Compliance with Dodd-Frank might not be as complicated as feared; however, companies must be vigilant in order to maintain the relevant exemptions.
Federal policy trumps state siting authority.
notably the now fully established RTOs) to adopt an open transmission planning process that coordinates with stakeholders, including state authorities. 8 This process must include a “reasonable and meaningful opportunity” for stakeholders, including state commissions, “to meet or otherwise interact meaningfully,” during which all assumptions underlying transmission system plans are disclosed. 9 Order 890 also provides for a resolution process to manage disputes arising from the planning process. The planning process is designed to be participatory to avoid discrimination or lack of independence, and to increase transparency, with a Section 206 complaint contemplated in the absence of consensus. The thrust of Order 890 is that its requirements are being imposed under FERC’s authority pursuant to Section 206 of the FPA to prevent undue discrimination in open-access transmission service: “Transmission customers have complained that even in RTO markets there are instances when comparable transmission service is not provided, particularly in the area of transmission planning.” 10
While FERC recognized that certain issues, such as retail load, fell within the states’ bailiwick, and that siting is primarily a state concern, it stressed in Order 890 that the ultimate control over planning was within the RTO’s authority and required compliance with the FERC-approved planning process in order to ensure open and equal treatment. Even if discrimination concerns do not arise in the generally understood sense, ( e.g., enabling a generation-owning transmission owner to block equal access to its lines) regional consistency in assumptions discourages discrimination and prevents disparate treatment as a general matter. In contrast, a state agency’s statutorily authorized charge is state-centric ( i.e., to examine a proposed project solely within the prism of benefit to its citizens and ratepayers).
In enacting FPA Section 215, Congress explicitly gave FERC jurisdiction over all users, owners, and operators of the bulk-power system for purposes of approving reliability standards and enforcing compliance. Section 215 defines a reliability standard as:
[A] requirement, approved by the Commission under this section, to provide for reliable operation of the bulk-power system. The term includes requirements for the … design of planned additions or modifications to such facilities to the extent necessary to provide for reliable operation of the bulk-power system, but the term does not include any requirement to enlarge such facilities or to construct new transmission capacity or generation capacity.
Read in the context of Section 215 and the FPA as a whole, this provision envisions that FERC identifies through its reliability standards the extent of need for reliability purposes, while state authorities determine how to meet that need— e.g., whether to build more transmission or employ non-transmission alternatives. The remaining provisions in Section 215 support this conclusion, in that they identify federal and regional bodies as the arbiters of reliability standards.
Consistent with the definition of a reliability standard, Section 215 specifically states that it doesn’t authorize FERC or NERC to order construction—as noted, a state is free to meet a defined need through non-transmission alternatives, such as energy efficiency and other load-reducing mechanisms. Section 215 goes on to provide that it also doesn’t