Why the vision of interregional electric transmission development in FERC Order 1000 is not happening.

Abstract

The Federal Energy Regulatory Commission (FERC) on March 19, 2020 announced a Notice of Proposed Rulemaking (NOPR) to further investigate how financial incentives might be used to encourage development of high-voltage electric transmission in the United States. An extension of previous efforts in FERC Order 679 issued in 2006, the NOPR-proposed incentives would consist of up to 250 additional basis points of equity return to be allowed on qualifying transmission projects. The NOPR was published in the Federal Register on April 2, and public comments were due back to FERC by July 1. Such incentives, if adopted, would be helpful to address prior FERC business that is yet undone. Issued in 2011, FERC Order 1000, "Transmission and Cost Allocation by Transmission Owning and Operating Utilities" among other things envisioned coordinated planning of interregional transmission developments spanning between individual Regional Transmission Organizations (RTO) and Independent System Operators (ISO), the operators of the FERC-regulated organized wholesale markets. In addition to traditional goals of generator interconnection and service reliability, the purpose of such interregional transmission development was to support public policy goals including renewable energy development, and lower costs for consumers. But little or no such interregional development has happened since Order 1000. Why? The authors have spent the last several years promoting development of one such interregional transmission project. While the effort is ongoing, the on-the-ground experience to-date clearly shows the reasons why interregional development envisioned by FERC Order 1000 is not happening. The authors offer solutions to the issues, including how the new FERC NOPR for transmission incentives can be helpful.