January 6, 2014
The Federal Energy Regulatory Commission's implementation of Order 1000 on transmission planning and cost allocation has failed to alleviate concerns about federal grid policy and instead confirms the commission "is headed in the wrong direction," Bruce Edelston, executive director of the Coalition for Fair Transmission Policy, wrote in a commentary published in The Hill, a highly-regarded Washington political publication.
The compliance orders "erode the traditional authority of state and regional regulators, assert unprecedented federal jurisdiction over public power, and will saddle many consumers with unfair transmission costs. FERC reality has trumped FERC rhetoric," Edelston noted.
As a result, "FERC's compliance orders have unleashed a backlash on Capitol Hill, dismayed state utility regulators and the public power community, and divided the commission," he added.
Over the last nine months, FERC has reviewed more than a dozen compliance plans implementing Order 1000, an unprecedented restructuring of the electricity grid mandating changes in the way regions and utilities plan and pay for new transmission. Unfortunately, FERC's compliance orders reveal the commission's desire to "micro-manage the nation's power grid from Washington," demanding "top down" regional planning and treating states as mere stakeholders, Edelston wrote.
The National Association of Regulatory Utility Commissioners (NARUC), Edelston noted, responded with a resolution stating that implementation of Order 1000 "inappropriately infringes on State authority" in key areas of transmission policy. FERC's refusal to recognize the role states play "could actually delay successful transmission planning and cost allocation," the NARUC resolution added.
In several compliance orders, FERC rejected cost allocation plans that local regions said best protected consumers. FERC demanded costs be spread more widely and benefits defined more broadly. As a result, some customers will pay more for transmission than what they receive in measurable benefits, Edelston emphasized.
In Florida, for example, a Public Service Commission member warned that FERC's cost-allocation approach could raise rates for Sunshine state consumers forced to pay part of the costs for new transmission lines that won't benefit Floridians, Edelston wrote.
FERC is also placing unnecessary and unwarranted burdens on government-owned utilities such as the Bonneville Power Authority. In its ColumbiaGrid order, FERC rejected a compliance plan that would have allowed public power entities in the Pacific Northwest to participate in regional planning without forcing customers to accept the costs of new transmission projects in advance. Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-OR) called the decision "a major step backward" and threatened legislation if FERC failed to reverse its ruling, Edelston noted.
House Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) has expressed concerns that FERC implementation of Order 1000 conflicts with its promises about flexible rulemaking and respecting regional differences. "I continue to have concerns that Order 1000 will, to the detriment of ratepayers, allow for the broad socialization of costs to pay for transmission lines that will carry expensive wind energy to load centers, even when the economic or reliability benefits will be minimal," Whitfield said in his opening statement at a recent FERC oversight hearing.
FERC Commissioner Tony Clark has challenged several FERC Order 1000 compliance rulings, Edelston's op-ed noted. In one, Clark said "shoehorning Order No. 1000 into a region with existing and extensive state-led planning, we could risk the creation of an expensive, potentially litigious, and time-consuming additional layer of unnecessary bureaucracy. If this happens, the counter-productive result will not be more cost-effective and timely built transmission, but less," Clark said.
Edelston concluded that "Order 1000 raised troubling issues for consumers. FERC's compliance decisions have only exacerbated these concerns, even among those once willing to give the commission the benefit of the doubt on grid policy.
For more information:
Coalition for Fair Transmission Policy
455 Massachusetts Avenue, N.W.
Washington, District of Columbia
United States, 20001