West interregional Order 1000 compliance filing draws modest criticism

As ISOs and RTOs across the rest of the nation labored to complete and submit interregional compliance filings for FERC Order 1000 by the July 10 deadline, intervenors were preparing and filing motions to intervene in and, in a handful of instances, protest the western region’s compliance filing submitted on May 10 (FERC Docket No. ER13-1470).

The 134-page joint compliance filing by the California ISO (Cal-ISO), Northern Tier Transmission Group (NTTG) and WestConnect was the result of the collaborative efforts of the three groups. NTTG and WestConnect together represent 15 utilities across the region.

The filing addressed “all matters relating to each of their revised tariff provisions necessary to address Order No. 1000’s interregional requirements,” the groups said. Specifically, it detailed how the parties’ interregional provisions satisfy the interregional transmission coordination requirements and interregional cost allocation principles of Order No. 1000. The filing also included a description of the process that led to the development of the principles, and included a flow diagram to illustrate how the interregional coordination and cost allocation processes are intended to work over a two-year planning cycle.

As required by Order 1000, the entities each committed to sharing each planning region’s regional transmission plan “to jointly identify and evaluate whether proposed interregional transmission projects would address regional transmission needs more efficiently or cost-effectively than separate regional transmission projects,” according to the filing.

With regard to identifying and jointly evaluating transmission facilities that are proposed to be located in more than one planning region, the compliance filing said the proponent of an interregional transmission project must submit the project to the relevant planning regions no later than March 31 of any even-numbered calendar year, and must include a list of all planning regions to which the project is submitted.

The organizations committed to an annual interregional coordination meeting to satisfy Order 1000’s requirement that regions adopt interregional transmission coordination procedures, and each planning region committed to post its annual interregional information on its website in accordance with its regional transmission planning process to satisfy the requirement that information regarding interregional coordination be shared via a website or e-mail list.

The compliance filing included a single plan for pro rata cost allocation for interregional projects and provided an attachment with an example of how the plan would be applied. The plan, the filing said, addressed four of the six principles in Order 1000 for interregional cost allocation, including that allocated costs be roughly commensurate with benefits, that costs will not be allocated to any region involuntarily, that costs only be assigned to the regions in which the project is located, and that the method of determining benefits be transparent.

The region does not currently use a benefit-cost threshold, nor did it adopt different cost-allocation methodologies for different types of interregional projects, so those principles did not apply, the groups said.

Filing generally well received

In a motion to intervene and limited protest filed June 24, San Diego Gas and Electric (SDG&E) called the compliance filing a reasonable, if ineffective, first step.

“SDG&E believes that the … proposed tariff filing can only be viewed as the first, but insufficient, step in developing an effective interregional transmission-planning process and reasonable interregional cost-allocation methodology,” the utility said. “Importantly and unfortunately, the compliance filings, as presently constituted, are unlikely to lead to the addition of cost-effective interregional transmission and thus will fail the intent and purposes of Order 1000.”

SDG&E said it had little faith the proposed tariff language would do much to enhance the likelihood that efficient and cost-effective interregional transmission will be constructed.

Southern California Edison (SCE) leveled a similar criticism, but went a step further.

“Unless the interregional filings are revised substantially, it is likely that the development of needed interregional, regional, and local projects will be delayed or will fail, resulting in serious reliability concerns for the transmission planning regions,” SCE said in comments filed June 24.

Taking specific aim at Cal-ISO, SDG&E said the grid operator would only include a proposed interregional transmission project in its annual transmission plan if it determined that its share of the costs of the proposed project were less than the costs of deferred or eliminated regional upgrades previously approved by the Cal-ISO.

Further, SDG&E said Cal-ISO’s method would completely omit the consideration of potentially significant benefits of proposed interregional transmission projects and ignore benefits such as reducing congestion-related costs, enhancing the capacity value of generators, or lowering the cost of complying with California’s renewable portfolio standard (RPS) requirements.

“Given the breadth of these omissions, cost-effective opportunities to add interregional transmission will certainly be missed or, at the very least, severely undervalued,” SDG&E said, while recommending that the commission direct the region to specify a list of potential benefits that should be considered for any proposed interregional transmission project.

SCE also argued that, without a uniform methodology, regions will not identify the same benefits and therefore will use different benefit measures to determine inclusion of an interregional project in their regional plans, SCE said.

SDG&E recommended that the regions adopt Cal-ISO’s transmission economic assessment methodology (TEAM) or a “suitable alternative,” as the framework for evaluating the economic benefits of proposed interregional transmission projects.

In its answer to the motion to intervene filed with FERC July 9, the regions said “Order No.1000 does not require that each region determine its regional benefits according to the same methodology. Order No. 1000 requires a uniform methodology for allocating costs among regions, not for determining benefits within a region, with regard to interregional transmission facilities.”

Interregional planning process called weak

In its filing, SDG&E said “a muscular interregional transmission planning process is essential to identifying and evaluating the economic and efficiency benefits of potential interregional transmission projects. The interregional transmission planning process set forth in the … compliance filing is, rather than muscular, abjectly skeletal.”

The proposed interregional coordination procedures indicate that each region “may” use the other regions’ information, SDG&E continued. Other than exchanging information and holding an annual coordination meeting at which a “vague list of topics ‘may’ be discussed,” the compliance filings provide no explanation of how the regions’ transmission planning processes will in fact be coordinated, the company said.

“Commitments to ‘confer’ and ‘seek to resolve differences’ do not amount to a ‘formal procedure’ and do not constitute meaningful ‘coordination’ or ‘joint evaluation’,” SDG&E said. “So far as SDG&E can tell, the compliance filings would allow each region to act unilaterally in the assessment of proposed interregional transmission projects.”

In response, the regions said that SDG&E’s arguments “failed to recognize that the commission decided to require only an interregional coordination process, not an interregional planning process.”

SDG&E’s comments, Cal-ISO noted, also failed to take into account the purpose of interregional coordination in Order 1000.

“Order No. 1000 does not impose a second level interregional transmission planning process on top of the regional transmission planning process, with duplicative assessments of needs and benefits,” Cal-ISO said. “To do so would be both inefficient and a waste of resources.” 

The regions also noted that the large majority of stakeholders support or do not oppose the May 10 compliance filing.

“Although both [SCE] and SDG&E would like to expand the scope of Order No. 1000 by imposing additional interregional planning and cost allocation requirements, neither party has shown that the common tariff language submitted for approval is inconsistent with Order No. 1000,” they said.

SDG&E is a subsidiary Sempra Energy (NYSE:SRE).

SCE is a unit of Edison International (NYSE:EIX).