Industry praising FERC move to examine Order 1000; evaluating FERC staff report

The Edison Electric Institute (EEI), the transmission group WIRES, and a few independent system operators are pleased with FERC’s decision to hold a technical conference on the commission’s Order 1000, representatives told TransmissionHub following FERC’s March 17 meeting.

“Electric power companies have experienced a number of challenges with implementation of Order No. 1000, and we look forward to working with FERC to address these issues moving forward,” James Fama, vice president, energy delivery at EEI, said in a March 22 statement provided to TransmissionHub.

EEI welcomes FERC’s review of Order 1000 and the transmission planning process, Fama said.

At the March 17 meeting, FERC announced that the technical conference will be held June 27 and 28 to address issues related to competitive transmission development, cost caps for new transmission projects and other matters.

At the same meeting, FERC commissioners discussed a FERC staff report that used different metrics to try and gauge whether there has been sufficient transmission investment in the United States over the past several years.

FERC’s decision to review Order 1000 was “music to my ears,” James Hoecker, counsel for WIRES and a former chairman at FERC, said in a March 23 interview. Clearly, there is additional work that needs to be done on interregional transmission projects, and it is widely held that the rule is not working as designed, Hoecker said.

A spokesperson for the New York ISO (NYISO) told TransmissionHub that the NYISO is implementing the Order 1000 transmission planning process as approved by FERC and is evaluating grid solutions to address public policy needs identified by state officials.

“The NYISO looks forward to the opportunity to examine further some of the key issues around Order 1000 compliance through FERC’s technical conference process,” the spokesperson said.

ISO New England (ISO-NE) was the last regional transmission organization to receive an order from FERC approving its Order 1000 implementation plan, with an effective date of May 18, 2015, an ISO-NE spokesperson noted. The region has had a very successful grid planning process with reliability needs that have been addressed, and when a reliability need is identified for a period of more than three years in the future, ISO-NE will issue a request for proposals to solicit solutions to address that need, the spokesperson said. 

Representatives from the Southwest Power Pool, Midcontinent ISO and the California ISO declined to comment on the Order 1000 technical conference before the event, and are reviewing the FERC staff report, spokespersons told TransmissionHub.

The FERC staff report includes three different metrics – transmission loading relief (TLR) data, power prices in different regions and the number of incumbent transmission providers striving to build new projects – to try and determine if FERC policies have been effective in fostering transmission development.

At ISO-NE, officials are reviewing the report but in general, it has “successfully identified the most cost-effective transmission solutions for the region’s reliability needs, with $7.4bn invested since 2002, and another $4.6bn that is grandfathered” under the original ISO-NE planning process, the ISO-NE spokesperson said.

In the report, FERC staff said “it is difficult to assess whether the industry is investing in sufficient transmission infrastructure to meet the nation’s needs and whether the investments made are more efficient or cost-effective. Nevertheless, staff has attempted to develop a range of objective and standardized measures of various characteristics of the electric system and its performance to help assess the effectiveness of the commission’s policies.”

At the March 17 meeting and in the report, FERC staff noted that the data sets examined are not complete and that reaching conclusions about the proper level of transmission investment is a challenge.

Hoecker agreed, and questioned whether that is an appropriate exercise for FERC to undertake.

“I think it is better to let the market decide how much transmission is sufficient,” he said.

The FERC staff report is “so littered with caveats” on the data used, that “I’m not sure it’s all that helpful,” Hoecker said.

Historical LMP data and the level of nonincumbent owners seeking to build transmission do not give much information that is useful to reach any conclusions, he said.

Hoecker hopes that the commission may seek input and try to improve the staff report or gain feedback on the metrics used.

“I really respect and appreciate what FERC staff is trying to do” in the report, Hoecker said, but the report does not reflect transmission needs in the United States.

He pointed to a 2015 study that WIRES paid for that said a more flexible transmission system is key to taking advantage of regional fuel diversity, supporting economic growth and facilitating competitive markets. That study, completed by The Brattle Group, said that regional grid planners currently consider an overly narrow set of economic or reliability criteria, ignoring many transmission-related benefits and values that would allow investments in building a more flexible grid.

Reflecting on the FERC staff report, Hoecker said he fears that some parties may see it and conclude that transmission is not needed in certain regions based on the data used. But “there are enough flaws in the analysis to make such conclusions very risky,” he said.