FERC owns more than one enforcement tool. Besides civil penalties, it can require compliance plans or disgorgement of unjust profits, or condition, suspend, or revoke market-based rate authority,...
Federal policy trumps state siting authority.
project—it violates Sections 201, 205, 206 and 215 of the FPA, including the filed-rate doctrine. And while Section 215 provides FERC with more specific tools to address transmission reliability, including approval of reliability standards, as discussed below, the FPA gave FERC authority in this area of transmission service even before EPAct was enacted.
Grid Reliability Authority
FERC had jurisdiction over grid reliability even prior to enactment of Section 215. 3 FERC has referenced its authority over rates under Sections 205 and 206 as a basis for actions it has taken to strengthen reliability. For example, in upholding ISO New England’s installed-capacity requirement, FERC noted that it could act to assure generation resource adequacy given the interface among reliability, costs and rates:
[W]here an interconnected transmission system is operated on [a] regional basis as part of an organized market for electricity… all users of the system are interdependent, particularly with respect to reliability, i.e., one participant’s reliability decisions can impact the reliability of service available to other participants and the related costs the other participants must bear.... We find that, in situations where one party’s resource adequacy decisions can cause adverse reliability and costs impacts on other participants in a regionally operated system, it is appropriate for us to consider resource adequacy in determining whether rates remain just and reasonable and not unduly discriminatory. 4
Because FERC has exclusive jurisdiction over transmission under Section 201, the reliability of FERC-jurisdictional infrastructure falls squarely within this transmission authority, even in the absence of Section 215. When there’s an upgrade to the transmission grid, absent a voluntary assumption of cost, everyone using the grid pays for that upgrade in their transmission rates, per the rules established by FERC. 5 And because reliability affects costs, it also falls within FERC’s purview under FPA Sections 205 and 206.
Regional Transmission Planning
In Order 2000, adopted in December 1999, FERC established RTOs in part because of concerns that a more regionalized approach was needed to fulfill FERC’s jurisdictional goals, including transmission reliability. 6 The changes in the industry from unbundling and a more competitive market further resulted in a more intense and different use of the grid. FERC observed:
According to the North American Electric Reliability Council (NERC), “the adequacy of the bulk transmission system has been challenged to support the movement of power in unprecedented amounts and in unexpected directions.” These changes in the use of the transmission system “will test the electric industry’s ability to maintain system security in operating the transmission system under conditions for which it was not planned or designed.” 7
One goal noted in particular in Order 2000 was more efficient transmission-system planning. With the close coordination between generation and transmission planning diminishing as vertically integrated utilities unbundled, it was necessary to establish regional organizations to ensure reliability. The independence of an RTO was deemed a crucial element in meeting these reliability and competitive market objectives, as was the RTO’s ultimate authority and responsibility over planning and grid expansion.
Eight years later, in Order 890, FERC required transmission providers ( i.e.,