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The NOPR Was Late

But transmission planning, as we know it, may never be the same.

Fortnightly Magazine - August 2011

itself is structured to honor any applicable public policy directives imposed by state or local laws and regulations:

Thus, Southern Company in its comments professes not even to know how it would actually comply with a FERC rule requiring it to participate in a regional grid planning exercise that would consider public policy as a mandate. In the Southeast, “policy” is something dealt with before you get to transmission planning. Otherwise, if you don’t know what resources are to be procured, and where, how would you plan the grid?

The NOPR, said Southern, “would jettison the current paradigm in the Southeast … in favor of some sort of speculative process.”

Curiously enough, the vertically integrated utilities of the Southeast find a certain sort of ally in New England—an RTO area with centralized energy markets—and where utilities and regulators generally tend to favor FERC’s ideas, but worry that unbridled consideration of public policy in transmission planning could lead to approval of high-cost, long-haul grid lines to import distant renewables, while ignoring the less transmission-intensive alternative of delivering closer wind energy from just offshore.

This concern leads New England interests to an opposite conclusion, however: that a key reason for integrating policy criteria and generation resource planning with grid planning must be to that transmission planning remains a “least-cost” process.

Thus, the Massachusetts DPU (the state utility commission) had filed comments with FERC embracing the policy criterion, but warning that states must be afforded “substantial deference” in the identification and consideration of their own policy goals in the planning process.

And the Ohio PUC took a similar tack, insisting that each state involved in a transmission planning region must have its own voice and veto:

“If FERC is to base transmission cost recovery on state energy public policy mandates, each individual state must be vested with authority to review and approve as accurate [any] assumptions made regarding that state’s energy policies.”

In fact, the industry’s reaction to FERC’s initial NOPR tends to suggest that the greater the reliance on public policy as a criterion for transmission planning, the closer the industry will move toward regional regulation.

For example, ISO New England in its comments suggested solving the problem by turning to a regional state committee, both to define what public policy is, and specify resource needs in great detail for the engineers and stakeholders who actually craft the transmission plan:

“The regional state committee would make this identification in writing and provide an appropriate degree of specificity … for example, by identification of the location of the existing or proposed generating resources desired to be integrated into the regional bulk power system, or by identifying a sufficiently formulated conceptual transmission project.”

Interestingly enough, this New England vision produces a sort of state-directed resource planning process—just as Southern Company touted in its comments—but in a federally regulated setting. That is, the resource planning adheres to state aims, but it gets done within the confines of a federally regulated and regional planning process.

And PJM in fact argued that without integrating state policies into the federally