s complaint against PJM for selecting competing projects proposed by incumbent transmission providers, PJM selected those proposals based on the lower cost estimates the incumbents provided, Wellinghoff noted.
“These orders highlight the very situation that Order No. 1000 is designed to remedy,” the chairman said. “In Order No. 1000, the commission stated that it is unjust and unreasonable to grant incumbent transmission providers a federal right of first refusal with respect to certain transmission projects because doing so may result in the failure to consider more efficient or cost-effective solutions to regional needs and, in turn, result in the inclusion of higher-cost solutions in the regional plan.”