Dec 30 -- On October 6, 2022, the Federal Energy Regulatory Commission (Commission) convened a technical conference to discuss transmission planning and cost management for transmission facilities developed through local or regional transmission planning processes. All interested persons are invited to file post-technical conference comments on issues raised during the conference that they believe would benefit from further discussion. In particular, parties are invited to provide comments on the questions listed below. Comments are due by March 30, 2023.
Question Topic Headings and Introductions:
Local Transmission Planning Under Order No. 890 and Planning for Asset Management Projects
1. In Order No. 890, the Commission established nine transmission planning principles, including the coordination, openness, transparency, and information exchange principles. The Commission adopted the transmission planning principles in Order No. 890 to remedy opportunities for undue discrimination in expansion of the transmission system on both a local and regional level. . . .
2. Order No. 890's requirements apply to transmission facilities that expand the transmission system, but do not apply to asset management projects, as defined above. However, some public utility transmission providers have processes that provide stakeholders with some transparency into their asset management decisions. For example, Pacific Gas & Electric's Stakeholder Transmission Asset Review (STAR) Process and Southern California Edison's Stakeholder Review Process (SRP) provide stakeholders with the opportunity to engage in a review of PG&E's and Southern California Edison's five-year plan for capital transmission projects so that stakeholders can understand the need for and anticipated costs of projects that are not reviewed in the California Independent System Operator Corp.'s (CAISO) transmission planning process. . . .
3. Could additional transparency facilitated by project-specific disclosure requirements or standardized filing requirements help increase the cost effectiveness of local transmission planning and asset management decisions? Examples include additional transparency and access to local planning criteria, utilities' rankings of their project priorities (subject to CEII protections), requirements for utilities to provide either publicly or to the Commission a standardized disclosure describing the need for a local transmission project or asset management project and why it is a cost-effective solution to that need before money is spent on the planned transmission project (other than any planning costs incurred), and a requirement for utilities to provide advance notice of a project nearing its end of life, among others. To the extent that such requirements may be appropriate, what specific requirements should the Commission impose? For example, for a standardized disclosure described above, should the Commission require utilities to provide such information to stakeholders as part of their local transmission planning process under Order No. 890, or should the Commission require utilities to make a filing with the Commission? At what point in the transmission planning process should these filings be made? Should any such filings be informational, or should they require Commission action? In designing any such requirements, how should the Commission weigh the administrative burden of those requirements against the transparency provided?
Project Implementation and Variance Analysis
4. In Order No. 1000, the Commission required public utility transmission providers to describe the circumstances and procedures by which they will reevaluate the regional transmission plan to determine if delays in the development of a regional or interregional transmission facility requires evaluation of alternative transmission solutions (reevaluation requirement). To comply with this requirement, some public utility transmission providers voluntarily adopted a variance analysis process tied to changes in cost estimates to examine whether a regional transmission facility selected in a regional transmission plan for the purposes of cost allocation remains the more efficient or cost-effective transmission facility if its costs rise above estimates or if there are delays in that regional transmission facility's development. . . .
Independent Transmission Monitor (ITM)
5. During the technical conference, many panelists argued in favor of an ITM to review and evaluate a wide range of elements of the transmission planning process, including the transmission planning criteria used to identify transmission facilities. However, others expressed concern that an ITM would be unnecessary or duplicative in light of other regulatory agencies or stakeholders. Given the divergence of views on the potential roles and responsibilities of an ITM, please respond to the following . . .
Commission's Formula Rates and Prudence Practices
6. Under the MISO Protocol Orders, the Commission required public utility transmission providers to include safeguards in their transmission formula rate protocols to provide transparency in the public utility transmission providers' implementation of their transmission formula rates, to ensure that input data is correct, and that their calculations are performed consistent with the formula. . . .
7. . Under the Commission's current prudence standard, the Commission presumes that a public utility transmission provider's expenditures are prudent in the absence of a challenge casting serious doubt on such prudence, and establishing serious doubt regarding prudence requires “reliable, probative, and substantial evidence.” . . .
8. Other than transparency criteria, are there ways that the Commission could consider local planning criteria that utilities use in determining how the prudence standard is applied to specific expenditures? For example, with respect to local transmission and/or asset management projects, should the Commission establish certain guidance for planning such projects and only apply the rebuttable presumption of prudence to projects that follow the Commission-determined guidelines for planning such projects? What are the pros and cons of that approach?
Federal and State Regulation of Transmission Facilities
9. Some panelists at the technical conference argued that there is a regulatory gap with regard to ensuring that a cost-effective mix of local, asset management, and regional reliability transmission projects is developed. Generally speaking, for such projects they contend that state siting processes, the formula rate process, and the Commission's prudence standard and existing transparency requirements, may not provide adequate assurance that utilities will choose a cost-effective mix of projects. Do you agree that there is a regulatory gap for local projects and/or asset management projects, and if so, why or why not? Does the presence or extent of a regulatory gap depend on the underlying state regulatory framework? If so, how? If you agree that one or more regulatory gaps exist, how should the Commission address these gaps? For example, should the Commission modify the prudence standard and/or formula rate protocols for transmission or asset management projects falling within such a regulatory gap? Should the Commission establish new transmission planning requirements to help ensure that such projects are cost-effective? In your response, please discuss whether the Commission's approach should depend on the underlying state regulatory framework. Also please discuss the extent to which your recommended reforms, standing alone, will address the perceived gaps, or whether they should or must be coupled with other solutions.
10. Some panelists argued that certain types of projects do not receive adequate state, regional, or federal scrutiny with regard to project prudence/need. For example, the Commission has held that asset management and end-of-life decisions are not subject to Order No. 890 planning requirements, and panelists highlighted that in some states such projects do not require a certificate of public convenience and necessity. Do you agree that some projects are not subject to adequate review, and if so, why or why not? What particular types of projects do not receive adequate scrutiny (if any), and should there be some form of heightened scrutiny for them? If so, what kind of heightened scrutiny would be appropriate, and how would that scrutiny be applied?
11. The Commission has authority over the justness and reasonableness of the rates for wholesale transmission service, including recovery of the costs of transmission facilities used in providing transmission service and the prudence of those expenditures, and has approved public utility transmission provider proposals to recover their costs of providing transmission service through formula rates. Under a formula rate, the Commission reviews and accepts as the rate a formula for calculating the utility's cost of service, including clear definitions of inputs to that formula and a process for updating rates every year as the utility's costs change. State regulators typically have authority to evaluate whether certain transmission facilities to be built within their state may be constructed (i.e., whether to grant the proposed facility a Certificate of Public Convenience and Necessity (CPCN)), which may involve evaluation of the need for, and projected costs of, a proposed transmission facility. . . .
12. Some panelists argued that the timing of cost management or oversight mechanisms is relevant to ensuring cost effectiveness, contending that cost scrutiny must be applied to decisions during the local or regional transmission planning phase in order to influence those decisions. Do you agree, and if so why or why not? What are the possibilities for facilitating timely cost management before money is spent on transmission projects (aside from planning costs)?