In a recent order on the ColumbiaGrid Order No. 1000 compliance filing, FERC dug in on its position that Order No. 1000 requires that cost allocation for transmission projects selected in the regional transmission planning process must be binding. FERC rejected the filing parties’ proposed non-binding cost allocation provisions, stating that non-binding cost allocation is inconsistent with Order No. 1000’s goals of minimizing free ridership and increasing the likelihood that planned transmission facilities move forward to construction.
FERC’s decision to require binding cost allocation could pose particular challenges to the transmission planning process in the ColumbiaGrid region, which is located in the Pacific Northwest. That region includes an unusually large number of transmission owners not subject to FERC’s jurisdiction or the requirements of Order No. 1000. About 75% of the transmission in the region is owned by the Bonneville Power Administration (“BPA”). BPA’s transmission is not generally subject to FERC’s jurisdiction. Without the participation of non-jurisdictional entities in the Order No. 1000 regional transmission planning process, FERC’s Order No. 1000 policy goals could be at risk.
In its order, FERC seemed unwilling to accommodate the concerns of public power to encourage their participation in the Order No. 1000 regional transmission planning process. According to BPA, its statutory obligations require that it not delegate cost allocation decisions to a regional transmission planning process, and it therefore considered a non-binding cost allocation process as necessary for its participation. Aware of this position, FERC nonetheless determined that binding cost allocation was necessary to further the goals and principles of Order No. 1000. FERC’s determination seems to put BPA in the position of either revising its views on its ability to meet its statutory obligations while participating in a binding cost allocation transmission planning process, or to simply not participate. Since BPA is such a large transmission provider in the region, its lack of participation could undermine the effectiveness of FERC’s transmission planning initiatives in the Pacific Northwest.
In a dissent to the order, FERC Commissioner Tony Clark stated that the ColumbiaGrid filings were “a best effort to comply with the spirit of Order No. 1000, while acknowledging the reality of the transmission grid in the Pacific Northwest.” Clark noted that FERC has previously stated its intent to be flexible and account for regional differences in implementing Order No. 1000, and he expressed his belief that inflexibility on the cost allocation issue could end up doing “more harm than good.”
The order can be accessed here.