FERC issues two order addressing transmission planning and siting

​FERC is issuing two orders today dealing with transmission reforms.  Here is summary of the two orders:
 

1. Order 1920 (date when the Federal Power Commission (“FPC”) was created):  This order addresses transmission planning and cost allocations.  It requires at least 20-year transmission planning to occur at five-year intervals.  It requires projects be evaluated for seven specific economic and reliability criteria.  It requires transmission solutions to consider advanced transmission technologies.  There is a provision of a federal right of first refusal (not sure the specifics).  Though the NOPR proposed changes to the CWIP incentive, the final order does not as it recognizes that CWIP incentive issues should be considered along with other incentives under section 219.  It requires that interregional planning also must be focused on long-term planning (20-years).  The order provides for room for more state involvement in the planning process.  And the process entails attempting to arrive at cost allocations to which all parties agree.  Commissioner Christie dissented with a 77-page document.  See below for more information.
2. Order 1977 (when the FPC became FERC):  This order addresses transmission siting of interstate projects in DOE determined national corridors.  This FERC siting process can be invoked one year after a state siting processed failed.  It requires involvement of tribal groups and environment justice communities.  It requires much engagement of stakeholders, including landowners, as part of the siting process.  See below for more information.

 
 
Order 1920
The grid rule contains these major elements:

• Requirement to conduct and periodically update long-term transmission planning to anticipate future needs.
• Requirement to consider a broad set of benefits when planning new facilities.
• Requirement to identify opportunities to modify in-kind replacement of existing transmission facilities to increase their transfer capability, known as “right-sizing.”
• Customers pay only for projects from which they benefit.
• Expands states’ pivotal role throughout the process of planning, selecting, and determining how to pay for transmission facilities.

Long-Term Regional Transmission Planning
More specifically, the rule requires each transmission operator to:

• Produce a regional transmission plan of at least 20 years to identify long-term needs and the facilities to meet them.
• Conduct this long-term planning at least once every five years using a plausible and diverse set of at least three scenarios that incorporate specific factors and use best available data.
• Apply seven specific benefits to determine whether any identified regional proposals will efficiently and cost-effectively address long-term transmission needs.
• Include an evaluation process to identify long-term regional transmission facilities for potential selection in the regional plan.
• Include a process giving states and interconnection customers the opportunity to fund all, or a portion, of the cost of a long-term regional transmission facilities that otherwise would not meet the transmission provider’s selection criteria.
• In the event of delays or cost overruns, reevaluate long-term regional transmission facilities that previously were selected in a regional transmission plan.
• Consider transmission facilities that address interconnection-related needs identified multiple times in existing generator interconnection processes, but that have not been built.
• Consider the use of Grid Enhancing Technologies such as dynamic line ratings, advanced power flow control devices, advanced conductors and transmission switching.

How to Pay for Transmission
The grid rule contains these cost-allocation provisions:

• Before applicants submit compliance filings, they must open a six-month engagement period with relevant state entities.
• Applicants must propose a default method of cost allocation to pay for selected long-term regional transmission facilities.
• Applicants may propose, a state agreement process that lasts for up to six months after a project is selected for participants to determine, and transmission providers to file, a cost allocation method for the selected facilities.

Enhanced Transparency, “Right-Sizing” and Interregional Transmission Coordination
The grid rule requires transmission providers to:

• Be transparent regarding local transmission planning information and conduct stakeholder meetings during the regional transmission planning cycle about the local process.
• Identify opportunities to modify in-kind replacement of existing transmission facilities to increase their transfer capability, known as “right-sizing,” when needed.
• Give incumbent transmission owners a right of first refusal to develop these “right-sized” replacement facilities.
• Revise existing interregional transmission coordination processes to reflect the new long-term regional transmission planning reforms. 

Order No. 1920 takes effect 60 days after publication in the Federal Register.  Compliance filings with respect to most of the rule’s requirements are due within 10 months of the effective date, while filings to comply with the interregional transmission coordination requirements are due within 12 months of the effective date.
 
Order 1977
With respect to the Commission’s siting authority, the Infrastructure Investment and Jobs Act of 2021 (or “the IIJA”) clarified that the Commission may issue an interstate transmission project permit if a State has denied an application.  In that process, the Commission must determine, as a precondition to a permit holder exercising eminent domain authority, that the permit holder has made “good faith efforts to engage with landowners and other stakeholders early in the applicable permitting process.”  First, rule clarifies that the Commission has the authority to issue permits to construct or modify electric transmission facilities in a National Corridor if a State has denied a siting application.  Second, the draft final rule codifies the Applicant Code of Conduct.  Compliance with the code of conduct is one way that an applicant may demonstrate that it has made good faith efforts to engage with landowners early in the applicable permitting process.  The Applicant Code of Conduct includes recordkeeping and information-sharing requirements for engagement with affected landowners, as well as general prohibitions against misconduct.  Third, the rule requires applicants to develop engagement plans that describe completed and planned outreach to environmental justice communities and Indian Tribes.  A Tribal Engagement Plan was added to the rule in response to comments.  Applicants will provide this information as part of a Project Participation Plan, which must be filed early in the pre-filing process.  The rule updates and clarifies the environmental information required for existing applicant-prepared resource reports - three new resource reports in which applicants must provide information regarding a proposed project’s impacts on air quality and environmental noise, on environmental justice communities, and on Tribal resources.  As part of the new Air quality and environmental noise resource report, and consistent with the Commission’s obligations under NEPA and the Clean Air Act, the applicant must estimate emissions and noise from the proposed project and the corresponding impacts on air quality and the environment.  The report must also describe any proposed mitigation measures.  In addition, the rule establishes an operational noise limit for proposed substations and related facilities at nearby noise-sensitive areas, such as schools, hospitals, or residences.  In the new Environmental justice resource report, the applicant must begin by using current guidance and data to identify environmental justice communities within the area of potential project impact.  Once environmental justice communities have been identified, the applicant must describe the impacts of project construction, operation, and maintenance on those communities.  In addition, the resource report must discuss cumulative impacts, describe any proposed mitigation measures, and describe any community input received on the proposed mitigation measures.   
If adopted by the Commission, the final rule will become effective 60 days after publication in the Federal Register.