FERC proposes transmission planning and cost allocation reformation

The US Federal Energy Regulatory Commission (FERC) has issued a draft notice of proposed rulemaking (NOPR) in a bid to reform electric regional transmission planning and cost allocation requirements.

FERC said the new rules are aimed at fixing problems in the way transmission planning and cost allocations are done.

FERC is proposing that public utility transmission providers be required to conduct long-term regional transmission planning on a sufficiently forward-looking basis to meet transmission needs driven by changes in the resource mix. Specific rules would include:

• Identifying transmission needs driven by changes in the resource mix and demand through the development of long-term scenarios, including accounting for high-impact, low-frequency events such as extreme weather
• Evaluating the benefits of regional transmission facilities to meet these needs over a time horizon that covers at a minimum 20 years starting from the estimated in-service date of the transmission facilities
• Establishing transparent and non-discriminatory criteria to select transmission facilities in the regional transmission plan for purposes of cost allocation that more efficiently or cost-effectively address these transmission needs
• Requiring that public utility transmission providers consider dynamic line ratings (DLR) and advanced power flow control devices in regional transmission planning

DLR provides grid operators greater visibility on existing transmission line capacity minute-to-minute by taking into account environmental factors that could increase or reduce capacity such as winds acting as additional cooling for power lines, which would allow them to carry more electricity.

Greater visibility is important, but that doesn’t actually change the power flow, stated Ted Bloch-Rubin, chair of the WATT Coalition and director of business development, Americas, at Smart Wires in an interview.

Advanced power flow technologies actually change the characteristics of the line itself to push or pull power as needed. “So you can think of how these two technologies work in conjunction,” Bloch-Rubin added.

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NOPR proposals

In the NOPR, FERC argues that these technologies, which allow the system to operate more efficiently and cost-effectively, were new and relatively untested when Order 1000 was written a decade ago. But now that they are widely available, the order should be updated “to ensure that they are appropriately considering these new technologies.” (page 213 of Docket No. RM21-17-000 issued April 21, 2022).

For cost allocation, FERC is proposing that public utility transmission providers in each region involve relevant state entities regarding a cost allocation and revise their Open Access Transmission Tariffs (OATTs) to include those methods.

The draft NOPR also proposes to not permit public utility transmission providers to take advantage of the construction-work-in-progress (CWIP) incentive for transmission facilities for purposes of cost allocation through long-term regional transmission planning.

In terms of federal rights of first refusal, the draft NOPR proposes to amend Order No. 1000’s requirements, in part, to permit the exercise of federal rights of first refusal for transmission facilities for purposes of cost allocation, conditioned on the incumbent transmission provider establishing joint ownership of the transmission facilities.

With respect to transparency and coordination, the draft NOPR proposes to require public utility transmission providers to adopt enhanced transparency requirements for local transmission planning processes and improve coordination between regional and local transmission planning with the aim of identifying potential opportunities to “right-size” replacement transmission facilities.

With respect to interregional transmission coordination and cost allocation, the reforms proposed in this draft NOPR would require that public utility transmission providers revise their existing interregional transmission coordination procedures to reflect the long-term regional transmission planning reforms proposed in this draft NOPR.

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Industry comments

The FERC turned to the industry to comment on the proposed reforms.

American for a Clean Energy Grid (ACEG) a coalition of business, labor, consumer, utility, environmental, and other groups that support transmission reform, applauded FERC for taking steps to institute policies that support proactive transmission planning and development and increased transparency. The group said that regionally planned transmission investment decreased by 50 percent in the past decade and almost no new interregional lines have been planned since 2012.

ACEG also pointed out that 174 organisations across a multitude of sectors — including state legislatures, energy offices, utility commissions, and consumer advocates; utilities; labor unions; and agricultural, rural, clean energy, commercial, industrial, environmental, and public interest organisations — had filed comments supporting proactive transmission planning last summer when the advanced notice of proposed rulemaking (ANOPR) was released.

Rob Gramlich, executive director of ACEG, said in a statement, “It seems obvious that we should be planning for future generation and load, but the rules need to change to make that happen. With 174 parties and 59 consumer organisations in the ANOPR proceeding supporting proactive planning, there is very broad and deep support for the general thrust of FERC’s action.”

According to ACEG, large-scale transmission, combined with large-scale buildout of renewable energy, is estimated to lead to $100 billion in savings cumulatively, saving a typical household more than $300 per year. Under a national macro grid, over 80% of the power system’s electricity can be supplied with renewable energy at a cost equal to or lower than today’s energy costs. Further, transmission makes the electricity market more competitive and increases the market influence of consumers. In 2021 alone, voluntary energy customers contracted for 11.06 GW of clean energy—the equivalent of 40% of all new carbon-free capacity installed that year

Adequate reforms to transmission policy could unlock access for much of the 1,300 GW of wind, solar, and energy storage capacity that are waiting in interconnection queues today. This energy would not only benefit communities with cleaner air, energy cost savings, and emissions reductions, but would also improve the reliability of the electric system. Well-planned transmission expansion would allow variable resources, like wind and solar, to move across regions to ensure demand is met in all hours at all locations and make targeted attacks on the grid more difficult to execute. 

“A 21st century economy needs a 21st century grid, and FERC’s new rulemaking on transmission is a long-overdue step in the right direction,” said Greg Wetstone, American Council on Renewable Energy (ACORE) president and CEO.  “ACORE also strongly supports the inclusion of grid-enhancing technologies within such planning efforts.”

“A resilient national grid requires more transmission to withstand damage from natural events, systemic failures, cyberattacks, and other stressors and disruptions,” said Shashank Sane, EVP of Transmission, Invenergy.

“FERC has a key role in advancing proactive generator interconnection and transmission planning reforms, including compensable reliability products or services for HVDC interregional transmission that will accelerate positive transmission investment to meet our changing electricity demand and resiliency objectives,” Sane said.

This article was originally published on Power Grid International.