Representative James Sensenbrenner (R-Menomonee Falls, Wisconsin) recently released a discussion draft of a bill to amend the Federal Power Act to require regional transmission plans. A brief summary of the highlights follows.
FERC, in consultation with electric reliability organizations, transmission operators, transmission owners and states, must designate one or more regions in both the Eastern and Western Interconnections to create transmission regions to be represented by a “regional transmission planner” within one year of enactment. Any entity with an existing planning process (such as an RTO or ISO) may submit an application to FERC for approval as the regional transmission planner for a designated region. FERC will rule on the application within 18 months. If no regional transmission planner is approved, or is not submitted by regions in a timely manner, FERC shall either designate a planner or assume the role itself.
No later than 2 years following FERC’s approval of a planner, and every two years following, the regional transmission planner must submit transmission plans to FERC that are designed to enhance grid reliability and security, encourage diverse resource generation, and show that upgrading high voltage transmission lines helps regions achieve their energy and transmission goals.
The discussion draft requires that the regional transmission plan be consistent with FERC order 890 standards, incorporate input from state and local policymakers, maintain a broad geographic and market scope, and to take efficiency and other resources into account.
The draft also addressed cost allocation. No later than 18 months following enactment, FERC must require that all cost allocation methodologies adhere to a clear and consistent set of regulatory principles.
Certificate of Public Convenience and Necessity (CPCN)
Regional planners may submit a request to issue a CPCN for a regional transmission project. The request will be based on necessity to comply with reliability criteria, ensure congestion relief, enhance energy supply diversification, and strengthen the development of smart grid technology. Regional transmission projects that receive a CPCN could fall under federal siting authority if:
Transmission facility is part or all of a regional transmission project;
The state in which transmission facility is to be sited does not have the authority to approve the facility or consider interstate benefits;
Applicant for a transmission permit does not qualify in a state because the applicant does not serve end-use customers in the state;
State commission has not issued a decision within one year after the applicant’s request was submitted; or
State authorized siting but placed unreasonable conditions.
On Thursday, the Southwest Power Pool (SPP), a regional transmission organization that maintains and operates the electric grid across nine states, approved five “priority projects” that could form a model for future efforts to plan and share the cost of new transmission infrastructure. The projects, costing a total of $1.14 billion but delivering $3.7 billion in total lifetime benefits, would reduce congestion on existing power lines, better integrate the power pool’s east and west regions, and facilitate development of renewable energy for the grid.
In the press release, SPP President and CEO said:
“Traditionally, we have built transmission infrastructure in a reactive way – incrementally ‘patching’ the electric grid by building just enough least-cost transmission to keep the lights on.”
“Our members are now shifting to a new vision of enabling transmission. We want to proactively build a robust ‘transmission superhighway’ that will benefit customers not just of one utility, but across the entire region. We need an electric grid that will meet near- and long-term needs, and allow us to better manage many uncertain future scenarios such as carbon policy, varying fuel prices, growth in electricity demand, and state or federal renewable energy standards.”
Pending FERC approval, SPP will employ a novel cost allocation policy called the “Highway/Byway model.” Under the model, the entire region’s ratepayers share the cost of large lines (300 kV and above). The costs for lines between 100 kV and 300 kV, so-called byways, would be 33% covered by the region as a whole and 67% covered by the local area or state. Smaller lines will be paid for by developers. FERC is expected to approve the approach.