Final briefs due this week in court challenges to Order 1000

Final briefs to oppose certain aspects of FERC Order 1000, 1000-A and 1000-B are due Dec. 13 in a group of consolidated cases in the United States Court of Appeals for the District of Columbia Circuit, (Docket No.12-1232).

Approximately 15 cases have been combined under South Carolina Public Service Authority, et al. vs. FERC. Complainants include state public service commissions, ISOs and RTOs, the American Public Power Association, the National Rural Electric Cooperative, the Large Public Power Council, NARUC, major utility companies including Exelon (NYSE:EXC) and Southern Company (NYSE:SO), as well as numerous local utilities such as Jersey Central Power & Light and the Sacramento Municipal Utility District.

The complaints against FERC fall into six broad categories, with many of those categories including additional subcategories. Broadly, the complaints allege that:

  • FERC overstepped its authority by requiring public utilities to participate in a regional transmission planning process
  • FERC’s decision to eliminate the right of first refusal (ROFR) was unreasonable,
  • Order 1000’s reforms intrude on state authority,
  • FERC’s determination that transmission planning must consider needs driven by public policy requirements was inappropriate,
  • FERC’s cost allocation determinations were unreasonable, and
  • FERC’s decision to rely on the reciprocity condition to encourage non-public utility transmission providers to enroll in Order 1000’s regional planning process was unreasonable.

Complainants assert that FERC overstepped the authority granted to it by the Federal Power Act (FPA) on several fronts, charging that Section 206 of the FPA does not give FERC the authority to require public utilities to participate in a regional transmission planning process, nor does it give FERC the authority to act based on a “theoretical threat” that transmission planned under Order 890 might be unjust or unreasonable because of factors Order 890 does not require.  Order 890, for example, does not require coordinated regional planning or consideration of public policy drivers.  

Other complainants stated that Sections 205 and 206 of the FPA empower FERC to ensure that transactions involving voluntary planning arrangements are just, reasonable and non-discriminatory, but not to mandate transmission planning in the first place.

In its initial response, filed Sept. 25, FERC countered, “Transmission planning and cost allocation processes are practices directly affecting transmission rates. The commission is obligated under section 206 … to ensure that such practices are just and reasonable and not unduly discriminatory.”

Another complainant charged that FERC “usurped state jurisdiction by requiring transmission providers to remove from tariffs and contracts any right of first refusal that utilities have to construct and own new transmission facilities.” In its response, FERC stated that the decision was correct.

Others protested the socialization of the costs of transmission to incorporate renewable energy resources across a wide footprint.

For example, the Sacramento Municipal Utility District (SMUD) stated, “The notion that a regional planning entity may allocate costs to a third party on the basis of perceived benefits and in the absence of a service relationship causes SMUD concern that it may be allocated costs of newly constructed transmission that it does not need or use.”

One action filed jointly by some three dozen utilities, regulatory bodies, and industry organizations articulated a similar complaint.

In the portion of its brief specific to cost allocation, the parties charged that FERC’s directive not only exceeds its authority under the FPA, but also contradicts Supreme Court precedent by providing transmission developers with a mechanism to secure funding for their projects on a socialized basis, from entities with whom they have no business relationship and to whom they do not provide service.

In its response, FERC countered that, in view of the engineering and scientific principles underlying the grid, “An entity taking service over the grid necessarily benefits from all facilities comprising that portion of the grid, not only the facilities over which it has contracted for service. It is thus reasonable to allocate the costs of new facilities to these entities.”

Depending on the situation, some complainants were more overt in their objection to the socialization of costs for transmission, which they view as specifically designed to facilitate the addition of renewable energy onto the grid.

However, FERC countered that a range of ever-growing demands placed on the electric grid drove the need for reform.

“The expansion of regional power markets has led to an increased need for new transmission facilities,” the commission said in its response. “And the widespread adoption of state energy resource policies has led to the rapid growth of renewable energy resources, whose viability is dependent upon the development of new transmission facilities.”

In its response to the complaints against it, FERC asserted that several of the arguments “are not ripe for review by the court because they concern matters that are being, or will be, addressed in compliance proceedings before the commission.” FERC asked that the court dismiss those claims, and deny the balance of the petitions for review based on the merits.

However, at least one complainant said there is precedent for action, even though the issues are not fully ripe. The Coalition for Fair Transmission Policy and its co-complainants pointed out that Courts of Appeal have, in some instances, ordered petitions for review to proceed to resolution even where requests for reconsideration are pending.

A schedule for oral arguments cannot be set until the last of the briefs have been submitted to the Court of Appeals for the D.C. Circuit. The deadline for those briefs is Dec. 13. However, considering the time of year, the Chief Clerk of the Court told TransmissionHub it is likely that a schedule will likely will not be set until after the first of the year.