Regulatory Alert -- FERC Order No. 1000-A

On May 17, 2011 the Federal Energy Regulatory Commission (FERC) issued an Order on Rehearing and Clarification of its Order No. 1000-A, which, among other things, established minimum criteria that a transmission planning process must satisfy, including general principles for cost allocation methods. These transmission planning requirements involve the development of regional plans, consideration of transmission needs driven by public policy requirements established by state or federal laws or regulations, and coordination between pairs of neighboring transmission planning regions.

Regional and interregional cost allocation methods must meet certain principles, including that allocated costs be "roughly commensurate" with estimated benefits, and that those who do not benefit from transmission do not have to pay for it. Participant-funding of new transmission facilities is permitted but cannot be used as the regional or interregional cost allocation method.

The order also affirms the Commission's actions in Order No. 1000 to promote competition in regional transmission planning by removing from Commission-approved tariffs and agreements any federal right of first refusal for transmission facilities selected in a regional transmission plan for purposes of cost allocation, subject to certain limitations.

While denying rehearing, the order provides a number of clarifications, including:

Each planning region must have a clear enrollment process that defines how entities, including non-public utility transmission providers, make the choice to become part of the region.

Claims that a federal right of first refusal in a Commission-approved agreement is protected by a Mobile-Sierra provision are properly made as part of an Order No. 1000 compliance filing. Before addressing proposed tariff revisions to comply with the rule, FERC will decide whether the agreement is protected by a Mobile-Sierra provision, and if so, whether the applicable standard of review to require removal of the right of first refusal has been met.

The transmission planning process is not intended to assess the merits of federal or state public policy requirements, but to help utilities comply with those requirements by considering new transmission facilities driven by such requirements.

Each public utility transmission provider must submit its Order No. 1000 compliance filing by October 11, 2012. Compliance filings for interregional transmission coordination and interregional cost allocation are due in April 2013.

Order 1000 was a landmark policy change that has the potential to create opportunities for grid-scale renewable projects as well as smaller scale distributed generation, energy efficiency investments and other "non-wires" alternatives to the construction of new transmission facilities. As result of Order No. 1000, utilities, independent generators, suppliers and developers of renewable technologies, merchants transmission providers, and end-users have something at stake. In addition, natural gas suppliers and generators and storage projects that can provide alternatives to transmission or support integration of intermittent renewables, also have significant interests in the new regulations.

If you have any questions about Order No. 1000-A or an interest in the proceedings that will implement the Order's requirements please contact us at info@mogelsweet.com.