Flora Flygt, strategic planning and policy advisor for American Transmission Co. (ATC), said that as the industry moves toward greater interregional collaboration and coordination under FERC Order 1000, stakeholders will need to identify and agree upon all of the benefits of transmission in order to spur the investment necessary to build an efficient and reliable grid.
“FERC has said, and the courts have said, that transmission cost allocation is still an issue, and cost has to be commensurate with benefits,” Flygt said in a Nov. 6 interview with TransmissionHub previewing her panel session at TransForum East to be held in Arlington, Va., in December.
ATC believes that the industry could understand more about the benefits of transmission and how to measure them.
“There are many benefits that can be quantified and monetized so that people can start to see the value of the transmission that is being built, and see it as the investment that it is – not just a cost,” Flygt said.
While some regions are doing a good job of counting the benefits, Flygt believes there could be unintended consequences if all regions cannot agree on what benefits should be quantified and monetized.
“We might get to a point where we say we’re only going to count the benefits that everyone agrees on – in which case, we’d be absolutely under-counting the benefits of transmission, as developers are deciding whether or not to build interregional projects,” Flygt said.
FERC Order 1000 is the latest in a series of orders that have been moving the industry forward incrementally toward transparent transmission planning.
“What FERC has been doing is gradually having people be more open in their processes; having them think about different futures; [and] having them look at different metrics, such as economics and public policy, in addition to reliability,” Flygt said.
At the same, she added, FERC has pushed for planning at broader regional levels.
“Traditionally, transmission planning was done at the integrated utility level, but FERC has, through its orders, been increasing the size of the regions that get planned for, and ultimately that’s a good thing from a transmission perspective,” Flygt said.
Regional transmission operators began submitting their FERC Order 1000 compliance filings in October, and Flygt is confident that FERC will see, upon review of those filings, that planning strategies are beginning to take a broad market perspective.
“I think that FERC will find that people are thinking about the greater good; they are thinking about how to incorporate public policy into their transmission planning,” Flygt said.
“They see the need for that approach and for a need to do transmission planning differently – not totally differently, but just by adding a few more layers of analysis to it,” she continued.
ITC Holdings (NYSE:ITC) subsidiary ITC Midwest filed a complaint against ATC in late October requesting that FERC direct ATC to enter into negotiations with ITC Midwest for 50-50 ownership and construction of the 136 mile, 345-kV Dubuque-Cardinal transmission line in compliance with the Midwest ISO (MISO) open access transmission tariff and the MISO transmission owner’s agreement (TOA).
FERC previously determined that the currently effective MISO TOA contains a right-of-first-refusal and that a project that runs between the facilities of two MISO transmission owners be shared equally between them unless otherwise agreed.
ATC believes that FERC’s interpretation of the 50-50 ownership language in the TOA is incorrect. The company has moved forward with a similar cost allocation complaint against Xcel Energy (NYSE:XEL) seeking co-ownership of the Hampton-La Crosse transmission line in an effort to further its legal argument. Hampton-La Crosse would form a new 345-kV interconnection between the companies’ facilities near the Twin Cities in Wisconsin.
Flygt will join representatives of Pepco Holdings (NYSE:POM) and LeClairRyan at TransForum East for the panel discussion “Beyond Order 1000” on Dec. 6 in Arlington, Va.
To learn more about participating in TransForum East, please visit the event website.