FERC Updates Transmission Planning Rule to Expand State Role

The Federal Energy Regulatory Commission has issued an order largely affirming its transmission planning and cost allocation rule, with changes to enhance the ability of state regulators to take part in the planning process. The order is in response to requests for rehearing of the original order – Order No. 1920 – adopted in May requiring regional transmission providers to conduct long-term transmission planning to identify and prepare for increasing electricity demand. The new order also grants the requests of state regulators to extend the engagement duration for cost allocation discussions by up to six additional months.

Under Order 1920, the first reform of FERC’s transmission policy in more than a decade, grid operators must perform comprehensive long-term regional transmission planning for a 20-year period. The advanced planning would ensure greater grid reliability and reduce service delays due to repairs and maintenance. However, after the original rule was issued, many state regulators and organizations raised concerns over the lack of state input in the transmission planning process.Transmission providers are required to conduct planning every five years, evaluating feasible and diverse long-term scenarios using factors that could affect electricity demand. Long-term planning would examine the impact of drivers such as population growth, extreme weather conditions, data centers, and electric vehicles on load growth.

Order No. 1920-A, which maintains most aspects of the original order, expands opportunities for state regulators to participate in the process of how to plan and pay for transmission facilities. In a concurring statement, FERC Commissioner Mark Christie noted that the new order allows states sufficient flexibility and authority to safeguard their consumers from paying unfair or unnecessary costs.

The National Association of Regulatory Utility Commissioners commended the revisions observing that “Order 1920-A and its impacts will now play out over significant proceedings and compliance filings.” The association said it will continue to support the ability of states to have an appropriate and needed role in transmission planning and cost allocation as states have a pivotal role in protecting consumers.

Under the new order, if states in a region agree to a cost allocation proposal, the concerned transmission provider must incorporate that agreement in its compliance filing. Further, transmission providers must consult states prior to considering changes to the cost allocation method or state agreement processes or if states seek to amend them.

The order grants more flexibility for states to develop and agree to allocation processes and ex ante formulae that suit the requirements of multistate regions such as PJM Interconnection LLC, Midcontinent Independent System Operator Inc., and the Southeastern Regional Transmission Planning region. The order requires state input on baseline scenarios, clarifying that states in multistate regions can opt for a new ex ante process to request transmission providers to run additional scenarios.

Transparency and clarity in identifying and quantifying benefits of state public policies enables states to determine whether they are being charged for other states’ public policies, understand the benefits they are paying for, and determine the costs involved.