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.
regulated regional process, grid planning becomes speculative and loses its bearings.
“To be actionable,” PJM argued, federal or state policymakers must articulate an identifiable public policy in the form of “assumptions, criteria and metrics” that a transmission planner can implement.
For example, as PJM asks, if the transmission cost of developing wind energy exceeds a state’s penalty for failing to satisfy its renewable portfolio standard, “should the transmission planner continue to plan the identified transmission facilities?”
And, in a similar vein, argues PJM, a planner would want to know whether a particular state would intend to develop renewable resources from within its own borders, even if the costs are significantly higher than out-of-state wind resources.
“In the end,” writes PJM, under a ‘build it and they will come’ approach, the transmission planner is trying to predict how the market will respond.
“This is a very different paradigm [from] the one used today.”
In fact, PJM argues that public policy mandates will prove actionable in regional transmission planning only if all parties are synchronized:
“The regional nature of planning and the interstate nature of the grid seem to point to the need for regional compacts among states to couple shared policy objectives with … siting and permitting authorities.”
Leveling the Field
Of all the NOPR’s reforms, the proposed elimination of ROFRs drew by far the most outcry. On one hand, the commission sought to calm the waters to assuring the industry that in killing off any federally granted ROFRs, it supposedly wouldn’t pre-empt any state-imposed right or obligation to build. Yet this balancing act on first glance would appear difficult to maintain.
For example, many states will grant a certificate of public convenience to authorize transmission line construction only to regulated load-serving retail utilities. So FERC might strike an express ROFR from an RTO tariff, only to find that incumbent transmission owners retain a de facto ROFR under state statutes. To do anything more, FERC would require some sort of grant from Congress to exercise jurisdiction over transmission line siting and construction.
Yet FERC already exercises some small measure of authority over transmission siting and construction, in the form of its generation interconnection rules adopted some eight years ago in Order 2003. Moreover, that authority was upheld in 2007 as a “practice affecting rates,” as the court decided that FERC rules setting terms, conditions, and procedures for generator interconnections bore a close enough relationship to the commission’s recognized statutory authority over interstate transmission service. (See, NARUC v. FERC, D.C. Cir., 475 F.3d 1277.)
Should that reasoning apply once again to justify the commission’s claimed authority to ban ROFRs and level the playing field in the transmission construction sector?
Many seem to think not, based upon a different ruling from the same court, issued in 2004, that struck down FERC authority relating to RTO boards of directors as not sufficiently connected to a “practice affecting rates.” (See, CAISO v. FERC, D.C. Cir., 372 F.3d 395.)
In fact, some have pointed to FERC’s Order 2003 interconnection policy as a continuing sore spot that could undermine