The FERC Order 1000 compliance filings by Tampa Electric, Duke Energy Carolinas, Florida Power & Light (FPL) and the Orlando Utilities Commission do not comply with the order’s regional cost allocation principles, FERC said on June 20.
The Florida parties, as FERC referred to the entities, proposed a single cost allocation method for allocating the costs of new transmission facilities selected in the regional transmission plan, regardless of whether a cost-effective and/or efficient regional transmission solution (CEERTS) project will serve transmission needs driven by reliability concerns, economic considerations or public policy requirements.
FERC noted that relying on the avoided cost method alone to allocate the costs of a transmission facility selected in the regional transmission plan does not allocate costs in a manner that is at least roughly commensurate with estimated benefits, as it does not adequately assess the potential benefits provided by that transmission facility.
Under the parties’ proposed regional cost allocation method, a regional transmission facility that results in a more efficient or cost-effective transmission solution than what is included in the roll-up of local transmission plans would not be eligible for regional cost allocation if there is no transmission facility in the local transmission plans that it would displace, FERC said.
“We therefore conclude that Florida Parties’ proposed regional cost allocation method fails to allow for the possibility of resolving transmission needs or realizing opportunities at a regional level where, in the local transmission planning process, the benefits of resolving the identified transmission need or realizing the identified opportunity did not outweigh the costs of doing so,” FERC said.
As reported, FERC said on June 20 that transmission providers in the Florida Reliability Coordinating Council (FRCC) have partially complied with Order 1000 requirements. FERC Commissioner Tony Clark concurred in the FRCC decision, though he raised some questions about the impact of Order 1000 on the state of Florida in comments that, as with the Pacific Northwest, suggested FERC was not giving sufficient consideration to regional differences.
A Duke Energy (NYSE:DUK) spokesperson told TransmissionHub on June 21 that the order is under review by the company’s attorneys and regulatory experts. Duke Energy is the parent company of Duke Energy Carolinas.
Similarly, a Tampa Electric spokesperson told TransmissionHub on June 21 that the company will work on becoming compliant as soon as possible with the remaining portions.
According to the order, the Florida parties submitted, in separate dockets, coordinated compliance filings that revise their respective FERC Order 890-compliant transmission planning processes. The individual filings contained proposed open access transmission tariff (OATT) revisions that sought to establish new transmission planning responsibilities for the FRCC, which is the regional entity that oversees the development of a 10-year regional transmission plan for the FRCC footprint.
FERC added that the parties proposed to revise their transmission planning process to meet Order 1000’s requirements by adding provisions establishing a new category of transmission facilities, CEERTS projects, that will be considered for selection in the regional transmission plan for purposes of cost allocation. The parties requested that their compliance filings be effective as part of the transmission planning cycle following FERC’s acceptance of the filings.
Alternate transmission solutions not accounted for
FERC also found that the parties’ filings do not comply with the requirement for public utility transmission providers to evaluate, in consultation with stakeholders, alternative transmission solutions that might meet the needs of the transmission planning region more efficiently or cost-effectively than transmission solutions identified by individual public utility transmission providers in their local transmission planning processes.
“It is not sufficient for a transmission planning region to merely ‘roll-up’ local transmission plans without analyzing whether the region’s transmission needs, when taken together, can be met more efficiently or cost-effectively by a regional transmission solution,” FERC said, adding that the parties should submit further compliance filings to revise their OATTs.
FERC further noted that the parties’ proposed minimum thresholds for CEERTS projects partially comply with Order 1000, noting that the parties propose that, to be considered a CEERTS project, a transmission facility must be a transmission line subject to the requirements of the Florida Transmission Line Siting Act (TLSA) or successor statute that would allow the state legislature to set the minimum threshold for a proposed CEERTS project by amending the Florida TLSA statutes. FERC directed Tampa Electric, Florida Power and FPL to remove the Florida TLSA reference and successor statutes in its entirety.
“While Order No. 1000 does not prohibit public utility transmission providers in a region from proposing minimum thresholds, Florida Parties’ OATTs lack clarity because Florida Parties use the Florida TLSA as the sole criterion rather than describing the specific thresholds for eligibility for selection in the regional transmission plan for purposes of cost allocation,” FERC said.
The parties must balance their objective of excluding clearly local transmission projects that are unlikely to provide regional benefits from being submitted for evaluation in the regional transmission planning process with the need to evaluate in the regional transmission planning process those transmission facilities that are likely to provide regional benefits.
FERC added that should Tampa Electric, Florida Power and FPL propose to set forth minimum threshold requirements as part of further compliance filings, they must provide justifications as to how their proposed threshold requirements reach that balance and identify transmission facilities that are likely to have regional benefits.
FERC also found that the parties’ filings do not comply with Order 1000’s requirement that public utility transmission providers in each transmission planning region propose what information and data a merchant transmission developer must provide to the regional transmission planning process to allow the public utility transmission providers in the transmission planning region to assess the potential reliability and operational impacts of the merchant transmission developer’s proposed transmission facilities on other systems in the region.
While the parties propose that a merchant transmission developer must provide such information and data related to its proposed project that is necessary for the FRCC planning committee and affected transmission providers to assess the potential reliability and operational impacts of the proposed project on the region’s transmission system, they do not specify the types of information or data that a merchant transmission developer must provide.
Public policy requirement not met
FERC expressed concern that the compliance proposal as drafted in certain ways failed to account for transmission needs driven by public policy, and found that the parties’ filings partially comply with Order 1000’s public policy requirements.
While Order 1000 does not require that public utility transmission providers identify any particular set of transmission needs driven by public policy requirements for evaluation, “we are concerned that Florida Parties’ compliance proposal categorically precludes Florida Parties from considering whether a regional transmission solution may meet transmission needs driven by public policy requirements more efficiently or cost-effectively than one or more local transmission projects,” FERC said.
FERC directed Tampa Electric, Florida Power and FPL to submit, within 120 days of the order’s date, further compliance filings that include certain OATT revisions, including to remove from their OATTs the provisions limiting the consideration of transmission needs driven by public policy requirements to those not readily met through existing approved requests for new transmission service or planned transmission facilities.
Evaluation of projects comes up short
FERC said the parties’ proposed method of evaluating proposed transmission projects does not comply with Order 1000’s requirements.
The parties’ OATTs provide only limited detail about how the FRCC regional transmission planning process will evaluate a transmission facility for selection in the regional transmission plan for purposes of cost allocation, and do not make clear that the FRCC regional transmission planning process will identify and evaluate transmission solutions other than those proposed by qualified transmission developers and how the region will consider the relative efficiency and cost-effectiveness of any proposed transmission solution.
The parties, for instance, proposed a project sponsorship model for the submission of CEERTS projects, except where there is more than one transmission developer for the same CEERTS project, or if there are different proposed CEERTS projects to address the same need.
FERC directed Tampa Electric, Florida Power and FPL to file further compliance filings that describe in their OATTs a transparent and not unduly discriminatory process for evaluating whether to select a proposed transmission facility in the FRCC regional transmission plan for purposes of cost allocation. Orlando should submit further revisions consistent with those directives, FERC added.
Reevaluation of regional transmission plan needs fine-tuning
FERC also found that the provisions in the parties’ filings addressing the reevaluation of proposed transmission projects partially comply with Order 1000’s requirements.
The parties’ proposal identified when the FRCC will reevaluate the regional transmission plan to determine if delays in the development of a transmission facility selected in a regional transmission plan for purposes of cost allocation require evaluation of alternative transmission solutions.
If a CEERTS reliability-based project is delayed such that it would potentially cause a transmission provider or other NERC-registered entity to violate a reliability standard, the FRCC planning committee will reevaluate the regional transmission plan to determine if the evaluation of alternative solutions are required.
However, FERC added, it is not clear that, with respect to such projects that are delayed, an incumbent transmission provider has an opportunity to propose solutions that it would implement within its retail distribution service territory or footprint, and if that solution is a transmission facility, then the proposed transmission facility would be evaluated for possible selection in the regional transmission plan for purposes of cost allocation.
FERC said it is consistent with Order 1000 for the parties to allow the incumbent transmission provider the chance to complete an abandoned reliability-based CEERTS project, but if the incumbent transmission provider decides not to complete the abandoned project and instead decides to build an alternative CEERTS project, then the Florida parties must allow any other potential developer to propose an alternative CEERTS project.
Among other things, FERC directed Tampa Electric, Florida Power and FPL to submit further compliance filings, within 120 days of the order’s date that revise their “Attachments K/N-2” to include a list of all the public utility and non-public utility transmission providers that have enrolled as transmission providers in the FRCC transmission planning region.
Instead of including a list of all public utility and non-public utility transmission providers that have enrolled as transmission providers in the FRCC transmission planning region in their OATTs, the parties had proposed to maintain the list on the FRCC website, which FERC found did not comply with Order 1000-A’s requirement that each public utility transmission provider include in its OATT a list of all the public and non-public utility transmission providers that have enrolled as transmission providers in its planning region.
The filings are to also set forth a clear enrollment process that defines how entities, including non-public utility transmission providers, make the choice to become part of the FRCC transmission planning region.
FERC noted that while the parties’ compliance proposal describes how the FRCC will determine whether transmission providers are qualified to enroll in the FRCC transmission planning region, it does not provide the procedures through which an existing, future or non-public utility transmission provider other than the Florida parties may request to enroll in the FRCC transmission planning region or the information that such transmission providers would be required to provide. Furthermore, the filings should justify the requirement that non-public utility transmission providers register with NERC as transmission service providers in order to enroll in the FRCC transmission planning region for purposes of cost allocation or, alternatively, remove this requirement from their Attachments K/N-2.
The parties do not, for instance, address the implications of the proposed NERC registration requirement for a new transmission developer that has not yet energized any transmission facilities and, therefore, does not yet administer an OATT or provide transmission service.
FERC also noted that the parties proposed that transmission projects approved in previous transmission plans before the revisions to their Attachments K/N-2 become effective will not be modified by applying changes retroactively. FERC said it understands that to mean that transmission projects approved in previous transmission plans as of the effective date of the compliance filings will not be subject to evaluation or reevaluation and, as a result, will not be subject to the requirements of Order 1000.
“[W]e reject Florida Parties’ proposal to establish an effective date at the start of the next transmission planning cycle following the commission’s acceptance of the compliance filing, which is contingent on the commission ‘largely’ adopting the proposed regional transmission planning process,” FERC said. “We do not believe that it is necessary to delay the effective date of the proposed revisions until every issue in this proceeding has ‘largely’ been resolved.”
Therefore, the further compliance filings are to establish an appropriate effective date to coincide with the beginning of a transmission planning cycle. Likewise, Orlando should submit further revisions to its Attachment K consistent with three of those four directives, FERC said.
Florida Power & Light is the subsidiary of NextEra Energy (NYSE:NEE) and Tampa Electric is a subsidiary of TECO Energy (NYSE:TE).