ISO New England’s public policy project cost allocation proposal losing support among states – Conservation Law Foundation exec

ISO New England’s (ISO-NE) regional proposal in relation to FERC Order 1000, which had been supported by the states, is continuing to move through the process, but has lost majority support from the states, Seth Kaplan, a vice president for policy and climate advocacy with the Conservation Law Foundation, said on Nov. 13.

What ISO-NE has proposed for public policy projects is for 70% of the costs to be allocated like a reliability project and 30% to be allocated based upon a calculation of who directly benefits from the project, Kaplan said during Americans for a Clean Energy Grid’s New England Transmission webinar.

Speaking with TransmissionHub on Nov. 14, Kaplan said that going into the Nov. 8 New England Power Pool Transmission Committee meeting, representatives from New Hampshire and Rhode Island had some concerns about the 70/30% default cost allocation matter, and Vermont announced at the meeting that it shared those concerns, “which meant that it sort of tipped the balance.”

Vermont announced its position on Oct. 30 to the transmission committee and reiterated it at the Nov. 8 meeting, he noted.

There is not consensus among the stakeholders and the states about Order 1000 implementation, so, “nobody is banking on an Order 1000-blessed project to actually getting built at any time in the near future,” Kaplan said.

Early on in the Order 1000 process, some people underestimated the order’s impact in New England, he said, adding, “[A] lot of people in New England took the attitude of, ‘Oh, it’s telling other places to be like us, so we’re good.’”

However, the biggest change that Order 1000 requires for New England is the creation of a mechanism for considering public policies in transmission planning and, even more importantly, cost allocation mechanisms to ensure that there is a mechanism for thoughtfully deciding whether to pay for such projects, he noted.

An ISO-NE spokesperson on Nov. 14 referred TransmissionHub to the transmission owners for more information on their cost-allocation methodology proposal, adding, “The ISO believes it’s a reasonable proposal that complies with the requirements of Order 1000.”

During the webinar, Kaplan said that while transmission is a key enabling technology for the use of electricity as an energy source, from an environmental group’s standpoint, it is simply part of a class of enabling technologies, which involve demand response, energy efficiency, distributed generation and energy storage.

Speaking with TransmissionHub, he said that in the future, there will definitely be a role for all kinds of distribution and transmission to handle the “sophisticated system with multiple resources of multiple types,” including electric vehicles, wind and solar energy, microgrids and the like.

“[M]anaging that system will require a lot of very, very smart hardware and it’s going to require a lot of very smart management,” he said.

The factors that are pushing for transmission-building overwhelmingly are the climate and renewable portfolio standard (RPS) mandates, he said during the webinar, adding that reliability is still a major issue but more and more, a force driving transmission development will be deploying the resources that are needed to make the energy transition that is already underway as coal, oil and nuclear units are being retired at a rapid pace.

The existence of Order 1000 and the possibility of a federally regulated system helping to facilitate the RPS compliance “isn’t hurting. I can’t say that it’s necessarily changing the debate [on state renewable policies] all that much,” he said.

Stephen Conant, senior vice president of project development for Anbaric Transmission, said that the new prospect of projects being built to meet public policy objectives holds a lot of promise. Like Kaplan, he said that the RPS goals of the New England states are driving the market, noting that despite changes in state legislatures from majority Democrat to Republican, as well as changes in governors’ offices, none of the states has backed away from their RPS goals.

Conant noted that arguably the largest wind development and transmission success story in the country is in Texas, adding, “Our appetite in New England is as voracious as it is in Texas.”

However, New England is obviously much smaller than the southern state and involves six individual states that have to work together, which creates some difficulties, he said.

Among other things, Kaplan said while some have advocated for the kind of multi-value approach for transmission projects that has been adopted elsewhere in the country, in New England, there was not an appetite for that, adding that there is a strong desire to leave the reliability based approach fully intact.

“I think it is accurate to say it is kind of creeping in the back door a little bit – that 70/30 default cost allocation, because of the recognition that a project that is explicitly being built for public policy reason has other ancillary benefits like, for example, reliability, that can help justify the cost,” he said. “So, I think the logic of the multiple values that a properly planned transmission project has is kind of creeping in there but there is strong resistance to explicitly recognizing that and coming up with that multi-value approach, which I think is unfortunate.”

Transmission owners are comfortable with the reliability-based approach in the sense of, “if it ain’t broke, don’t fix it,” he said, adding, “[S]ome of the folks who are not wild about the transition underway, like some of the traditional fossil generators, do not like the idea of coming up with something that could result in the kind of multi-value build-out like you’re seeing in” the Midwest ISO.

Conant agreed, noting, “We did witness … the states have been chafing at even the 70/30 cost allocation.”

Kaplan also noted that while in the short- to medium-term, the odds that the interregional planning mandated by Order 1000 is going to change anything significant between ISO-NE, PJM Interconnection and the New York ISO are “very, very, very small,” in the long-term, there will be big changes.

About Corina Rivera-Linares 3152 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.