Transmission providers in the ColumbiaGrid transmission planning region and the Florida Reliability Coordinating Council (FRCC) have partially complied with the requirements of FERC Order 1000, FERC said at its open meeting June 20.
In its orders partially accepting the filings, however, FERC ordered both entities to make additional compliance filings to address shortcomings in cost allocation and other areas (FERC Docket Nos. ER13-93-000, ER13-94-000, NJ13-1-000, ER13-836-000, ER13-98-000, ER13-99-000, ER13-836-000 (ColumbiaGrid); Docket Nos. ER13-80-000, ER13-86-000, ER13-104, NJ13-2-000 (FRCC)).
FERC found that the ColumbiaGrid transmission planning region does not meet FERC Order 1000 requirements because Avista (NYSE:AVA), Puget Sound Energy (PSE) and MATL, the company developing the Montana-Alberta Tie Line, have not enrolled in the regional transmission planning process. Instead, they conditioned their continued participation in the ColumbiaGrid transmission planning process on FERC accepting the compliance filings without modifications.
All three companies were directed to make additional compliance filings.
Based on the filing by MATL, which was directed to explain how its participation in the ColumbiaGrid planning process satisfies FERC Order1000’s criteria governing a planning region, FERC found that ColubiaGrid’s planning region “could be of sufficient scope to satisfy the requirements set forth in Order No. 1000, based upon the enrollment of the filing parties in the ColumbiaGrid regional transmission planning process.”
In reviewing the regional cost allocation method proposed by ColumbiaGrid, FERC found that cost allocation determinations “must be binding on identified beneficiaries” and required a further compliance filing to remove the provisions providing for non-binding cost allocation.
Head of Senate Energy Committee critical of decision
FERC’s ruling drew sharp criticism from Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-Ore.), who called the compliance order “a major step backward” that did not take into account regional differences.
“FERC has ruled that to be participants in the ColumbiaGrid Order No.1000 transmission planning process, government-owned utilities such as BPA must sign a blank check to pay for the costs of transmission that they have not contracted for and may not use,” Wyden said in a statement. “This is directly counter to the interests of Northwest ratepayers and may lead to an exodus from ColumbiaGrid.”
The ColumbiaGrid decision did not sit well with FERC Commissioner Tony Clark, who said the decision rejected “key elements … related to transmission planning and cost allocation for utilities serving the Pacific Northwest.”
Like Wyden, Clark criticized the decision as violating FERC’s oft-repeated principle of flexibility and respect for regional differences.
“I believe this order runs afoul of that stated principle,” he wrote in his dissent, in which he also detailed the uniqueness of the Pacific Northwest as it pertains to transmission planning.
“Approximately 75% of the transmission service in the region is provided by one entity: the Bonneville Power Administration [BPA], a federal agency that the commission cannot compel to participate in the Order No. 1000 regime,” Clark continued.
He noted that jurisdictional and non-jurisdictional utilities in the region have been planning together through ColumbiaGrid since 2006 and, through the compliance filings, proposed continuing the planning process while incorporating key elements of FERC Order 1000.
While BPA is “either unable or unwilling to commit to the sort of binding cost allocation envisioned by Order No. 1000,” substantially accepting the filing would allow those much smaller jurisdictional utilities in the region to effectively participate in an “Order No. 1000-like” process, he wrote.
Clark expressed concern that rejecting key elements of ColumbiaGrid’s filing could cause the region more harm than good.
“Failing to accommodate the region’s unique characteristics … may cause the region to fracture, and thereby strand a number of jurisdictional utilities for purposes of Order No. 1000 planning,” he said, adding, “It is hard to contemplate an effective regional planning effort that ignores the reality of a region dominated by one non-jurisdictional transmission provider.”
Wyden strongly urged the commission to promptly reverse its decision.
“If it does not, I will have little choice but to consider whether a legislative remedy is necessary,” he added.
In its ruling on the Florida region’s compliance filing, FERC determined that FRCC provided the required scope for a transmission planning region. However, the commission said the regional cost allocation methodology proposed by Tampa Electric (TECO), Florida Power Corp. and Florida Power & Light (FPL) did not meet the order’s regional cost allocation principles.
The proposed methodology only considered the cost savings that result when a local transmission project is avoided because a transmission facility included in a regional transmission plan was selected to take advantage of the allocation of costs for a regional project. FERC acknowledged that the use of an “avoided-cost method” could be appropriate to measure reliability benefits. However, the commission repeated its prior finding that Order 1000 places “an affirmative obligation on public utility transmission providers to identify transmission solutions in the regional planning process that more efficiently or cost-effectively meet transmission needs driven by driven by reliability, economic or public policy considerations.”
The plan proposed by the Florida utilities, “fails to account for other benefits associated with addressing economic and public policy-related transmission needs,” the commission said. Accordingly, the proposed methodology did not meet the requirement that costs must be allocated in a manner that is at least roughly commensurate with estimated benefits.
Florida Power Corp., which is now known as Duke Energy Florida, is in the process of reviewing the order and will not be able to comment until it has completed that review, a spokesperson told TransmissionHub. Calls to other companies seeking additional comment were not returned by press time June 20.
Clark questions impact of FERC Order 1000 on Florida
Commissioner Clark concurred in the FRCC decision, though he raised some questions about the impact of FERC 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.
He noted that the FERC-jurisdictional utilities that serve the state are “vertically-integrated, monopoly utilities whose planning and operations are comprehensively regulated by the state of Florida. Integrated resource planning and facility siting, as approved by the state, ensures that generation and transmission decisions are viewed and approved holistically.”
He also noted that the utilities’ integration with the rest of the southeast region is physically limited because of Florida’s unique geography. Further, he pointed out that there is no central dispatching entity in Florida, there are no locational marginal prices to reflect local congestion, and no public policy requirement driving transmission construction. Accordingly, Clark expressed uncertainty about the value of FERC Order 1000 in the area.
“On one hand, since a good deal of integrated resource planning is already happening, there is a chance the real net effect of these changes will fall somewhere between minimally and modestly beneficial,” he wrote, while warning that FERC-mandated compliance with the order could result in the creation of an additional layer of unnecessary bureaucracy, which he called expensive, potentially litigious, and time-consuming.
“If this happens, the counter-productive result will not be more cost-effective and timely built transmission, but less,” Clark said.
The additional compliance filings are due within 120 days of the issuance of the orders.
TECO is the principal subsidiary of TECO Energy (NYSE:TE).
Duke Energy Florida is a subsidiary of Duke Energy (NYSE:DUK).
FPL is a subsidiary of NextEra Energy (NYSE:NEE).