Strict adherence to cost-of-service ratemaking led to what might be considered a Luddite decision in the Maryland PSC’s initial rejection of BGE’s smart-grid filing. More than 60 years ago, the U....
The NOPR Was Late
But transmission planning, as we know it, may never be the same.
gas pipeline construction. That put the feds in charge of where the money was.
Not so for electricity. The Federal Power Act contains no significant grant of regulatory authority over siting and construction of transmission lines. That creates a vacuum that FERC aims to fill.
Yet, as it turns out, even FERC’s surrogates, the RTOs, don’t quite have all the necessary tools to plan and site transmission projects. Engineers can’t plan the grid without knowing the extent and location of desired resources—something that RTOs can’t guarantee, because RTOs don’t enact RPS laws; states do. RTOs don’t issue siting permits; states do.
Thus, FERC’s proposal to require regional transmission planners to consider public policy as a governing criterion, in addition to reliability and economic congestion, aims to recapture the half of the process that went missing when transmission planning migrated from utilities and state commissions to federally regulated RTOs, but generation resource planning was left behind, still governed by state law.
And so FERC’s NOPR can be seen not only as a bid to carve out a federal role in the regulation of the transmission construction sector, but to do so in the most efficient way possible, by reuniting grid planning and generation resource planning under one roof—but at the regional level.
Transmission planning typically takes account of a universe of factors, such as future load, growth, changes in generation dispatch, locational marginal prices, loop flows, the location of new generating units, the possible retirement of existing units, other transmission expansions, and existing and new interconnections with neighboring grid systems.
But consider this question: Should transmission planning allow for selection of a non-transmission solution, such as energy storage or demand response?
Some would say yes—certainly FERC would—but many of the vertically integrated, load-serving utilities of the Southeast would likely say no.
One such possible example would be the Southern Company, with its operating utility subsidiaries Georgia Power, Alabama Power, Mississippi Power, and Gulf Power.
As Southern explained in comments filed at FERC in response to the initial NOPR, a transmission plan is exactly that and no more. By contrast, resource options, such as fossil generation, nuclear, wind or solar, pumped storage, and even demand response, are committed through RFP solicitations conducted under state-mandated resource planning processes. Specific resources win inclusion in the resource plan by gaining a long-term purchased power contract or similar agreement that fixes an obligation to serve load. Once certified as part of this state-governed plan, the resource then becomes known fact and a verified data input to serve as a starting point for the transmission plan.
In fact, as Southern noted, a non-transmission solution can be considered in its transmission plan only to the extent that it addresses problems linked directly to transmission line power flows, loading, and congestion. For example, a transmission plan could consider need for a local must-run generation plant to relieve congestion or perhaps supply reactive power, but not in the sense that the plant was needed to support a public policy requirement. That, Southern explained, would bypass the state-mandated RFP process, which