Yesterday, the Federal Energy Regulatory Commission ("FERC" or "the Commission") issued Order No. 1000 in Docket No. RM10-23-000, a rulemaking proceeding initiated by the Commission on June 17, 2010.  Order No. 1000 is a Final Rule that weighs in at a whopping 620 pages and reforms the Commission's electric transmission planning and cost allocation requirements for public utility transmission providers.

The order takes effect 60 days from its publication in the Federal Register and public utility transmission providers are required to make a compliance filing within 12 months of the effective date of the Final Rule.  Compliance filings for interregional transmission coordination and cost allocation mandated by the Final Rule must be submitted within 18 months of the effective date.

Attorneys here at Stoel Rives are reviewing the order and its implications for our clients now, but given the size and scope of the order, this blog will rely on summary information published by the Commission concurrently with the order to provide readers a general idea of its contents.

Planning Reforms

The rule establishes three requirements for transmission planning.  Each public utility transmission provider must:

  1. Participate in a regional transmission planning process that satisfies the requirements set out in Order No. 890 and produces a regional transmission plan;
  2. Establish procedures to identify transmission needs driven by public policy requirements established by state or federal laws or regulations and evaluate proposed solutions to those transmission needs;
  3. Coordinate with public utility transmission providers in neighboring transmission planning regions to determine if there are more efficient or cost-effective solutions to mutual transmission needs.

Cost Allocation Reforms

The fule establishes three requirements for transmission cost allocation:

  1. Each public utility transmission provider must participate in a regional transmission planning process that has a regional cost allocation method for new transmission facilities selected in the regional transmission plan for purposes of cost allocation.  That cost allocation method must satisfy six regional cost allocation principles that would apply only to new transmission facilities selected in the regional transmission plan produced by the transmission planning process in which the public utility transmission provider participates.
  2. Public utility transmission providers in neighboring transmission planning regions must have a common interregional cost allocation method for new interregional transmission facilities.  That interregional cost allocation method will be subject to similar interregional cost allocation principles.
  3. Although participant-funding of new transmission facilities is allowed under the Final Rule, it cannot be adopted as either the regional or interregional cost allocation method.

Non-Incumbent Developer Reforms

The Commission directed public utility transmission providers to remove from their Open Access Transmission Tariffs ("OATTs") or other Commission-jurisdictional tariffs and agreements any provisions that grant a federal right of first refusal (a "ROFR") to transmission facilities that are selected in a regional transmission planning process for purposes of cost allocation.  The elimination of federal ROFRs is subject to four limitations.

The Final Rule also recognizes that incumbent transmission providers may rely on regional transmission facilities to satisfy their reliability needs or service obligations.  Thus, the Final Rule requires each public utility transmission provider to amend its tariff to require reevaluation of the regional transmission plan to determine if delays in the development of a transmission facility require evaluation of alternative solutions to ensure that reliability needs and service obligations can be met.