June 17 NOPR Fed Reg Filing

37884 Federal Register / Vol. 75, No.
125 / Wednesday, June 30, 2010 / Proposed Rules
DEPARTMENT OF ENERGY remove from Commission-approved • Agency Web Site: http://

tariffs or agreements a right of first www.ferc.gov. Documents created
Federal Energy Regulatory refusal created by those documents that electronically using word processing
Commission provides an incumbent transmission software should be filed in native
provider with an undue advantage over applications or print-to-PDF format and
18 CFR Part 35 a nonincumbent transmission not in a scanned format.
[Docket No. RM10–23–000] developer. Neither incumbent nor • Mail/Hand Delivery: Commenters
nonincumbent transmission facility unable to file comments electronically
Transmission Planning and Cost developers should, as a result of a must mail or hand deliver an original
Allocation by Transmission Owning Commission-approved tariff or and 14 copies of their comments to:
and Operating Public Utilities agreement, receive different treatment in Federal Energy Regulatory Commission,
a regional transmission planning Office of the Secretary, 888 First Street,
Issued June 17, 2010. process. Further, both should share
AGENCY: Federal Energy Regulatory
NE., Washington, DC 20426.
similar benefits and obligations
Commission. Instructions: For detailed instructions
commensurate with that participation,
ACTION: Notice of proposed rulemaking. on submitting comments and additional
including the right, consistent with
information on the rulemaking process,
SUMMARY: The Federal Energy
State or local laws or regulations, to
see the Comment Procedures Section of
Regulatory Commission is proposing to construct and own a facility that it
this document
amend the transmission planning and sponsors in a regional transmission
cost allocation requirements established planning process and that is selected for FOR FURTHER INFORMATION CONTACT:
in Order No. 890 to ensure that inclusion in the regional transmission Russell Profozich, Federal Energy
Commission-jurisdictional services are plan. With respect to cost allocation, the Regulatory Commission, Office of
provided on a basis that is just, proposed rule would establish a closer Energy Policy and Innovation, 888
reasonable and not unduly link between transmission planning First Street, NE., Washington, DC
discriminatory or preferential. With processes and cost allocation and would 20426, (202) 502–6478.
respect to transmission planning, the require cost allocation methods for
intraregional and interregional John Cohen, Federal Energy Regulatory
proposed rule would provide that local Commission, Office of the General
and regional transmission planning transmission facilities to satisfy newly
established cost allocation principles. Counsel, 888 First Street, NE.,
processes account for transmission Washington, DC 20426, (202) 502–
needs driven by public policy DATES: Comments are due August 30, 8705.
requirements established by State or 2010.
Federal laws or regulations; improve SUPPLEMENTARY INFORMATION:
coordination between neighboring ADDRESSES: You may submit comments,
Notice of Proposed Rulemaking
transmission planning regions with identified by docket number by any of
respect to interregional facilities; and the following methods: Table of Contents
Paragraph
Nos.
I. Introduction ........................................................................................................................................................................................... 1
II. Background ........................................................................................................................................................................................... 6
A. Order Nos. 888 and 890 ............................................................................................................................................................... 6
B. Technical Conferences and Notice of Request for Comments on Transmission Planning and Cost Allocation .................... 13
C. Additional Developments Since Issuance of Order No. 890 ..................................................................................................... 25
III. The Need for Reform .......................................................................................................................................................................... 32
IV. Proposed Reforms: Transmission Planning ...................................................................................................................................... 44
A. Participation in the Regional Planning Process ......................................................................................................................... 45
B. Public Policy Driven Projects ....................................................................................................................................................... 55
C. Opportunities for Undue Discrimination Against Nonincumbent Transmission Developers ................................................. 71
1. Nonincumbent Transmission Developer Participation in the Transmission Planning Process ....................................... 71
2. Proposed Reforms Regarding Nonincumbents ..................................................................................................................... 87
D. Interregional Coordination ........................................................................................................................................................... 102
1. The Need for Interregional Planning Reforms ..................................................................................................................... 102
2. Proposed Interregional Planning Reforms ............................................................................................................................ 114
V. Proposed Reforms: Cost Allocation .................................................................................................................................................... 121
A. Introduction .................................................................................................................................................................................. 121
1. Order No. 890’s Transmission Planning Principle on Cost Allocation for New Transmission Facilities ....................... 121
2. October 2009 Notice and Subsequent Comments ................................................................................................................ 129
B. Legal Authority and Need for Reform ......................................................................................................................................... 138
1. The Cost Causation Principle ................................................................................................................................................ 139
2. Need for Reform ..................................................................................................................................................................... 148
emcdonald on DSK2BSOYB1PROD with PROPOSALS2
C. Proposed Reforms ......................................................................................................................................................................... 155

1. Intraregional Cost Allocation ................................................................................................................................................ 164
2. Interregional Cost Allocation ................................................................................................................................................ 170
VI. Compliance Filings ............................................................................................................................................................................. 179
VII. Information Collection Statement .................................................................................................................................................... 182
VIII. Environmental Analysis .................................................................................................................................................................. 186
IX. Regulatory Flexibility Act Analysis .................................................................................................................................................. 187
X. Comment Procedures ........................................................................................................................................................................... 188
XI. Document Availability ....................................................................................................................................................................... 192
Regulatory Text
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Federal Register / Vol. 75, No. 125 / Wednesday, June 30, 2010 / Proposed Rules 37885
Paragraph
Nos.
Appendix A: List of Short Names of Commenters on the Federal Energy Regulator Commission’s Notice of Request for Com-
ments on Transmission Planning Processes Under Order No. 890—Docket No. AD09–8–000, October 2009
Appendix B: Pro Forma Open Access Transmission Tariff Attachment K
Notice of Proposed Rulemaking proposal as formulated will best achieve allocation methods must satisfy. The
Issued June 17, 2010. the Commission’s goals. The Commission sees these proposals as
Commission therefore seeks comment steps that would increase the likelihood
I. Introduction on the reforms proposed herein and that facilities included in regional
1. In this Notice of Proposed encourages commenters to identify transmission plans are actually
Rulemaking (Proposed Rule), the enhancements to the reforms that could constructed. For example, establishing a
Federal Energy Regulatory Commission better support the efficient and effective closer link between transmission
(Commission) is proposing to reform its development of transmission facilities. planning and cost allocation processes
electric transmission planning and cost 4. With respect to transmission would diminish the likelihood that a
allocation requirements for public planning, the reforms proposed in this transmission facility would be included
utility transmission providers. The Proposed Rule would provide that: (1) in a regional transmission plan, only to
proposed reforms are intended to Local and regional transmission later encounter cost allocation disputes
correct deficiencies in transmission planning processes account for that inhibit construction of that facility.
planning and cost allocation processes transmission needs driven by public
II. Background
so that the transmission grid can better policy requirements established by State
support wholesale power markets and or Federal laws or regulations; (2) A. Order Nos. 888 and 890
thereby ensure that Commission- coordination between neighboring 6. In Order No. 888,2 issued in 1996,
jurisdictional services are provided at transmission planning regions is
the Commission found that it was in the
rates, terms and conditions that are just improved with respect to facilities that
economic interest of transmission
and reasonable and not unduly are proposed to be located in both
providers to deny transmission service
discriminatory or preferential. regions, as well as interregional
or to offer transmission service on a
2. This Proposed Rule builds on Order facilities that could address
basis that is inferior to that which they
No. 890,1 in which the Commission transmission needs more efficiently
reformed the pro forma open access provide to themselves.3 Concluding that
than separate intraregional facilities;
transmission tariff (OATT). Among unduly discriminatory and
and (3) a right of first refusal that is
other changes, Order No. 890 required anticompetitive practices existed in the
created by a document subject to the
each public utility transmission electric industry and that, absent
Commission’s jurisdiction and that
provider to have a coordinated, open, Commission action, such practices
provides an incumbent utility with an
and transparent regional transmission would increase as competitive pressures
undue advantage over nonincumbent
planning process. Order No. 890 also in the industry grew, the Commission in
transmission project developers is
established nine transmission planning Order No. 888 and the accompanying
removed from that document. Neither
principles, one of which addressed cost pro forma OATT implemented open
incumbent nor nonincumbent
allocation for new projects. access to transmission facilities owned,
transmission facility developers should,
3. The Commission acknowledges that operated, or controlled by a public
as a result of a Commission-approved
significant work has been done in recent utility.
OATT or agreement, receive different
years to enhance regional transmission 7. As part of those reforms, Order No.
treatment in a regional transmission
planning processes. The reforms 888 and the pro forma OATT set forth
planning process. Further, both should
proposed herein seek to build on this certain minimum requirements for
share similar benefits and obligations
progress by improving the effectiveness transmission planning. For example, the
commensurate with that participation,
of regional transmission planning and pro forma OATT required a public
including the right, consistent with
the efficiency of resulting transmission utility transmission provider to account
State or local laws or regulations, to
development. In formulating this for the needs of its network customers
construct and own a facility that it
proposal, the Commission has sought to in its transmission planning activities
sponsors in a regional transmission
balance competing interests and identify on the same basis as it provides for its
planning process and that is selected for
a package of reforms that, if own needs.4 The pro forma OATT also
inclusion in the regional transmission
implemented, would support the required that new facilities be
plan. The Commission preliminarily
development of transmission facilities constructed to meet the service requests
finds that these proposed reforms are
identified by the region as necessary to of long-term firm point-to-point
needed to protect against unjust and
satisfy reliability standards, reduce unreasonable rates, terms and
congestion, and enable compliance with conditions and undue discrimination in
2 Promoting Wholesale Competition Through
public policy requirements established the provision of Commission-

Open Access Non-Discriminatory Transmission
by State or Federal laws or regulations. Services by Public Utilities; Recovery of Stranded
jurisdictional services. Costs by Public Utilities and Transmitting Utilities,
The Commission recognizes that
5. With respect to transmission cost Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996),
opinions may differ as to whether the order on reh’g, Order No. 888–A, FERC Stats. &
allocation, the Commission is proposing Regs. ¶ 31,048, order on reh’g, Order No. 888–B, 81
1 Preventing Undue Discrimination and
to require public utility transmission FERC ¶ 61,248 (1997), order on reh’g, Order No.
Preference in Transmission Service, Order No. 890, providers to establish a closer link 888–C, 82 FERC ¶ 61,046 (1998), aff’d in relevant
FERC Stats. & Regs. ¶ 31,241, order on reh’g, Order between cost allocation and regional part sub nom. Transmission Access Policy Study
No. 890–A, FERC Stats. & Regs. ¶ 31,261 (2007), Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d
transmission planning processes in sub nom. New York v. FERC, 535 U.S. 1 (2002).
order on reh’g, Order No. 890–B, 123 FERC ¶ 61,299
(2008), order on reh’g, Order No. 890–C, 126 FERC
which the beneficiaries of new 3 Order No. 888, FERC Stats. & Regs. ¶ 31,036 at
¶ 61,228 (2009), order on clarification, Order No. transmission facilities are identified, as 31,682.
890–D, 129 FERC ¶ 61,126 (2009). well as to establish principles that cost 4 See Section 28.2 of the pro forma OATT.
37886 Federal Register / Vol. 75, No. 125 / Wednesday, June 30, 2010 / Proposed Rules
customers.5 While Order No. 888–A approved regional transmission 12. As a result of these compliance
went on to encourage utilities to engage organizations (RTOs) and independent filings, RTOs and ISOs have enhanced
in joint and regional transmission system operators (ISOs). The their regional transmission planning
planning with other utilities and Commission also stated that it expected processes, making them more open,
customers, it did not require those all non-public utility transmission transparent, and inclusive. Regions of
actions.6 providers to participate in the planning the country outside of RTO and ISO
8. In early 2007, the Commission processes required by Order No. 890. regions have also made significant
issued Order No. 890 to remedy flaws in The Commission noted that reciprocity strides with respect to transmission
the pro forma OATT that the dictates that non-public utility planning by working together to
Commission identified based on the transmission providers that take enhance existing, or create new,
decade of experience since the issuance advantage of open access due to regional transmission planning
of Order No. 888. Among other things, improved planning should be subject to processes.11 These improvements to
the Commission found that pro forma the same requirements as jurisdictional transmission planning processes have
OATT obligations related to transmission providers.8 The given customers and other stakeholders
transmission planning were insufficient Commission stated that a coordinated, the opportunity to participate in the
to eliminate opportunities for undue open, and transparent regional planning identification of regional needs and
discrimination in the provision of process cannot succeed unless all corresponding solutions, thereby
transmission service. The Commission transmission owners participate. facilitating the development of more
stated that particularly in an era of However, the Commission did not efficient and effective transmission
increasing transmission congestion and invoke its authority under FPA section expansion plans.
the need for significant new 211A, which allows the Commission to
transmission investment, it could not B. Technical Conferences and Notice of
require an unregulated transmitting Request for Comments on Transmission
rely on the self-interest of transmission
utility (i.e., a non-public utility Planning and Cost Allocation
providers to expand the grid in a not
transmission provider) to provide 13. In several of the above-noted
unduly discriminatory manner. Among
transmission services on a comparable orders issued in 2008 and early 2009 on
other shortcomings in the pro forma
and not unduly discriminatory or filings submitted to comply with the
OATT, the Commission pointed to the
preferential basis.9 The Commission Order No. 890 transmission planning
lack of clear criteria regarding the
instead stated that if it found on the requirements, the Commission stated
transmission provider’s planning
appropriate record that non-public that it would continue to monitor
obligation; the absence of a requirement
utility transmission providers are not implementation of these transmission
that the overall transmission planning
process be open to customers, participating in the planning processes planning processes. The Commission
competitors, and State commissions; required by Order No. 890, then the also announced its intention to convene
and the absence of a requirement that Commission may exercise its authority regional technical conferences in 2009.
key assumptions and data underlying under FPA section 211A on a case-by- 14. Consistent with the Commission’s
transmission plans be made available to case basis. announcement, Commission staff in
customers. 11. On December 7, 2007, pursuant to September 2009 convened three
9. In light of these findings, one of the Order No. 890, most public utility regional technical conferences in
primary goals of the reforms undertaken transmission providers and several non- Philadelphia, Atlanta, and Phoenix,
in Order No. 890 was to address the lack public utility transmission providers respectively. The focus of the technical
of specificity regarding how customers submitted compliance filings that conferences was to: (1) Determine the
and other stakeholders should be treated describe their proposed transmission progress and benefits realized by each
in the transmission planning process. planning processes.10 The Commission transmission provider’s transmission
To remedy the potential for undue addressed these filings in a series of planning process, obtain customer and
discrimination in transmission planning orders that were issued throughout other stakeholder input, and discuss any
activities, the Commission required 2008. Generally, the Commission areas that may need improvement; (2)
each public utility transmission accepted the compliance filings to be examine whether existing transmission
provider to develop a transmission effective December 7, 2007, subject to planning processes adequately consider
planning process that satisfies nine further compliance filings as necessary needs and solutions on a regional or
principles and to clearly describe that for the proposed transmission planning interconnection-wide basis to ensure
process in a new attachment to its processes to satisfy the nine adequate and reliable supplies at just
OATT (Attachment K). The Order No. transmission planning principles. The and reasonable rates; and (3) explore
890 transmission planning principles Commission issued additional orders on whether existing processes are sufficient
are: (1) Coordination; (2) openness; (3) Order No. 890 transmission planning to meet emerging challenges to the
transparency; (4) information exchange; compliance filings in the spring and transmission system, such as the
(5) comparability; (6) dispute resolution; summer of 2009. development of interregional
(7) regional participation; (8) economic transmission facilities and the
planning studies; and (9) cost allocation 8 Id. P 441. integration of large amounts of location-
for new projects.7 9 FPA section 211A(b) provides, in pertinent part, constrained generation. Issues discussed
10. The transmission planning that ‘‘the Commission may, by rule or order, require
reforms adopted in Order No. 890 apply an unregulated transmitting utility to provide 11 The regional transmission planning processes
to all public utility transmission transmission services—(1) at rates that are that public utility transmission providers in regions
comparable to those that the unregulated outside of RTOs and ISOs have relied on to comply
providers, including Commission- transmitting utility charges itself; and (2) on terms with certain requirements of Order No. 890 are the
and conditions (not relating to rates) that are North Carolina Transmission Planning
5 See Sections 13.5, 15.4, & 27 of the pro forma comparable to those under which the unregulated Collaborative, Southeast Inter-Regional
OATT. transmitting utility provides transmission services Participation Process, SERC Reliability Corporation,
6 Order No. 888–A, FERC Stats. & Regs. ¶ 31,048 to itself and that are not unduly discriminatory or ReliabilityFirst Corporation, Mid-Continent Area
at 30,311. preferential.’’ 16 U.S.C. 824j (2006). Power Pool, Florida Reliability Coordination
7 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at 10 A small number of transmission providers were Council, WestConnect, ColumbiaGrid, and Northern
P 418–601. granted extensions. Tier Transmission Group.
at the technical conferences included transmission planning at this time.16 a regional transmission plan and meets
the effectiveness of the current These commenters offer a wide range of certain other criteria.22 These
transmission planning processes, the views on why and how the planning commenters argue that such practices
development of regional and process should be improved. Although discourage other, merchant and
interregional transmission plans, and these commenters express diverse independent transmission developers’ 23
the effectiveness of existing cost views, there appears to be a consensus participation in the transmission
allocation methods used by among those supporting action that the planning process and present a
transmission providers and alternatives Commission should—at a minimum— significant barrier to transmission
to those methods. provide guidance about planning for investment. Other commenters state that
15. Following these technical large, interregional transmission projects proposed by merchant and
conferences, the Commission in October projects. independent transmission project
2009 issued a Notice of Request for 19. Many commenters that support developers need to be included fully in
Comments.12 The October 2009 Notice Commission action on transmission regional transmission planning
presented numerous questions with planning raise issues related to the processes on the same basis as other
respect to enhancing regional procedural characteristics or geographic projects.24
transmission planning processes and scope of existing transmission planning 21. Still other commenters that
allocating the cost of transmission. processes. Some commenters contend support Commission action on
16. In response to the October 2009 that the Order No. 890 transmission transmission planning express concern
Notice, the Commission received 107 planning principles should be extended that current transmission planning
initial comments and 45 reply to support interregional coordination, processes do not adequately assess all of
comments.13 Many of these comments while others argue that additional the potential benefits associated with
are discussed in greater detail later in planning principles are necessary to transmission project proposals.25 Some
this Proposed Rule, in the context of the ensure the effectiveness of transmission of these commenters state that more
Commission’s proposals on specific planning processes. Some commenters attention needs to be devoted to
issues. suggest that the type of ‘‘bottom-up’’ analyzing the benefits associated with
17. In general, some commenters transmission planning described above economic-based projects and
oppose additional Commission action at is insufficient,17 and other commenters incorporating such projects into regional
this time with respect to transmission advocate changes such as establishing a transmission plans.26 PJM states that
planning. Among these commenters, regional or interconnection-wide generic planning principles are needed
some argue that existing transmission planning coordinator.18 A few to deal with the various social,
planning processes are adequate to commenters suggest that the environmental and economic impacts of
achieve the Commission’s stated Commission add to the OATT a pro regional transmission projects. In
goals.14 Some of these commenters forma seams agreement that includes addition, several commenters
highlight work already underway in joint collaborative planning and cost recommend that the Commission
their own transmission planning allocation across planning regions.19 incorporate State and Federal public
regions, arguing that no Commission Still other commenters support changes policy objectives into the transmission
action is needed at least in those to transmission planning processes, but planning process,27 noting, for example,
regions. Other commenters argue that caution against adopting a one-size-fits- that doing so could facilitate cost-
existing processes are new or are being all or an interconnectionwide effective achievement of those
revised and should be given time to approach.20 objectives. Commenters also
mature before additional changes are 20. Other commenters that support
proposed. Many of these commenters Commission action on transmission 22 E.g., AWEA, EPSA, LS Power, and
state that if the Commission chooses to planning argue that some existing Transmission Dependent Utility Systems.
23 Merchant transmission projects are defined as
act, it should do so in a manner that transmission planning processes those for which the costs of constructing the
does not disrupt existing transmission provide an incumbent transmission proposed transmission facilities will be recovered
planning processes. Some commenters owner with an unfair advantage over through negotiated rates instead of cost-based rates.
that oppose Commission action on merchant and independent transmission For purposes of this proposed rulemaking, an
transmission planning at this time state incumbent transmission developer is an entity that
project developers, such as by providing develops a project within its own service territory.
that it is important to maintain what an incumbent transmission owner with We note that a transmission owner that proposes a
they describe as a ‘‘bottom-up’’ approach a right of first refusal 21 to construct a project outside of its own service territory is not
to transmission planning, in which transmission facility that is included in considered an incumbent for purposes of that
regional transmission planning is based project.
24 E.g., Allegheny Companies, AEP, CAlifornians
on transmission planning conducted by 16 E.g., American Transmission, CAlifornians for
for Renewable Energy, Delaware Municipal and
the individual transmission-owning Renewable Energy, Dayton Power and Light, E.ON, Southwestern Electric, E.ON Climate & Renewables
utilities in a transmission planning LS Power, NRG, Pioneer Transmission, San Diego North America, Great River Energy, Sun Flower and
region.15 Gas & Electric, and Transmission Access Policy Mid-Kansas, National Nuclear Security
Study Group. Administration Service Center, Organization of
18. Many other commenters support 17 E.g., Calvin Daniels (commenting as an
MISO States, and Transmission Agency of Northern
additional Commission action on individual). California.
18 E.g., AEP. 25 E.g., AEP, AWEA, Baltimore Gas and Electric,
12 Federal Energy Regulatory Commission, 19 E.g., Midwest ISO Transmission Owners, Energy Future Coalition, Exelon, Green Energy
Transmission Planning Processes Under Order No. National Rural Electric Coops, and SPP. Express, ITC Holdings, MidAmerican, National
890; Notice of Request for Comments; Docket No. 20 E.g., Pacific Gas and Electric and Transmission Audubon Society, et al., NextEra, and Public
AD09–8–000, October 8, 2009 (October 2009 Agency of Northern California. Interest Organizations & Renewable Energy Groups.
Notice). 21 A right of first refusal is defined, for the 26 E.g., MidAmerican and Old Dominion.
13 See Appendix A for a list of the commenters
purposes of this proposed rulemaking, as the right 27 E.g., AWEA, Baltimore Gas and Electric,
and their abbreviated names. of an incumbent transmission owner to construct, Exelon, Eastern PJM Governors, The Brattle Group,
14 E.g., Dominion, Large Public Power Council,
own, and propose cost recovery for any new ITC Holdings, LS Power, National Audubon
Midwest ISO, New York PSC, Northern Tier transmission project that is: (1) Located within its Society, et al., National Grid, NextEra, Old
Transmission Group, and WECC. service territory; and (2) approved for inclusion in Dominion, PJM, Public Interest Organizations &
15 E.g., Ohio Commission, PPL, Southern a transmission plan developed through the Order Renewable Energy Groups, Renewable Energy
Companies, and WECC. No. 890 planning process. Systems Americas, and Trans-Elect.
recommend that the Commission planning have occurred amid the above- concludes that ‘‘[s]ignificant expansion
provide for flexibility so that each noted Order No. 890 compliance efforts of the transmission grid will be required
transmission planning region could on transmission planning and as the under any future electric industry
determine which resources it would use Commission gathered information scenario. Expanded transmission will
to fulfill these public policy through the technical conferences and increase reliability, reduce costly
objectives.28 the October 2009 Notice discussed congestion and line losses, and supply
22. The Commission’s questions in above. access to low-cost remote resources,
the October 2009 Notice with respect to 26. For example, in February 2009, including renewables.’’ 37
allocating the cost of transmission also Congress enacted the American 29. Similarly, in its 2009 report,
drew wide-ranging responses. For Recovery and Reinvestment Act Keeping the Lights On in a New World,
example, some commenters express (ARRA), which provided $80 million for the DOE Electricity Advisory Committee
concern that the lack of a link between the U.S. Department of Energy (DOE), in concluded that expanding and
transmission planning and cost coordination with the Commission, to strengthening the nation’s transmission
allocation procedures may support the development of infrastructure is becoming increasingly
unnecessarily block or delay needed interconnection-based transmission important for two reasons: ‘‘First,
projects.29 Other commenters support plans for the Eastern, Western, and increasing transmission capability will
establishing a generic cost allocation Texas interconnections. In seeking help ensure a reliable electric supply
method as a backstop that would apply applications for use of those funds, DOE and provide greater access to
when parties or transmission planning described the initiative as intended to: economically priced power. Second, the
regions cannot agree on a cost allocation (1) Improve coordination between growth in renewable energy
method.30 electric industry participants and states development, stimulated in part by
23. Some commenters indicate that on the regional, interregional, and State-adopted renewable portfolio
the Commission should provide more interconnection-wide levels with regard standards (RPS) and the possibility of a
detailed guidelines or principles for to long-term electricity policy and national RPS, will require significant
allocating the costs of new transmission planning; (2) provide better quality new transmission to bring these
facilities.31 These commenters generally information for industry planners and resources, which are often remotely
agree that those who share in the State and Federal policymakers and located, to consumer load centers.’’ 38
benefits of transmission facilities should regulators, including a portfolio of 30. The number of states that have
be responsible for their costs. However, potential future supply scenarios and adopted renewable portfolio standard
there is not a consensus on how this their corresponding transmission measures, as well as the target levels set
principle should be implemented, what requirements; (3) increase awareness of in those measures, has continued to
benefits should be considered for required long-term transmission increase. Some 30 states and the District
purposes of cost allocation, or how to of Columbia have now adopted
investments under various scenarios,
determine who is a beneficiary. renewable portfolio standard measures.
which may encourage parties to resolve
24. Some commenters urge the These measures typically require that a
Commission to avoid rushing to a one- cost allocation and siting issues; and (4)
facilitate and accelerate development of certain percentage of energy sales
size-fits-all approach to determining
renewable or other low-carbon (MWh) or installed capacity (MW) come
beneficiaries of transmission projects,
generation resources.35 from renewable energy resources, with
due to the varying nature of projects and
27. In December 2009, DOE the target level and qualifying resources
benefits.32 Others express the view that
announced award selections for much of varying among the renewable portfolio
it is difficult to quantify certain benefits
this ARRA funding. In each standard measures.
that they consider relevant, such as
interconnection, applicants awarded 31. In its role as the Commission-
carbon emission reduction, integration
funds under what DOE defined as Topic designated Electric Reliability
of renewable generation, or the most
A are responsible for conducting Organization, the North American
efficient use of existing rights-of-way.33
interconnection-level analysis and Electric Reliability Corporation (NERC)
Other commenters suggest that there are
transmission planning. Applicants concluded that significant transmission
ways to factor difficult to quantify
awarded funds under Topic B are to expansion will be needed to comply
benefits into the planning process such
facilitate greater cooperation among with renewable mandates. Even in the
that they are adequately considered.34
states and stakeholders within each absence of a national renewable
C. Additional Developments Since interconnection to guide the analyses portfolio standard, NERC has stated that
Issuance of Order No. 890 and planning performed under Topic ‘‘an analysis of the past 14 years shows
25. Other developments with A.36 Broad participation in sessions to that the siting and construction of
important implications for transmission date related to this initiative suggest that transmission lines will need to
the availability of Federal funds to significantly accelerate to maintain
28 E.g., Consolidated Edison, et al. pursue these goals has increased reliability over the coming years.’’ 39 In
29 E.g., ITC Holdings, AEP, American awareness of the potential for greater
Transmission, Green Energy Express, and WIRES. coordination among regions in 37 Department of Energy, 20% Wind Energy by
30 E.g., American Transmission; National Grid; 2030, at 93 (July 2008).
and NEPOOL Participants.
transmission planning. 38 Electricity Advisory Committee, Keeping the
31 E.g., APPA, Green Energy Express, ITC 28. DOE has also been involved in the Lights On in a New World, at 45 (Jan. 2009). The
Holdings, NEPOOL Participants, NextEra, Ohio development of several recent reports Electricity Advisory Committee was formed to
Commission, Solar Energy Industries, and that may have implications for provide advice to DOE in implementing the Energy
Transmission Access Policy Study Group. Policy Act of 2005 and the Energy Independence
32 E.g., APPA, Bonneville, California ISO,
transmission planning. In its 2008
and Security Act of 2007, and in modernizing the
ColumbiaGrid, Consolidated Edison, et al., Dayton report, 20% Wind Energy by 2030, DOE nation’s electricity delivery infrastructure. The
Power and Light, EEI, Entergy, Midwest ISO, Electricity Advisory Committee includes
Southern Companies. 35 Department of Energy, Recovery Act—Resource representatives from industry, academia, and state
33 E.g., California ISO, Electricity Consumers Assessment and Interconnection-Level government.
Resource Council, MidAmerican, National Grid. Transmission Analysis and Planning Funding 39 North American Electric Reliability
34 E.g., AWEA, Energy Future Coalition, Entergy, Opportunity Announcement, at 5–6 (June 15, 2009). Corporation, 2009 Long-Term Reliability
Exelon, ITC Holdings, Integrys, et al. 36 Id. at 4–8. Assessment: 2009–2018, October 2009, at 29.
its 2009 assessment of transmission so that the transmission grid can better zone and thereby affect transmission
needs, NERC found that if a national support wholesale power markets and planning determinations. In addition,
renewable portfolio standard of 15 thereby ensure that Commission- states may adopt economic development
percent were adopted, an additional jurisdictional services are provided at policies associated with meeting energy
40,000 miles of transmission lines rates, terms and conditions that are just needs that may be relevant to
would be needed and ‘‘transmission and reasonable and not unduly assumptions made in a transmission
would be a key component to discriminatory or preferential. planning process. Future public policy
accommodating new resources, linking 34. The siting, permitting, and cost requirements established by Federal
geographically remote generation to allocation of transmission facilities face laws or regulations also could have a
demand centers.’’ 40 significant challenges. These challenges significant effect on transmission
may be present whether an interstate planning.
III. The Need for Reform transmission project is proposed to be 37. However, existing transmission
32. The Commission notes that located within a single region for which planning processes generally were not
transmission planning processes, transmission planning is conducted in designed to account for, and do not
particularly at the regional level, have accordance with Order No. 890 (i.e., an explicitly consider, these types of public
seen substantial improvement through intraregional transmission facility) or is policy requirements established by State
compliance with Order No. 890. As instead proposed to be located in more or Federal laws or regulations. Indeed,
noted above, these improvements have than one such transmission planning some comments submitted in response
increased opportunities for customers region (i.e., an interregional to the October 2009 Notice indicate that
and other stakeholders to participate in transmission facility). The failure to current transmission planning processes
the identification of regional needs and address these challenges also can lead to may not permit consideration of public
corresponding solutions, facilitating the increases in congestion costs. For policy requirements within regional
development of more efficient and example, PJM stated recently that prices transmission plans.43 As discussed in
effective transmission plans. The for new generating capacity in the greater detail below, the Commission
Commission believes that the expanded eastern part of its transmission planning preliminarily finds that the failure to
cooperation and collaboration that is region have increased due to constraints account explicitly for such public policy
now occurring in transmission planning on its transmission system. Observing requirements in the transmission
both among transmission providers and that capacity prices in the western planning process may result in undue
between transmission providers and portion of PJM were $27.73 per discrimination and rates, terms, and
their stakeholders is to be commended. megawatt-day, while capacity prices in conditions of service that are not just
33. Although Order No. 890 became the transmission-constrained areas of and reasonable.
effective just a few years ago, there have PJM were between $226.15 and $247.14 38. A third deficiency involves
been significant changes in the nation’s per megawatt-day, PJM noted that ‘‘the obstacles to nonincumbent transmission
electric power industry in those few great difference in prices for the eastern project developers’ participation in
years that require the Commission to portion of PJM compared with regional transmission planning
consider additional reforms to elsewhere shows the need for increased processes. The Commission in recent
transmission planning and cost transmission line capacity into the years has seen increasing interest in
allocation to reflect these new region. Transmission line additions and transmission investment among these
circumstances. These changes have been upgrades would reduce capacity price developers. Such interest, however,
widely recognized within the differences.’’ 42 often has been coupled with expressions
industry.41 Our intention in this 35. In light of the comments and of concern about the treatment of
Proposed Rule is not to disrupt the developments discussed above, one merchant and independent transmission
progress that is already being made with deficiency that has arisen is the lack of project developers in relevant
respect to transmission planning and a requirement for a regional transmission planning processes.44
investment in transmission transmission plan, without which the Many commenters raised similar
infrastructure, but rather to address construction of new transmission concerns in response to the October
remaining deficiencies in transmission facilities could be inhibited. 2009 Notice, describing what they see as
planning and cost allocation processes Additionally, in the absence of such a remaining opportunities for undue
requirement, the facilities best suited to discrimination against nonincumbent
40 North American Electric Reliability meet the needs of a particular region transmission project developers in
Corporation, 2009 Scenario Reliability Assessment: may not be identified. transmission planning processes. Such
2009–2018, October 2009, at 9. 36. Another deficiency that has arisen undue discrimination could discourage
41 For example, a trend of increased investment
since the issuance of Order No. 890 these developers from presenting
in the country’s transmission infrastructure has involves transmission needs driven by
emerged in recent years. EEI attributes that trend to,
projects in regional transmission
among other factors, recognition of the reliability public policy requirements established planning processes, which, in turn,
and other developments discussed above, as well as by State or Federal laws or regulations. could inhibit development of beneficial
enactment of the Energy Policy Act of 2005 and the For example, State policies to promote transmission facilities.
Commission’s implementation of its new increased reliance on renewable energy
transmission pricing policies. EEI has also observed
39. A fourth deficiency involves the
that even amid this trend of increased investment resources, such as the renewable relative lack of coordination between
in transmission infrastructure, transmission projects portfolio standard measures discussed transmission planning regions. In Order
that would be located in more than one state ‘‘face above, accentuate the need for No. 890, the Commission found that
significant challenges for siting, permitting, cost transmission to deliver electricity from
allocation and cost recovery.’’ Transmission
when transmission providers engage in
Projects: At a Glance, Prepared by Edison Electric location-constrained renewable energy
Institute with assistance from Navigant Consulting, resources to load centers. Other State 43 E.g., Baltimore Gas and Electric, Eastern PJM
Inc., February 2010, at iii–iv. EEI has also stated policies, such as goals for use of energy Governors, ITC Holdings, LS Power, National Grid,
that ‘‘[t]hese challenges must be resolved to Old Dominion, PJM, and Trans-Elect.
efficiency or demand response, may
facilitate the movement of large quantities of 44 See, e.g., Green Energy Express LLC, 129 FERC
renewable energy.’’ Transmission Projects lower load forecasts within a given load ¶ 61,165 (2009); Western Grid Dev., LLC, 130 FERC
Supporting Renewable Resources, Prepared by ¶ 61,056 (2010); Pioneer Transmission LLC, 126
Edison Electric Institute, February 2009, at iv. 42 PJM Interchange, News Release, May 14, 2010. FERC ¶ 61,281 (2009).
regional transmission planning, they the hopes that other beneficiaries will planning processes. We therefore do not
may identify solutions to regional needs value the project enough to fund its believe it is necessary at this time to
that are more efficient than those that development. invoke our authority under FPA section
would have been identified if needs and 41. Moreover, as stated in the October 211A, which allows us to require non-
potential solutions were evaluated only 2009 Notice, constructing new public utility transmission providers to
independently by each individual transmission facilities requires a provide transmission services on a
transmission provider.45 Similarly, in significant amount of capital. Therefore, comparable and not unduly
the absence of coordination between a threshold consideration for any discriminatory or preferential basis.
transmission planning regions, company considering investing in However, if the Commission finds on
transmission providers may not identify transmission is whether it will have a the appropriate record that non-public
more efficient and cost-effective reasonable opportunity to recover its utility transmission providers are not
solutions to the individual needs costs. However, there are few rate participating in the regional
identified in their respective utility- structures in place today that provide transmission planning and cost
level and regional transmission for the allocation and recovery of costs allocation processes proposed in this
planning processes, potentially for projects that are proposed to be Proposed Rule, the Commission may
including interregional transmission located either within a transmission exercise its authority under FPA section
projects. In the few years since the planning region that is outside of an 211A on a case-by-case basis.
issuance of Order No. 890, interest in RTO or ISO, or in more than one
transmission planning region. The lack IV. Proposed Reforms: Transmission
multiregional facilities has grown Planning
significantly.46 The October 2009 Notice of such rate structures creates
observed that the lack of coordinated significant risk for transmission project 44. Transmission planning is a critical
planning over the seams of current developers that they will have no component of the provision of
transmission planning regions could be identified group of customers from transmission service in interstate
needlessly increasing costs for which to recover the cost of their commerce. Among other purposes,
customers of individual transmission investment. transmission planning is the means by
providers. Accordingly, the Order No. 42. Therefore, the Commission which the transmission needs of a given
890 transmission planning requirements proposes to reform transmission area and the facilities that are best
may not be just and reasonable in that planning and cost allocation processes suited to meet those needs are
they may not be sufficient to address the as described in the following sections of identified. Based on the comments
need for greater coordination in this Proposed Rule. Although focused received in response to the October
interregional transmission planning. on discrete aspects of the transmission 2009 Notice and the other developments
planning and cost allocation processes, and considerations discussed above, the
40. Finally, we preliminarily
these reforms are integrally related and Commission believes that further steps
conclude that existing methods for
should be understood as a package. with respect to transmission planning
allocating the costs of new transmission
With these related reforms, more may be necessary to protect against
may not be just and reasonable because
transmission projects would be unjust and unreasonable rates, terms
they may inhibit the development of
considered in the transmission planning and conditions and undue
efficient, cost-effective transmission
process on an equitable basis, and more discrimination in the provision of
facilities necessary to produce just and
facilities that are included in Commission-jurisdictional services.
reasonable rates. While challenges
transmission plans are likely to move
associated with allocating the cost of A. Participation in the Regional
forward to construction.
transmission are not new, those 43. The Commission recognizes that Planning Process
challenges appear to have become more many of the existing regional 45. In Order No. 890, the Commission
acute as the need for transmission transmission planning processes are adopted a regional participation
infrastructure has grown. For example, comprised of both public utility and principle as a necessary component of a
the expansion of regional power markets non-public utility transmission public utility transmission provider’s
and the increasing adoption of State providers. Consistent with the approach transmission planning process. To meet
policies to promote increased reliance taken in Order No. 890,47 the that principle, the Commission required
on renewable energy resources have led
Commission expects all public utility that each public utility transmission
to a growing need for regional or
and non-public utility transmission provider coordinate with interconnected
interregional transmission facilities.
providers to participate in the regional systems to: (1) Share system plans to
Meanwhile, determining the benefits of
transmission planning and cost ensure that the plans are simultaneously
adding transmission infrastructure to
allocation processes proposed by this feasible and otherwise use consistent
the grid is a complex process,
Proposed Rule. Reciprocity dictates that assumptions and data; and (2) identify
particularly for projects that affect
non-public utility transmission system enhancements that could relieve
multiple utilities’ transmission systems
providers that take advantage of open congestion or integrate new resources.48
and therefore may have multiple
access, including improved regional This requirement for coordination at the
beneficiaries. In such circumstances,
transmission planning and cost regional level can be contrasted with the
any individual beneficiary of a project
allocation, should be subject to the same separate requirement in Order No. 890
has an incentive to defer investment in
requirements as public utility that each public utility transmission
45 ‘‘The coordination of planning on a regional

transmission providers. We are provider use an open and transparent
basis will also increase efficiency through the encouraged, based on the efforts that process to develop a transmission plan
coordination of transmission upgrades that have followed Order No. 890, that both for its own control area.49 In other
region-wide benefits, as opposed to pursuing public utility and non-public utility words, by adopting the regional
transmission expansion on a piecemeal basis.’’
Order No. 890, FERC Stats. & Regs. ¶ 31,241 at
transmission providers collaborate in a participation principle, the Commission
P 524. number of regional transmission
46 See, e.g., Pioneer Transmission LLC, 126 FERC 48 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at
¶ 61,281 (2009); Green Power Express, 127 FERC 47 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 523.
¶ 61,031 (2009). P 441. 49 Id. P 494, 523.
did not require development of a regional participation principle may not transmission provider engages in local
comprehensive regional transmission be sufficient, in and of itself, to ensure transmission planning, it considers and
plan. an open, transparent, inclusive, and evaluates transmission facilities and
46. The Commission explained that in comprehensive regional transmission non-transmission solutions that are
complying with the regional planning process. Without such a proposed and then develops a local
participation principle, the specific process, each transmission provider will transmission plan that identifies what
features of a public utility transmission not have information needed to assess transmission facilities are needed to
provider’s regional transmission proposed projects and determine which meet the needs of its native load (if any),
planning process should take account of project or group of projects could satisfy transmission customers, and other
and accommodate, where appropriate, local and regional needs more stakeholders. Likewise, the regional
existing institutions, as well as efficiently and cost-effectively. As a transmission planning process would
historical practices and the physical result, the rates, terms and conditions of consider and evaluate transmission
characteristics of the region.50 The transmission services may not be just facilities and non-transmission
Commission recognized that regional and reasonable. For example, greater solutions that are proposed and develop
transmission planning already occurs, regional coordination in transmission a regional transmission plan that
for example, as part of the NERC planning would expand opportunities identifies what transmission facilities
Regional Entity planning process.51 The for transmission providers, their are needed to meet the needs of
Commission urged public utility transmission customers, and other transmission customers and other
transmission providers to closely stakeholders to identify and implement stakeholders in the region.59
examine whether improvements in regional solutions to local and regional 52. In addition, because of the
these regional transmission planning needs that are more cost-effective than increased importance of regional
processes could be implemented to those proposed in the transmission transmission planning that is designed
satisfy the requirements of Order No. planning process of individual to produce a regional transmission plan,
890 imposed on individual transmission transmission providers. In addition, transmission customers and other
providers.52 more effective regional transmission stakeholders must be provided with an
47. The Commission also stated that planning could better facilitate the opportunity to participate meaningfully
to satisfy the regional participation integration of location-constrained in that process. Therefore, we propose
principle, an existing transmission renewable energy resources, which may to apply the above-noted Order No. 890
planning process must be open and be needed to fulfill public policy transmission planning principles to the
inclusive and address both reliability requirements such as the renewable regional transmission planning process,
and economic considerations.53 The portfolio standards adopted by many which would ensure that transmission
Commission required each public utility states. customers and other stakeholders can
transmission provider to participate in a 50. Given this concern, we propose to express their needs before a regional
transmission planning process that require that each public utility transmission plan is finalized and thus
facilitates regional participation and transmission provider participate in a help to identify solutions that more
that is open to all interested customers regional transmission planning process efficiently address the region’s needs.
and stakeholders.54 However, the that produces a regional transmission Similarly, ensuring access to the models
Commission did not require each plan and that meets the following and data used in the regional
regional transmission planning process transmission planning principles transmission planning process would
to comply with each of the nine established in Order No. 890: (1) allow transmission customers and other
transmission planning principles Coordination; (2) openness; (3) stakeholders to determine if their needs
established in Order No. 890.55 transparency; (4) information exchange; are being addressed in a cost-effective
48. On compliance with these Order manner. Greater access to information
(5) comparability; (6) dispute resolution;
No. 890 requirements, many public and transparency would also help
and (7) economic planning studies.57
utility transmission providers relied on 51. More specifically, we propose to transmission customers and other
existing regional entities and stakeholders to recognize and
require that each regional transmission
transmission planning processes, understand the benefits that they will
planning process consider and evaluate
modified as necessary, to comply with receive from a transmission facility that
transmission facilities and other non-
the regional participation principle.56 is included in a regional transmission
transmission solutions that may be
49. Since the issuance of Order No. plan. This consideration is particularly
proposed and develop a regional
890, it has become apparent to the important in light of our proposal below
transmission plan that identifies the
Commission that Order No. 890’s to require that each public utility
transmission facilities that cost-
effectively meet the needs of transmission provider have a cost
50 Id. P 524.
transmission providers, their allocation method for transmission
51 Id. P 528.
52 Id. P 526. transmission customers, and other
Commission also has recognized that in appropriate
53 Id. P 528. stakeholders.58 When an individual circumstances alternative technologies may be
54 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261
eligible for treatment as transmission for ratemaking
at P 226. 57 This proposal does not include the regional purposes. Western Grid, 130 FERC ¶ 61,056 (2010).
55 See, e.g., Entergy Services, Inc., 124 FERC participation principle and cost allocation for new 59 As noted in Order No. 890, the planning
¶ 61,268, at P 104 (2008). projects principle of Order No. 890 because we obligations proposed here do not address or dictate
56 As we note above, the regional transmission address interregional coordination in transmission which investments identified in a transmission plan
planning processes that public utility transmission planning and cost allocation for transmission should be undertaken by transmission providers.
providers in regions outside of RTOs and ISOs have facilities included in a regional transmission plan Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P
relied on to comply with certain requirements of elsewhere in this Proposed Rule. 438. As also noted in Order No. 890, the ultimate
Order No. 890 are North Carolina Transmission 58 When evaluating potential solutions to responsibility for transmission planning remains
Planning Collaborative, Southeast Inter-Regional identified needs, transmission providers must with transmission providers. With that said, the
Participation Process, SERC Reliability Corporation, evaluate proposals for transmission, generation, and Commission fully intends that the transmission
ReliabilityFirst Corporation, Mid-Continent Area demand resources against one another based on planning processes provide for the timely and
Power Pool, Florida Reliability Coordination criteria set forth in their tariffs. See Order No. 890, meaningful input and participation of customers
Council, WestConnect, ColumbiaGrid, and Northern FERC Stats. & Regs. ¶ 31,241 at P 494–95; Order No. into the development of transmission plans. Id. P
Tier Transmission Group. 890–A, FERC Stats. & Regs. ¶ 31,261 at P 216. The 454.
facilities included in its regional planning process. As defined in Order evaluations and assessments of a
transmission plan that reflects the No. 890, these high priority studies are project’s ability to meet public policy
benefits that those facilities provide. intended to identify solutions that could goals could be aligned to better identify
53. Although the explicit requirement relieve transmission congestion or options that meet all of these regional
for a public utility transmission integrate new resources and loads, needs.67
provider to participate in a regional including upgrades to integrate new 60. The Commission received a
transmission planning process that resources or loads on an aggregated or number of comments on these issues,
complies with the Order No. 890 regional basis.64 expressing a range of opinions. Several
transmission planning principles 58. In Order No. 890, the Commission commenters argue that the existing
identified above would be new, we note also required each public utility transmission planning and stakeholder
that the existing regional transmission transmission provider to coordinate its processes properly align reliability
planning processes that many utilities transmission planning activities with impact studies with evaluations of other
relied upon to comply with the the relevant State and local regulatory projects designed to meet economic-
requirements of Order No. 890 may authorities that choose to participate in based or public policy requirements.68
require only modest changes to fully the transmission planning process and Other commenters suggest that it would
comply with these requirements. stated its expectation that ‘‘all be inappropriate for the Commission to
54. We seek comment on any issue of transmission providers will respect require that renewable energy standards
interest or concern related to the states’ concerns.’’ 65 As such, State and be incorporated into the transmission
requirements proposed in this section of local regulatory authorities may fully planning process.69 For example, Public
the Proposed Rule. participate in the existing Order No. 890 Power Council contends that the
transmission planning process and Commission lacks jurisdiction to require
B. Public Policy Driven Projects identify, among other issues, public that the resources necessary to comply
55. In Order No. 890, the Commission policy requirements established by State with State renewable energy standards
included an Economic Planning Studies or Federal laws or regulations that they are accounted for in the transmission
principle among the nine transmission see as relevant to transmission needs. planning process, as such standards are
planning principles. The Commission However, when choosing whether to State-level policies.70
stated that its primary objective in include a proposed transmission project 61. In addition, several commenters
adopting that principle was ‘‘to ensure in its local or regional transmission recommend that the Commission
that the transmission planning process plan, a public utility transmission incorporate public policy objectives into
encompasses more than reliability provider has no explicit obligation the transmission planning process.71
considerations.’’ 60 The Commission under Order No. 890 or the pro forma For example, PJM argues that
explained that although planning to OATT to evaluate the project based on ‘‘additional guidance from the
maintain reliability is a critical priority, its potential to facilitate the Commission is needed if public policy
transmission planning also involves achievement of public policy imperatives such as aggressive
economic considerations.61 requirements established by State or integration of renewable resources are to
56. More specifically, the Commission Federal laws or regulations. be met.’’ 72 PJM states that while
stated that when conducting 59. The October 2009 Notice observed ensuring system reliability should
transmission planning to serve native that some areas are struggling with how remain the primary goal of the
load customers, a prudent vertically to adequately address transmission transmission planning process,
integrated transmission provider will expansion necessary to, for example, providing for incorporation of public
plan not only to maintain reliability, but integrate renewable generation policy objectives, where applicable,
also consider whether transmission resources into the transmission system. could facilitate cost-effective
upgrades or other investments can The October 2009 Notice attributed achievement of those objectives. In
reduce the overall costs of serving these difficulties in part to the fact that particular, PJM suggests that the
native load.62 The Commission planning transmission facilities Commission move beyond a strict
identified this potential for undue necessary to meet State resource application of ‘‘bright line’’ criteria
discrimination among a transmission requirements, such as the renewable currently used for reliability and
provider’s customers as a justification to portfolio standard measures discussed economic projects and allow
implement the Economic Planning above, must be integrated with existing transmission providers more flexibility
Studies principle requiring transmission transmission planning processes that are
67 Id. at 4.
providers to make available to their based on metrics or tariff provisions 68 E.g., Dominion, Entergy, Large Public Power
customers services that are comparable focused on reliability or in some cases Council, Midwest ISO, New York PSC, Northern
to those they are performing on behalf production cost savings.66 Drawing on Tier Transmission Group, Southern Companies,
of their native loads.63 these observations, the October 2009 WestConnect Planning Parties, and WECC. In
Notice sought comment as to whether addition, PSEG Companies state that while it is true
57. The Economic Planning Studies that reliability impact studies are performed
principle requires that stakeholders be reliability impact studies are properly independently of economic planning, such a
given the right to request a defined aligned with evaluations of economic- distinction is appropriate because ensuring
number of high priority studies based projects or projects proposed to reliability is the primary objective of the planning
satisfy renewable energy standards. To process.
annually through the transmission 69 E.g., Massachusetts Departments and Public
the extent that assessments of various
Power Council.
60 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at possible project benefits are not 70 Massachusetts Departments share a similar
P 542. properly aligned, the October 2009 concern.
61 Id.
Notice sought comment as to how 71 E.g., AWEA, Baltimore Gas and Electric, Public
62 The Commission further stated that such
reliability assessments, economic Interest Organizations & Renewable Energy Groups,
upgrades could, for example, reduce congestion Exelon, Eastern PJM Governors, ITC Holdings, LS
(redispatch) costs or integrate efficient new Power, National Grid, NextEra, Old Dominion, PJM,
64 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at
resources (including demand resources) and new or Renewable Energy Systems Americas, Trans-Elect,
growing loads. Id. P 547–48. and The Brattle Group.
63 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261 65 Id. P 574. 72 PJM Order No. 890 Technical Conference
at P 240. 66 October 2009 Notice at 3. Comments, op. cit. at 6.
to take into account the multiple public utility transmission provider then it must make that demonstration in
reliability, economic, or public policy- must consider these same needs on its compliance filing.
based benefits a single project may be behalf of all of its customers. In 67. This proposed requirement is
able to provide.73 addition, providing for incorporation of intended to clarify the objectives that
62. Other commenters propose public policy requirements established would be considered in local and
various approaches to incorporating by State or Federal laws or regulations regional transmission planning
public policy objectives into the in transmission planning processes, processes. As we stated in Order No.
transmission planning process. Some of where applicable, could facilitate cost- 890, we believe that the transparency
these commenters argue that if the goal effective achievement of those provided under open transmission
of the transmission planning process is requirements. planning processes can provide useful
to allow load-serving entities to satisfy 64. To address these issues, we information that would help states to
their resource needs, such needs could propose to revise the requirements coordinate transmission and generation
include resources required to comply established in Order No. 890 with siting decisions, allow consideration of
with State and Federal public policy respect to local and regional regional resource adequacy
objectives.74 Still other commenters transmission planning processes.77 requirements, facilitate consideration of
recommend that the Commission Specifically, we propose to require each demand response and load management
provide flexibility in the transmission public utility transmission provider to programs at the State level, and address
planning process so that each region can amend its OATT such that its local and other factors states wish to consider.
determine which resources it will use to regional transmission planning 68. Another benefit of this proposed
fulfill any applicable public policy processes explicitly provide for
requirement to consider public policy
objectives.75 consideration of public policy
requirements established by State or
63. To ensure that each public utility requirements established by State or
transmission provider’s transmission Federal laws or regulations within the
Federal laws or regulations that may
planning process supports rates, terms, transmission planning process is that
drive transmission needs. After
and conditions of transmission service adherence with this proposed
consulting with stakeholders, a public
in interstate commerce that are just and requirement may eventually increase
utility transmission provider may
reasonable and not unduly the proportion of transmission network
include in the transmission planning
discriminatory or preferential, the investment that is constructed pursuant
process additional public policy
Commission preliminarily finds that to proactive transmission planning
objectives not specifically required by
transmission needs driven by public State or Federal laws or regulations. processes, thereby reducing the
policy requirements established by State This proposed requirement would be a proportion of network upgrades that
or Federal laws or regulations should be supplement to, and would not replace, would otherwise be triggered by
taken into account in the transmission any existing requirements with respect individual generator interconnection
planning process. Indeed, consideration to consideration of reliability needs and requests, which can be time consuming
of such public policy requirements application of the economic studies and inefficient. If more of the
raises issues similar to those raised in principle in the transmission planning transmission network were expanded
the Commission’s discussion in Order process. under the type of regional transmission
No. 890 of the Economic Planning 65. The Commission does not propose planning process described above, then
Studies principle.76 When conducting to identify the public policy the network upgrades triggered by
transmission planning to serve native requirements established by State or interconnection requests should be less
load customers, a prudent transmission Federal laws or regulations that must be significant in size and cost than they
provider will not only plan to maintain considered in individual local and have been in the past and the associated
reliability and consider whether regional transmission planning differences in cost allocation provisions
transmission upgrades or other processes. Instead, we propose to may become less significant as well.
investments can reduce the overall costs require each public utility transmission 69. This proposed requirement is not
of serving native load, but also consider provider to coordinate with its intended in any way to infringe upon
how to enable compliance with relevant customers and other stakeholders to State authority with respect to
public policy requirements established identify public policy requirements integrated resource planning.78 In
by State or Federal laws or regulations established by State or Federal laws or addition, to the extent that a public
in a cost-effective manner. Therefore, regulations that are appropriate to utility transmission provider has an
we propose to find that, to avoid acting include in its local and regional obligation to comply with public policy
in an unduly discriminatory manner, a transmission planning processes. requirements established by State or
66. We propose to require each public Federal laws or regulations, such as the
73 Citing, PJM Interconnection, L.L.C., 119 FERC utility transmission provider to specify State renewable portfolio standard
¶ 61,265 (2007) (directing PJM to adopt a formulaic in its OATT the procedures and measures discussed above, this
approach to applying metrics used to choose mechanisms in its local and regional proposed requirement is not intended to
economic projects). transmission planning processes for
74 E.g., APPA and Bay Area Municipal
convert a failure to satisfy that
Transmission Group.
evaluating transmission projects obligation into a violation of its OATT.
75 E.g., Consolidated Edison, et al. proposed to achieve public policy In other words, while a public utility
76 In Order No. 890, the Commission intended the requirements established by State or transmission provider would be
economic planning studies principle to be Federal laws or regulations. If a public required to identify and consider public
sufficiently broad to identify solutions that could utility transmission provider believes policy requirements established by State
relieve transmission congestion or integrate new
resources and loads, including upgrades to integrate
that its existing transmission planning or Federal laws or regulations in its
new resources and loads on an aggregated or processes satisfy these requirements, local and regional transmission
regional basis. The Commission recognizes that its planning processes, this proposed
statements with respect to the economic planning 77 By ‘‘local’’ transmission planning process, we
requirement would not establish an
studies principle may have contributed to mean the transmission planning process that a
confusion as to whether public policy requirements pubic utility transmission provider performs for its
may be considered in the transmission planning individual service territory or footprint pursuant to 78 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at
process. the requirements of Order No. 890. P 479, n.274.
independent obligation to satisfy those 73. The October 2009 Notice posed 75. Other commenters state that
requirements. several questions relating to merchant merchant and independent developers
70. We seek comment on any issue of and independent transmission should not be treated similarly or
interest or concern related to the developers’ participation in the regional required to participate in the
requirements proposed in this section of transmission planning process. The transmission planning process. For
the Proposed Rule. In particular, we October 2009 Notice sought comment example, Chinook and Zephyr and ITC
seek comment as to whether public on how projects proposed by merchant Holdings state that because the business
policy requirements established by State or independent transmission developers model of merchant and independent
or Federal laws or regulations should be should be treated in the regional transmission developers is different
considered in the transmission planning transmission planning process. The from that of vertically-integrated
process. Further, we seek comment on October 2009 Notice also asked whether utilities, different transmission planning
how planning criteria based on public these types of developers should be requirements are appropriate for them.
policy requirements should be required to participate in the regional Chinook and Zephyr also argue that
formulated, including whether it is transmission planning process and, if regional transmission planning
more appropriate to use flexible criteria so, at what point they should be requirements should apply to a
instead of ‘‘bright line’’ metrics when required to engage in that process. In merchant developer only after it is
determining which projects are to be addition, the October 2009 Notice asked operating under a Commission-
included in the regional transmission whether the right of first refusal for approved OATT. Dayton Power and
plan, whether the use of flexible criteria incumbent transmission owners Light contends that while any
would provide undue discretion as to unreasonably impedes the development transmission facility that is necessary to
whether a project is included in a of merchant and independent meet NERC reliability criteria,
regional transmission plan, and whether transmission and, if so, how that regardless of ownership, should be
the use of ‘‘bright line’’ metrics may impediment could be addressed. required to be included in the
inappropriately result in alternating Finally, the October 2009 Notice asked transmission planning process,
inclusion and exclusion of a single whether there are barriers to merchant merchant and independent projects
project over successive planning cycles and independent transmission planned for nonreliability reasons can
and therefore create inappropriate developers’ participation in the regional be developed independently of the
disruptions in long-term transmission transmission planning process other transmission planning process, subject
planning. than rights of first refusal.80 to appropriate interconnection
74. These questions generated requirements.
C. Opportunities for Undue
extensive comments. For example, 76. Other commenters emphasize the
Discrimination Against Nonincumbent
many commenters argue that a project importance of allowing merchant and
Transmission Developers
proposed by a merchant or independent independent developers to participate
1. Nonincumbent Transmission transmission developer should be actively in the transmission planning
Developer Participation in the treated on the same basis as all other process.83 Generally, these commenters
Transmission Planning Process proposed projects.81 Also, a number of argue that merchant and independent
71. As discussed above, Order No. 890 commenters assert that merchant and transmission developers should either
sought to reduce opportunities for independent developers should be participate in the transmission planning
undue discrimination and preference in required to participate in the process as early as practical, at the
the provision of transmission service. transmission planning process.82 For beginning of the transmission planning
With regard to the transmission example, Southern Companies asserts cycle, or as soon as they have a proposal
planning process, the Commission that it would be discriminatory if the that is developed well enough to be
established nine transmission planning Commission did not require merchant considered. Pattern Transmission also
principles to prevent undue and independent developers to suggests that the Commission should
discrimination. However, Order No. 890 participate in the transmission planning better define the transmission planning
did not specifically address the process, as jurisdictional and non- process and the roles of its participants
potential for undue preference to jurisdictional transmission providers are to ensure a level playing field for
incumbent utilities over nonincumbent required to do. independent transmission developers.
transmission developers through 77. The questions about whether an
practices applied within transmission 80 Id. at 4.
incumbent transmission owner’s right of
planning processes. 81 E.g., Allegheny Companies, AEP, CAlifornians first refusal unreasonably impedes
72. The October 2009 Notice observed for Renewable Energy, Delaware Municipal and merchant or independent transmission
that in some areas, when a Southwestern Electric, E.ON Climate & Renewables development and, if so, how this
North America, Great River Energy, Sun Flower and impediment could be addressed, also
nonincumbent transmission developer Mid-Kansas, National Nuclear Security
participates in the transmission Administration Service Center, Organization of generated extensive comments. Many
planning process, it may lose the MISO States, and Transmission Agency of Northern commenters state that a right of first
opportunity to construct its proposed California. refusal does not unreasonably impede
82 E.g., APPA, CAlifornians for Renewable
project to the incumbent transmission merchant and independent transmission
Energy, Delaware Municipal and Southwestern
owner if that owner has a right of first Electric, Dominion, Exelon, Integrys, Old
development.84 Various commenters
refusal to construct any transmission Dominion, Sun Flower and Mid-Kansas, Large
83 E.g., Green Energy Express, ITC Holdings,
facility in its service territory. The Public Power Council, Midwest ISO, National
Nuclear Security Administration Service Center, Pattern Transmission, and Starwood.
October 2009 Notice also observed that National Rural Electric Coops, New England States’ 84 E.g., Allegheny Companies, AEP, Ameren,
in some areas, merchant transmission Committee on Electricity, New York PSC, Baltimore Gas and Electric, Dominion, EEI, Great
developers choose to plan proposed Organization of MISO States, Pacific Gas and River Energy, Integrys, et al., Sun Flower and Mid-
facilities outside of the transmission Electric, Ohio Commission, SPP, San Diego Gas & Kansas, Large Public Power Council, MidAmerican,
Electric, South Carolina Electric & Gas, Midwest ISO Transmission Owners, National Grid,
providers’ planning processes.79 Transmission Access Policy Study Group, Northern Tier Transmission Group, Old Dominion,
Transmission Agency of Northern California, PPL, PSEG Companies, Ohio Commission, San
79 October 2009 Notice at 3. Transmission Dependent Utility Systems, and Xcel. Diego Gas & Electric, Southern California Edison,
present a range of reasons that it is right of first refusal provides a obligation.89 In response to concerns
appropriate for an incumbent disincentive for a merchant or that a merchant or independent
transmission provider to have a right of independent developer to propose a developer would submit an inaccurately
first refusal, including that the project, especially a proposal for a low bid to construct a proposed
incumbent transmission owner: (1) Has transmission facility that spans multiple transmission facility, some commenters
a legally enforceable obligation to utilities’ service territories, because any claim that such a developer is no more
maintain reliability on its systems and investment that it makes in developing likely to do so than an incumbent
faces penalties for noncompliance; (2) is a proposal may be lost if an incumbent transmission owner.90 These same
obligated under State law to provide transmission owner can exercise its commenters argue that, contrary to what
reliable service at the lowest reasonable right of first refusal or otherwise delay some commenters assert, an incumbent
cost; (3) may be required to build the project or prevent construction of transmission owner will not leave an
facilities included in an RTO’s or ISO’s the project; (2) by discouraging RTO or ISO if the right of first refusal
regional plan, an obligation that competition and new entry, a right of is eliminated.
merchant and independent transmission first refusal likely increases costs to 82. While some commenters advocate
developers lack; (4) is best situated to ratepayers; and (3) a merchant or elimination of all rights of first refusal,
develop transmission facilities within independent transmission developer other commenters support more limited
its service territory, as it is most familiar may have difficulty obtaining financing restrictions. For example, Exelon states
with the design and operation of its if investors perceive that its proposed that ‘‘where an independent developer
system, its customers’ needs, and State project could be subject to a right of first bids on transmission expansion that is
and local permitting and siting refusal or is otherwise at a disadvantage justified under existing planning criteria
processes; and (5) may be able to compared to a project sponsored by an and will be included in rate base, the
provide transmission services at a lower incumbent transmission owner. incumbent transmission owner should
cost than a merchant or independent 80. Among other comments on this be required to match the bid to invoke
transmission developer because it issue, Startrans claims that for an its right of first refusal.’’ 91 Several
enjoys economies of scale with respect incumbent transmission owner, a commenters argue that a right of first
to the staff and resources necessary to Commission-approved right of first refusal should be allowed for reliability-
maintain and operate new transmission refusal effectively creates a Federal based projects, but may not be necessary
facilities. franchise for transmission development for economic-based or other projects.92
78. Some commenters contend that derived from a State franchise for retail While AWEA and LS Power both
the right of first refusal should be electricity. Transmission Agency of maintain that the right of first refusal
preserved because an incumbent Northern California contends that a should be eliminated, they contend that
transmission owner that voluntarily right of first refusal also may ‘‘diminish if the right of first refusal is preserved
joined an RTO or ISO did so with the the incentive for the incumbent utilities then those practices should apply only
understanding that it would retain the to conceive projects in their own service to local reliability projects. Moreover,
right to invest in and earn a return on territory.’’ 87 AWEA asserts that a right of first refusal
new facilities within its system.85 81. Responding to arguments in favor should be required to be exercised
According to Midwest ISO of a right of first refusal, some within ninety days. Similarly, ITC
Transmission Owners, eliminating a commenters argue that concerns about Holdings contends that a right of first
right of first refusal could provide a the reliability of a merchant or refusal will continue to impede
disincentive for RTO membership. independent transmission developer’s transmission development if the time
Similarly, the California ISO asserts that project are unfounded, as the merchant for exercising it is allowed to continue
without a right of first refusal, a or independent transmission developer indefinitely, and Pacific Gas and
transmission owner may have less will be subject to NERC reliability Electric argues that any right of first
incentive to participate in an RTO or standards and to the same penalties for refusal should be exercised in a timely
ISO. noncompliance as an incumbent manner. Transmission Access Policy
79. However, other commenters argue transmission owner.88 Pattern Study Group, however, states that the
that a right of first refusal impedes Transmission states that a merchant or Commission may need to take other
transmission development and provides independent developer has a financial steps in addressing this issue in
an undue advantage to an incumbent incentive to construct and operate addition to limiting the time in which
transmission owner.86 Such facilities safely and reliably in a right of first refusal may be exercised.
commenters present a number of accordance with all applicable In addition, several commenters
reasons for eliminating a right of first regulatory and industry standards, as its contend that placing restrictions on a
refusal, including the following: (1) A investment is at risk if it does otherwise. right of first refusal makes the practice
With regard to an incumbent no less discriminatory.93
Southern Companies, WestConnect Planning
Parties, and Xcel. However, Old Dominion suggests
transmission owner’s obligation to 83. EEI argues that while ‘‘in general,
that the Commission could eliminate the right of build, some commenters assert that it is applicability of a right of first refusal
first refusal if merchant and independent not a burden, but rather a privilege, as does not create an impediment to
transmission developers were subject to the same the incumbent transmission owner is transmission planning or development’’
rules and had the same responsibilities as
incumbent transmission owners, and could recover
assured the opportunity to recover its and that in many cases, ‘‘incumbent
costs and earn a return on its investment
their costs through the RTO/ISO tariff. transmission owners are better situated
85 E.g., Ameren, MidAmerican, and Midwest ISO through the rate base. These to build needed transmission within
Transmission Owners. commenters argue that a merchant or their franchised service territories,’’ if
86 E.g., American Forest and Paper, AWEA,
independent developer would be
CAlifornians for Renewable Energy, EPSA,
Indicated Partners, Modesto Irrigation District,
willing to compete for such an 89 E.g., Indicated Partners and Startrans.
90 E.g., Indicated Partners.
NationalWind, NextEra, Renewable Energy Systems
87 Transmission 91 Exelon at 12.
Americas, Startrans, Starwood, Transmission Agency of Northern California at
Access Policy Study Group, Transmission Agency 3. 92 E.g., Allegheny Companies, Dominion, Large
of Northern California, and Transmission 88 E.g., Green Energy Express and Pattern Public Power Council, and SPP.
Dependent Utility Systems. Transmission. 93 E.g., Indicated Partners.
the Commission finds it necessary to For example, LS Power states that there necessary. The result may be that
address the exercise of a right of first are regions in which an independent regional transmission services may be
refusal, it should do so on a case- developer cannot become a transmission provided at rates, terms and conditions
specific basis.94 Similarly, the California owner until it has completed a project that are not just and reasonable.
ISO recommends that the Commission and owns the resulting transmission 89. To address these issues, we
allow the right of first refusal to be facility. Additionally, LS Power states propose a framework that reflects the
addressed through individual RTO and that it is difficult to develop a project in following reforms, including the
ISO stakeholder processes, rather than a region where the load-serving entity is elimination from a transmission
adopting generic right of first refusal also a transmission owner, as the provider’s OATT or agreements subject
regulations. Pacific Gas and Electric incumbent utility is often responsible to the Commission’s jurisdiction of
states that this proceeding should not for both generation and transmission provisions that establish a Federal right
preempt the California ISO’s planning and resource procurement and of first refusal for an incumbent
development of a right of first refusal may have an incentive to expand its rate transmission provider with respect to
proposal. In contrast, SPP states that base by investing in transmission facilities that are included in a regional
additional clarification and a generally infrastructure rather than support transmission plan. Neither incumbent
applicable policy regarding the right of independent transmission development. nor nonincumbent transmission facility
first refusal is necessary. The 86. Northern Tier Transmission Group developers should, as a result of a
Organization of MISO States argues that, suggests that some merchant Commission-approved OATT or
while a right of first refusal may limit transmission developers self-impose a agreement, receive different treatment in
competition, any modifications must barrier to successful participation in the a regional transmission planning
recognize various State regulatory transmission planning process in that process. Further, both should share
structures and respect State jurisdiction they do not submit comparable planning similar benefits and obligations
and statutes. The Alabama PSC argues data. As such, Northern Tier commensurate with that participation,
that the Commission should adopt Transmission Group is unable to including the right, consistent with
policies that encourage merchant include their projects in its analytical State or local laws or regulations, to
transmission development only if the studies. construct and own a facility that it
State commissions in a region support sponsors in a regional transmission
2. Proposed Reforms Regarding
such policies. planning process and that is selected for
Nonincumbents
84. In response to the question in the inclusion in the regional transmission
October 2009 Notice regarding barriers 87. Based on the comments submitted plan. The Commission proposes that the
in response to the October 2009 Notice, tariff changes to implement these
to merchant and independent
there appear to be opportunities for proposed reforms would be developed
transmission developers’ participation
undue discrimination and preferential through an open and transparent
in the regional transmission planning
treatment against nonincumbent process involving the public utility
process other than a right of first refusal,
transmission developers within existing transmission provider, its customers,
several commenters state that there are
regional transmission planning and other stakeholders.
none or that they are unaware of any.95
processes. Where an incumbent 90. First, we propose to require that
However, Pattern Transmission suggests
transmission provider has a right of first each public utility transmission
that the uncertainty of recovering the
refusal, a nonincumbent transmission provider must revise its OATT to
costs associated with participation in developer risks losing its investment in demonstrate that the regional
the transmission planning process can developing a proposal for submittal to transmission planning process in which
be a barrier to participation by merchant the regional transmission planning it participates has established
and independent transmission process, even if that proposal is selected appropriate qualification criteria for
developers, particularly if the planning for inclusion in the regional determining an entity’s eligibility to
process is inefficient and deadlines are transmission plan. We are concerned propose a project in the regional
not met. Pattern Transmission also that it may be unduly discriminatory or transmission planning process, whether
asserts that an incumbent transmission preferential to deny a nonincumbent that entity is an incumbent transmission
owner has an advantage in developing transmission developer that sponsors a owner or a nonincumbent transmission
proposals as it has priority access to project that is included in a regional developer. These criteria must be
data. Green Energy Express states that transmission plan the rights of an included in the public utility
the Commission should ensure ‘‘a level incumbent transmission provider that transmission provider’s OATT and must
playing field with regard to the flow of are created by a transmission provider’s not be unduly discriminatory or
information, the determination of need, OATT or agreements subject to the preferential. However, it would not be
and related interactions between an Commission jurisdiction. unduly discriminatory or preferential to
RTO or ISO or other transmission 88. In addition, under these have appropriate qualification criteria
planning region, incumbent circumstances, nonincumbent for all potential transmission owners.
transmission owners and developers, transmission developers may be less Such criteria should be designed to
and independent, nonincumbent likely to participate in the regional demonstrate that each potential
developers.’’ 96 transmission planning process. If the transmission owner has the necessary
85. LS Power states that there are regional transmission planning process financial and technical expertise to
several additional barriers to third party does not consider and evaluate projects develop, construct, own, operate, and
developers’ participation in regional proposed by nonincumbents, it cannot maintain transmission facilities.97 Any
transmission planning processes, some meet the principle of being ‘‘open.’’ such criteria must be approved by the
of which are unique to certain markets. Moreover, such a planning process may Commission. Although we do not
94 EEI
not result in a cost-effective solution to
at 9–10.
95 E.g.,
regional transmission needs and 97 Nothing would preclude the incumbent
Allegheny Companies, CAlifornians for transmission owner from agreeing to operate and
Renewable Energy, Integrys, et al., Maine PUC and projects that are included in a maintain the facilities. Additionally, nothing in this
Public Advocate, New York PSC, and Xcel. transmission plan therefore may be Proposed Rule is intended to change existing RTO
96 Green Energy Express at 10. developed at a higher cost than and ISO operational procedures and practices.
propose here to establish a single set of provisions that establish a Federal right of an incumbent transmission owner to
qualification criteria that would apply of first refusal for an incumbent recover the costs associated with
in all regional transmission planning transmission provider.100 We also developing the project and constructing
processes, we seek comment on whether propose to require each public utility the transmission facility. Costs
we should do so and if so, what these transmission provider to amend its associated with a project that is not
criteria should be. Instead, we propose OATT to describe how the regional included in the regional transmission
that each public utility transmission transmission planning process in which plan, whether proposed by an
provider, in cooperation with customers it participates provides for the sponsor incumbent or by a nonincumbent
and other stakeholders in its (whether an incumbent transmission transmission provider, may not be
transmission planning region, must provider or a nonincumbent recovered through a transmission
participate in a regional transmission transmission developer) of a facility that planning region’s cost allocation
planning process that develops is selected through the regional process.
qualification criteria that satisfy the transmission planning process for 97. We emphasize that these proposed
requirements of this Proposed Rule. inclusion in the regional transmission reforms would apply only to facilities
91. Second, we propose to require that plan to have a right, consistent with that are evaluated in a regional
each public utility transmission State or local laws or regulations, to transmission planning process and
provider must revise its OATT to construct and own that facility. selected for inclusion in a regional
include a form by which a prospective 94. Moreover, because a regional transmission plan. We do not propose to
project sponsor would provide transmission planning process may modify any existing obligation for an
information in sufficient detail to allow result in modifications to proposed incumbent transmission owner to build
the proposed project to be evaluated in projects in order to better meet the unsponsored projects that are identified
the regional transmission planning needs of the region, the public utility as necessary in a regional transmission
process.98 In connection with the other transmission provider must ensure that plan.101 In addition, where an
aspects of the framework discussed in its regional transmission planning incumbent transmission owner has the
this section, we also propose to require process has a mechanism to determine right to build, own, and recover costs for
that all proposals to be considered in a which proposal the modified project is upgrades to its own existing
given transmission planning cycle must most similar to, with the sponsor of the transmission facilities (e.g., tower
be submitted by a single, specified date, most similar project having the right, change out and reconductoring), such
to minimize the opportunity for other consistent with State or local laws or right would not be affected by the
entities to propose slight modifications regulations to construct and own the reforms proposed here.
to already submitted projects. facilities. 98. We also emphasize that these
92. Third, we propose to require that 95. Fifth, we propose to require that proposed reforms would affect only a
each public utility transmission if a proposed project is not included in right of first refusal established in a
provider participate in a regional a regional transmission plan and if the transmission provider’s OATT or
transmission planning process that project’s sponsor resubmits that agreements subject to the Commission’s
evaluates the proposals submitted to the proposed project in a future jurisdiction. This Proposed Rule does
regional planning process through a transmission planning cycle, that not address, propose to change, or seek
transparent and not unduly sponsor would have the right to develop to preempt any State or local laws or
discriminatory or preferential process. that project under the foregoing rules regulations.
Each public utility transmission 99. Finally, we do not propose here to
even if one or more substantially similar
provider would be required to describe require a transmission developer that
projects are proposed by others in the
in its OATT the process used for does not seek to use the regional cost
future transmission planning cycle. The
evaluating whether to include a allocation process to participate in the
OATT must state that this priority to
proposed transmission facility in the regional transmission planning process,
develop the proposed facility continues
regional transmission plan.99 as some commenters recommend. For
93. Fourth, with respect to facilities for a defined period of time (e.g., for example, because a merchant
that are included in a regional resubmission annually in subsequent transmission developer assumes all
transmission plan, we propose to transmission planning cycles over a 5- financial risk for developing its project
require removal from a transmission year period). and constructing the proposed facilities,
96. Sixth, we propose to require that,
provider’s OATT or agreements subject it is unnecessary to require such a
to the Commission’s jurisdiction if an incumbent transmission project developer to participate in a regional
developer may recover the cost of a transmission planning process for
98 The information about its proposed project that transmission facility for a selected purposes of identifying the beneficiaries
a sponsor provides also should include, as relevant, project through a regional cost of its project or securing eligibility to
engineering studies, cost analyses, and any other allocation method, a nonincumbent use a regional cost allocation method. A
detailed reports completed by the project sponsor transmission project developer must
as needed to facilitate evaluation of the project in
the regional transmission planning process. enjoy that same eligibility. More 101 For example, in some RTO and ISO regions,
99 The description would need to provide specifically, each public utility transmission owners have obligations to build
sufficient detail so that an entity that proposed a transmission provider must participate certain transmission facilities identified by the RTO
project could determine why the project was in a regional planning process that or ISO. As new transmission owners, including
included or not included in the regional nonincumbent transmission owners, join the RTO
transmission plan. In addition to addressing

provides that, when a project proposed or ISO, they will incur the obligations
concerns about undue discrimination or preference, by a nonincumbent transmission accompanying that status in the RTO or ISO’s tariff
the description would facilitate understanding of developer is included in a regional and other governing documents. We note that
the relative weight placed on various benefits transmission plan, that developer must provisions imposing such obligations may need to
associated with competing proposals (e.g., one be modified to reflect how they will apply to
proposal might address only a reliability-driven have an opportunity comparable to that nonincumbent transmission project developers. We
transmission need, while another proposal might also note that before turning to a transmission
also provide greater benefits in terms of congestion 100 If a Commission-approved tariff or agreement owner with such an obligation, the RTO or ISO
relief or advancement of public policy requirement contains a reference to a right provided under state could conduct a competitive bidding process to
established by State or Federal laws or regulations or local laws or regulations, such a provision would assign construction rights for an unsponsored
that a transmission planning region has identified). not be subject to this requirement. project in its regional transmission plan.
developer that does not seek to use the D. Interregional Coordination efficiently or effectively meet the needs
regional cost allocation process identified in individual regional
1. The Need for Interregional Planning
nevertheless would be required to transmission plans.106
Reforms 104. The October 2009 Notice posed
comply with all reliability requirements
applicable to facilities in the 102. As discussed above, the several questions related to this issue,
transmission planning region in which transmission planning principles including whether existing transmission
established in Order Nos. 890 and 890– planning processes are adequate to
its project would be located. In addition,
A establish a framework for identify and evaluate potential solutions
such a developer is not prohibited from
transmission planning at the local and to needs affecting the systems of
participating—and, indeed, is regional levels. In Order No. 890–A, the multiple transmission providers. The
encouraged to participate—in the Commission emphasized that effective October 2009 Notice also sought
regional transmission planning process. regional planning should include comment as to what processes should
100. As discussed above, in response coordination among regions. Further, govern the identification and selection
to the October 2009 Notice, many the Commission stated that regions and of projects that affect multiple
commenters link the right of first refusal subregions should coordinate as systems.107
for an incumbent utility to its obligation necessary to share data, information and 105. In response to the October 2009
to construct new facilities if called upon assumptions to maintain reliability and Notice, some commenters state that the
to do so. While the Commission allow customers to consider the need for supplemental interregional
acknowledges these comments, we resource options that span the transmission planning processes cannot
preliminarily find that these two regions.102 In several of the Order No. be evaluated until stakeholders gain
practices are not, and should not be, 890 compliance orders, the Commission more experience with the regional
requested more detailed information transmission planning processes
linked within regional transmission
regarding compliance with this aspect of conducted pursuant to Order No. 890,
planning processes. That is, while a
the regional participation principle.103 and thus oppose Commission action on
public utility transmission owner may 103. Within that Order No. 890 and this issue at this time.108 Other
have accepted an obligation to build in 890–A framework, transmission commenters state that the lack of
relation to its membership in an RTO or providers in certain parts of the country interregional planning is a considerable
ISO, this obligation is not directly have organized subregional problem and that transmission planning
dependent on that transmission transmission planning groups for the could be enhanced by increasing the
provider having a corresponding right of purpose of collectively developing plans amount of coordination that occurs
first refusal with regard to a proposal to for upgrades on their combined between neighboring transmission
construct and own a new transmission transmission systems. These subregional planning regions.109
facility located in that region. What is transmission plans are then analyzed at 106. More specifically, several
important from the Commission’s a regional level to ensure that, if commenters advocate expansion of
perspective is that the documents implemented, they will be interregional transmission planning, but
approved by the Commission must not simultaneously feasible and meet disagree as to the extent to which
be unduly discriminatory. The reliability requirements.104 interregional coordination should be
Commission preliminarily finds that Additionally, some neighboring institutionalized. Proposals range from
neither incumbent nor nonincumbent transmission providers have undertaken requiring regional transmission
transmission facility developers should, joint transmission planning pursuant to planning entities to comply with Order
as a result of a Commission approved bilateral agreements.105 However, as No. 890 transmission planning
observed in the October 2009 Notice, principles,110 to requiring greater
OATT or agreement, receive different
there are few processes in place to coordination among existing
treatment in the transmission planning
analyze whether alternative transmission planning regions,111 to
and selection process, and both should interregional solutions would more
share similar benefits and obligations expanding the authorities of regional
commensurate with that participation. transmission planning entities.112 Some
102 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261
101. We seek comment on how the at P 226. 106 October

103 See, e.g., Southern Co. Servs., Inc.; 124 FERC 2009 Notice at 2.
reforms proposed in this section of the ¶ 61,265, at P 70 (2008); United States Department
107 Id. at 3.
Proposed Rule would affect the rights, of Energy—Bonneville Power Administration, 124
108 E.g., American Transmission, Consolidated
obligations, and responsibilities of FERC ¶ 61,054, at P 65 (2008); Southwest Power Edison, et al., Dominion, Eastern Interconnection
Pool, Inc., 124 FERC ¶ 61,028, at P 49 (2008). Planning Collaborative Analysis Team, Imperial
incumbent and nonincumbent 104 Such analysis is consistent with one aspect of Irrigation District, New York ISO, Public Power
transmission providers. In particular, the Regional Participation transmission planning Council, South Carolina Electric & Gas, and
we seek comment on the relationship or principle that the Commission established in Order Southern Companies.
109 E.g., Duke, Exelon, NextEra, Ohio
lack of relationship between a right of No. 890. On that issue, the Commission stated: ‘‘[I]n
addition to preparing a system plan for its own Commission, Old Dominion, Organization of MISO
first refusal and an obligation to build. States, PSEG Companies, Transmission Access
control area on an open and nondiscriminatory
We also seek comment on whether it basis, each transmission provider will be required Policy Study Group, and Transmission Dependent
would be appropriate to retain a Federal to coordinate with interconnected systems to: (1) Utility Systems.
110 E.g., Old Dominion.
right of first refusal in an OATT or other Share system plans to ensure that they are
simultaneously feasible and otherwise use 111 E.g., AWEA, Pioneer Transmission, PSEG
documents subject to the Commission’s
consistent assumptions and data, and (2) identify Companies, Public Interest Organizations &
jurisdiction. If not, why not? If so, system enhancements that could relieve congestion Renewable Energy Groups, Transmission Access
would it be appropriate to retain an of integrate new resources * * *’’ Order No. 890, Policy Study Group, and Transmission Dependent
FERC Stats. & Regs. ¶ 31,241 at P 523. Utility Systems.
obligation to build for an incumbent 105 See, e.g., Joint Operating Agreement Between 112 Regional transmission planning entities would
transmission provider while removing a the Midwest Independent Transmission System be empowered ‘‘to make specific project
Federal right of first refusal for that Operator, Inc. and PJM Interconnection, L.L.C. recommendations at the end of the planning
incumbent? (Midwest Independent Transmission System process and to enter binding, near-juridical findings
Operator, Inc., Second Revised Rate Schedule FERC of fact and conclusions related to the need and
No. 5; PJM Interconnection, L.L.C. Second Revised economic benefits of specific projects or solutions.’’
Rate Schedule FERC No. 38). San Diego Gas & Electric at 6.
commenters suggest that the question.117 Similarly, Public Interest transmission planning efforts being
Commission should require Organizations & Renewable Energy undertaken pursuant to the ARRA. As
interregional transmission planning or Groups state that the Commission noted above, broad participation in
develop pro forma seams agreements should require coordinated transmission sessions to date related to these efforts
that describe the requirements for infrastructure plan development by suggests that that the availability of
coordinating transmission planning regional or interregional transmission Federal funds to pursue
with a neighboring transmission planning authorities informed by interconnectionwide transmission
planning region.113 interconnection-wide assessments and planning has increased awareness of the
107. San Diego Gas & Electric, for broad stakeholder input. potential for greater coordination among
example, states that, in the West, 110. The October 2009 Notice also regions in transmission planning. The
transmission planning is a hodgepodge recognized that proposals to implement Commission anticipates that the ARRA-
of balkanized processes resulting in a interconnectionwide transmission funded efforts will enhance
flood of proposed interstate planning were being developed in transmission planning by, among other
transmission facilities but with virtually response to the above-noted funding actions, building upon local and
no consideration given to which of the opportunities that DOE offered under regional transmission planning
proposed facilities would be most the American Recovery and processes and improving capabilities to
effective in meeting the needs of the Reinvestment Act of 2009. The October model the development of transmission
broadest set of constituents. San Diego 2009 Notice observed that it was not enhancements for the various scenarios
Gas & Electric also states that little clear whether those activities would of interest to State and Federal policy
serious consideration is given to how result in a regular process for jointly makers and other stakeholders, as well
various project proposals could be identifying and evaluating alternatives as Canadian provincial policy makers in
modified, combined, or eliminated so as to solutions identified in transmission the Western Interconnection. We
to make the best possible use of plans developed through existing emphasize that this Proposed Rule,
available transmission corridors, transmission planning processes which does not require
minimize adverse environmental conducted in accordance with Order interconnectionwide planning or cost
impacts, and enhance overarching No. 890.118 allocation, is not intended to interfere
system efficiencies.114 111. In response to the October 2009 with the efforts already underway in
108. Pioneer Transmission states that Notice, some commenters state that ARRA-funded transmission planning
it has a unique perspective on interconnectionwide transmission initiatives.
interregional transmission planning planning undertaken pursuant to the 113. However, even with these
issues, as it spent the last year and a half ARRA should be given a chance to important steps toward interconnection-
working with the Midwest ISO and PJM mature before the Commission takes wide scenario analysis, the Commission
in an effort to develop extra high voltage additional action with respect to remains concerned that the lack of
transmission facilities that will be transmission planning.119 Other coordinated transmission planning
located in both the Midwest ISO and commenters emphasize that funding processes across the seams of
PJM footprints. Pioneer Transmission under the ARRA is an important one- neighboring transmission planning
states that although the Midwest ISO time opportunity, but should not be regions could be needlessly increasing
and PJM have undertaken various viewed as a prerequisite for initiating or costs for customers of transmission
studies and have worked cooperatively expanding upon other transmission providers. These circumstances may
with Pioneer Transmission, they have planning efforts.120 For example, Exelon result in transmission rates that are
been hampered in their efforts to assess states that the ARRA-funded unjust and unreasonable. Therefore, the
the Pioneer project for inclusion in their transmission planning for the Eastern Commission proposes reforms that are
transmission plans because neither RTO Interconnection is a positive effort, but intended to improve coordination
has in place formal procedures for is aimed at evaluating what would between neighboring transmission
evaluating interregional projects.115 happen under various scenarios rather planning regions with respect to
109. The Ohio Commission states in than at evaluating solutions and facilities that are proposed to be located
its comments that ‘‘[j]ust as the identifying the best solution for any in both regions, as well as interregional
development of RTOs and ISOs was given transmission planning problem. facilities that could address
encouraged to better coordinate AWEA states that the Commission transmission needs more efficiently
individual transmission owners’ and should not rely on interconnectionwide than separate intraregional facilities.
operators’ plans, the development of transmission planning undertaken
inter-regional planning committees to 2. Proposed Interregional Planning
pursuant to the ARRA as the sole means
review and coordinate individual and Reforms
for reforming the transmission planning
RTO and ISO plans should be process because the ARRA-funded 114. We propose to require each
encouraged.’’ 116 The California ISO efforts cannot be expected to lead to the public utility transmission provider
states that it would be easier to analyze near-term changes that need to be through its regional transmission
and justify transmission facilities that implemented in order to support planning process to coordinate with the
would be located in more than one development of renewable energy public utility transmission providers in
region if the underlying data were resources. each of its neighboring transmission
consistent in all of the areas that are part 112. The Commission supports and planning regions within its
of evaluating the transmission project in encourages the interconnectionwide interconnection to address transmission
planning issues, as discussed below.121
113 E.g., AEP, Energy Future Coalition, Old 117 California ISO at 8. This coordination between transmission
Dominion, Pioneer Transmission, Public Interest 118 October 2009 Notice at 2–3. planning regions must be reflected in an
Organizations & Renewable Energy Groups, SPP, 119 E.g., ColumbiaGrid, NARUC, New England
Transmission Access Policy Study Group, and States’ Committee on Electricity, and Organization 121 This proposal does not require a public utility
Transmission Dependent Utility Systems. of MISO States. transmission provider to enter into an interregional
114 San Diego Gas & Electric at 5. 120 E.g., Eastern Interconnection Planning transmission planning agreement with a
115 Pioneer Transmission at 1–2.
Collaborative Analysis Team, Entergy, and Progress neighboring transmission planning region in
116 Ohio Commission Comments at 6. Energy. another interconnection.
interregional transmission planning interregional facilities that could agreements to be submitted to the
agreement to be filed with the address transmission needs more Commission no later than one year after
Commission. efficiently than separate intraregional the effective date of the final rule issued
115. The interregional transmission facilities; (2) an agreement to exchange in this proceeding.
planning agreement may be developed at least annually planning data and
on behalf of the public utility V. Proposed Reforms: Cost Allocation
information; (3) a formal procedure to
transmission providers within multiple identify and jointly evaluate A. Introduction
transmission planning regions. For transmission facilities that are proposed
example, two RTOs may set forth the 1. Order No. 890’s Transmission
to be located in both regions; and (4) a
requirements of their interregional Planning Principle on Cost Allocation
commitment to maintain a Web site or
transmission planning coordination as for New Transmission Facilities
e-mail list for the communication of
part of an overall joint operating information related to the coordinated 121. In Order No. 890, the
agreement between them. A public planning process. Commission found that there is a close
utility transmission provider that is not 118. With respect to the third relationship between transmission
in an RTO or ISO may, for example, proposed requirement for an planning, which identifies needed
work with other transmission providers interregional transmission planning transmission facilities, and the
that participate in its regional agreement, the Commission proposes allocation of costs of the transmission
transmission planning process to create that the sponsor of a project that would facilities in the plan. The Commission
and enter into a multilateral be located in both transmission stated that knowing how the costs of
interregional transmission planning planning regions to which that new transmission facilities would be
agreement with transmission providers agreement applies must first propose its allocated is critical to the development
in a neighboring transmission planning project in the transmission planning of new infrastructure, because
region. Although not required under process of each of those transmission transmission providers and customers
this proposal, we encourage public planning regions. The Commission cannot be expected to support the
utility transmission providers to explore further proposes that such a submission construction of new transmission unless
possible multilateral interregional would trigger a procedure established they understand who will pay the
transmission planning agreements by the interregional transmission associated costs.122
among several, or even all, regions planning agreement, under which the 122. In light of this close relationship,
within an interconnection, building on transmission planning regions would the Commission included a principle
processes developed through the ARRA- coordinate their reviews of and jointly entitled ‘‘Cost Allocation for New
funded transmission planning evaluate the proposed project. The Projects’’ among the Order No. 890
initiatives. We note that multilateral Commission proposes that such transmission planning principles. The
interregional transmission planning coordination and joint evaluation must Commission stated that the Order No.
agreements may minimize the growing be conducted in the same general 890 Cost Allocation principle was
number of planning meetings that some timeframe as, rather than subsequent to, intended to apply to projects that did
stakeholders suggest pose barriers to each transmission planning region’s not fit under existing cost allocation
their meaningful participation in the individual consideration of the methods. As examples of such projects,
planning processes, given their limited proposed project. Finally, the the Commission cited regional projects
resources. Commission proposes that inclusion of involving several transmission owners
116. The interregional transmission the interregional transmission project in and economic projects that are
planning agreement must include a each of the relevant regional identified pursuant to the Order No. 890
detailed description of the process for transmission plans would be a economic planning studies principle for
coordination between public utility prerequisite to application of an transmission planning, rather than
transmission providers in neighboring interregional cost allocation method that through individual requests for
transmission planning regions with satisfies the cost allocation principles transmission service.123
respect to facilities that are proposed to proposed below in this NOPR. 123. The Commission did not impose
be located in both regions, as well as 119. We seek comment on any issue a particular cost allocation method in
interregional facilities that are not of interest or concern related to the Order No. 890, but instead permitted
proposed but that could address requirements proposed in this section of public utility transmission providers,
transmission needs more efficiently the Proposed Rule, including the customers, and other stakeholders to
than separate intraregional facilities. proposed required elements of an determine a method that would be
117. While the Commission interregional transmission planning appropriate given the needs of the
encourages every interregional agreement and any other elements that region. While allowing this flexibility
transmission planning agreement to be should be part of an interregional among regions, the Commission also
tailored to best fit the needs of the transmission planning agreement. In stated that providing some overall
regions entering into the agreement, particular, we seek comment on how guidance on the issue was appropriate.
there are certain elements that we such an agreement would be The Commission stated that when
propose each public utility transmission implemented in non-RTO or ISO regions considering a dispute over cost
provider must ensure are included in and on the impact that an interregional allocation, it would exercise its
any interregional transmission planning transmission planning agreement would judgment by weighing several factors.
agreement in which it participates. likely have on the development of First, the Commission stated that it
Including these elements will help to interregional transmission facilities. would consider whether a cost
ensure a proactive, comprehensive 120. We recognize that development allocation proposal fairly assigns costs
process. Specifically, we propose that of interregional transmission planning among participants, including those
an interregional transmission planning agreements would take time and would who cause the costs to be incurred and
agreement must include: (1) A necessarily depend on progress at the
commitment to coordinate and share the regional level. Accordingly, the 122 Order No. 890, FERC Stats. & Regs. ¶ 31,241
results of respective regional Commission proposes to require the at P 557.
transmission plans to identify possible interregional transmission planning 123 Id. P 558.
those that otherwise benefit from them. 126. After several rounds of However, both ColumbiaGrid and
Second, the Commission stated that it compliance filings, the Commission Northern Tier Transmission Group use
would consider whether a cost approved various public utility a process where, if no agreement on cost
allocation proposal provides adequate transmission providers’ proposals allocation among the study team
incentives to construct new pursuant to the cost allocation participants or the project proponents is
transmission. Third, the Commission principle. The Commission found that obtained, the entities requesting the
stated that it would consider whether the proposals adequately identified both project will bear the costs.
the proposal is generally supported by the types of new projects that were not
State authorities and participants across covered under previously existing cost 2. October 2009 Notice and Subsequent
the region.124 allocation methods and new methods Comments
124. The Commission also stated that for allocating the cost of those projects. 129. As discussed above, in the
these factors are particularly important 127. Particularly in transmission October 2009 Notice, the Commission
as applied to economic projects that are planning regions outside of the RTO and posed a number of questions with
identified pursuant to the Order No. 890 ISO footprints, many of the cost respect to allocating the cost of
economic planning studies principle for allocation methods that the Commission transmission facilities. Those questions
transmission planning, such as upgrades accepted in the Order No. 890 drew wide-ranging responses as to
to reduce congestion or enable groups of compliance proceedings rely whether further Commission action on
customers to access new generation. The exclusively on a ‘‘participant funding’’ cost allocation is needed at this time
Commission stated that, as a general approach to cost allocation. Under a and, if so, what that action should be.
matter, the beneficiaries of any such participant funding approach to cost
project should agree to support its costs. allocation, the costs of a new 130. Among the commenters, there is
The Commission recognized, however, transmission facility are allocated only general agreement that the Commission
that there are free rider problems to entities that volunteer to bear those should not supersede existing, ongoing
associated with new transmission costs. processes in various parts of the country
investment, such that customers who do 128. For example, El Paso Electric that are attempting to address regional
not agree to support a particular project proposed in its Order No. 890 and interregional cost allocation issues.
may nonetheless receive substantial compliance filing to use a cost 131. Nonetheless, commenters
benefit from it. The Commission also allocation method in which such supporting further Commission action
stated that a range of solutions to free entities would share the costs on cost allocation at this time generally
rider problems is available, noting that proportionally based on each assert that the Commission should
different regions have attempted to participant’s desired use of the facility provide more detailed guidelines or
address those problems in a variety of to be constructed.129 Other members of principles for allocating the costs of new
ways.125 WestConnect, such as Public Service transmission facilities.134 Many
125. To comply with the cost Company of Colorado, filed and now commenters argue that a clear path to
allocation principle, the Commission use similar participant funding cost cost recovery is necessary for a new
directed each public utility transmission allocation methods.130 South Carolina transmission project to move beyond the
provider to clearly define the details of Electric & Gas included in its Order No. evaluation stage and to be included in
its cost allocation method as part of a 890 compliance filing the Southeast any regional transmission planning
new attachment to its OATT. The Inter-Regional Participation Process process and ultimately to proceed to
Commission stated that each proposal (SIRPP) provisions stating that costs for construction.135 Such commenters
should identify the types of new economics-driven upgrades will be born indicate that risks associated with cost
projects that are not covered under entirely by the transmission owner that recovery—together with the risks
previously existing cost allocation builds the facilities.131 Similarly, associated with permitting and siting—
methods and, therefore, would be Entergy filed and had approved a are among the most significant obstacles
affected by the Order No. 890 cost method where the costs for projects to the construction of a new
allocation principle.126 The Commission developed under its Regional Planning transmission facility, especially if
also stated that it is important that each Process and its interregional customers that are allocated costs do not
region address these cost allocation transmission planning process would be perceive that they will benefit from the
issues up front, at least in principle, born by the party that constructs the proposed facility.136 Old Dominion
rather than having them relitigated each facilities.132 ColumbiaGrid and the emphasizes that many of the obstacles
time a project is proposed.127 The Northern Tier Transmission Group both inhibiting transmission development are
Commission explained that up-front utilize a study committee process interrelated, but that greater certainty on
identification of how the cost of a whereby alternative cost allocation cost allocation would likely ease access
facility will be allocated will allow methods can be proposed for projects to capital for proposed facilities.137
transmission providers, customers, and within their respective regions.133 132. Several commenters specifically
potential investors to make the decision
address cost allocation as an
whether or not to build that facility on adoption of a cost allocation method nor impediment to the development of
an informed basis.128 identification of an upgrade (whether driven by
reliability or economics) in a transmission plan generation to satisfy renewable portfolio
124 Id. P 559. triggers an obligation to build. Id.
129 El Paso Electric Company, 124 FERC ¶ 61,051, 134 E.g., APPA, National Rural Electric Coops,
125 Id. P 561 (‘‘[D]ifferent regions have attempted
to address such issues in a variety of ways, such at P 44 (2008). Transmission Access Policy Study Group,
130 Xcel Energy Services, Inc.—Public Service Transmission Dependent Utility Systems, and
as by assigning transmission rights only to those
who financially support a project or spreading a Company of Colorado, 124 FERC ¶ 61,052 (2008). California ISO.
portion of the cost of certain high-voltage projects 131 South Carolina Electric & Gas Company, 127 135 E.g., American Transmission, AWEA, E.ON
more broadly than the immediate beneficiary/ FERC ¶ 61,275, at P 50 (2009). Climate & Renewables North America, Energy
supporters of the project.’’). 132 Entergy Services, Inc., 127 FERC ¶ 61,272 Future Coalition, and NextEra.
126 Id. P 558. (2009). 136 E.g., AWEA, Transmission Dependent Utility
127 Id. P 561. 133 See Avista Corporation, 128 FERC ¶ 61,065 Systems, Xcel, Transmission Access Policy Study
128 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261 (2009) and Idaho Power Company, 128 FERC ¶ Group, and National Rural Electric Coops.
at P 251. The Commission also stated that neither 61,064 (2009). 137 Old Dominion at 26.
standards implemented by the states.138 135. In addition, the comments in cost allocation in their region is not a
AWEA, for example, states that cost response to the October 2009 Notice problem.147
allocation policies are the biggest reflect a general consensus that those
B. Legal Authority and Need for Reform
impediment to construction of new who share in the benefits of
transmission facilities, regardless of transmission projects should also share 138. Based on the comments received
location, and that costs should be in their costs. However, there is no in response to the October 2009 Notice,
assigned to all entities that benefit from consensus on what types of benefits the Commission believes that further
a new facility. AWEA further comments should be considered or how such reform with respect to transmission cost
that a participant funding cost benefits should be calculated. Certain allocation methods may be necessary in
allocation method does not achieve that commenters, for example, support order to ensure that the rates, terms and
goal.139 These commenters also state recognition of a broad spectrum of conditions of transmission service in
that uncertainty over cost allocation benefits that may stem from interstate commerce are just and
imposes significant costs on customers transmission development, such as reasonable and not unduly
attempting to export energy from environmental impacts, land discriminatory or preferential.
renewable resources and inhibit conservation and energy security.142 1. The Cost Causation Principle
planning for the integration of the most Other commenters urge the Commission
economic generation resources into the 139. Under sections 205 and 206 of
to avoid a uniform approach to
transmission grid. Maine PUC and the FPA, the Commission is responsible
determining the benefits of transmission
Public Advocate state that the existing for ensuring that the rates, terms, and
projects.143 conditions for transmission of electricity
ISO–NE cost allocation methods are not
136. Several commenters suggest that in interstate commerce are just,
optimal when considering large
if the Commission decides to establish reasonable, and not unduly
amounts of wind integration.140
a default cost allocation method for new discriminatory or preferential.148 With
133. Similarly, the majority of transmission facilities, such a method respect to this responsibility, the
commenters that address cost allocation should be employed and enforced only Commission and the courts have found
for large, interregional transmission when stakeholders are unable to agree that the costs of jurisdictional
facilities agree that the Commission upon their own regional cost allocation transmission facilities must be allocated
should provide more guidance on cost method or methods.144 For example, in a manner that satisfies the ‘‘cost
allocation.141 Some commenters American Transmission, National Grid, causation’’ principle.
complain that as a general matter, the Northern Tier Transmission Group, and 140. The U.S. Court of Appeals for the
Commission has addressed cost NEPOOL Participants state that the District of Columbia Circuit (D.C.
allocation methods only for facilities Commission could create a generic cost Circuit) has defined the cost causation
within the footprint of a single allocation method as a backstop, which principle as follows: ‘‘[I]t has been
transmission provider or a single RTO traditionally required that all approved
would apply when parties or regions
or ISO, and not for interregional rates reflect to some degree the costs
could not come to their own agreement.
projects. For example, AEP states that it actually caused by the customer who
Other commenters express the view that
has experienced delays in developing must pay them.’’ 149 The U.S. Court of
the Commission should create one or
transmission facilities that cross RTO Appeals for the Seventh Circuit
more rebuttable presumptions about
boundaries as a result of uncertainty (Seventh Circuit) recently quoted and
over cost allocation, as well as who benefits from various types of
facilities in order to make cost elaborated on that definition, stating,
difficulties with how the facilities are to ‘‘All approved rates must reflect to some
be planned. allocation easier.145
degree the costs actually caused by the
134. Some of these commenters assert 137. Finally, many commenters state customer who must pay them. Not
that the expansion of regional power that no further generic Commission surprisingly, we evaluate compliance
markets and the increasing adoption by action on cost allocation is needed at with this unremarkable principle by
State governments of renewable energy this time because the processes in their comparing the costs assessed against a
requirements have led to a growing need own regions already address, or are now party to the burdens imposed or benefits
for new transmission facilities that cross working to address, cost allocation. For drawn by that party. To the extent that
several utility and/or RTO or ISO example, in the Southeast, some a utility benefits from the costs of new
regions. These commenters generally commenters state that their processes facilities, it may be said to have ‘caused’
support, or state that they do not for cost allocation are working well and a part of those costs to be incurred, as
oppose, the Commission establishing a argue that the Commission should without the expectation of its
process to help stakeholders address continue to allow regional flexibility on contributions the facilities might not
cost allocation matters over larger cost allocation processes.146 Similarly, have been built, or might have been
geographic areas. For example, in the West, some commenters state that delayed.’’ 150 The Commission has
California ISO and the California
142 E.g., AEP, AWEA, Baltimore Gas and Electric,
Commission comment that, although 147 E.g., ColumbiaGrid, Northern Tier
Energy Future Coalition, Green Energy Express, ITC Transmission Group, Transmission Agency of
cost allocation within the California ISO Holdings, MidAmerican, National Audubon Northern California, Salt River Project and
works well, they support the Society, NextEra, and Public Interest Organizations WestConnect Planning Parties.
Commission creating a process to
& Renewable Energy Groups. 148 16 U.S.C. 824d, 824e.
consider cost allocation over a larger 143 E.g., ColumbiaGrid, ConEd, Delaware 149 K N Energy, Inc. v. FERC, 968 F.2d 1295, 1300
region in the West. Municipal and Southwestern Electric, and (D.C. Cir. 1992) (K N Energy).
Northeast Utilities. 150 Illinois Commerce Comm’n v. FERC, 576 F.3d
144 E.g., American Transmission, National Grid,
138 E.g., AWEA at 9–10, American Transmission
470, 476 (7th Cir. 2009) (Illinois Commerce
Northern Tier Transmission Group, and NEPOOL Commission) (citing K N Energy, 968 F.2d at 1300;
and Exelon. Participants. Transmission Access Policy Study Group v. FERC,
139 AWEA at 4. See also Transmission Access 145 E.g., ITC Holdings, MidAmerican, PJM, Solar
225 F.3d 667, 708 (D.C. Cir. 2000); Pacific Gas &
Policy Study Group at 25–27. Energy Industries, and WIRES. Elec. Co. v. FERC, 373 F.3d 1315, 1320–21 (D.C. Cir.
140 Maine PUC and Public Advocate at 7–8. 146 E.g., Entergy, Southern Companies, and 2004); Midwest ISO Transmission Owners v. FERC,
141 E.g., AEP, ITC Holdings, and Exelon. Florida Transmission Providers. 373 F.3d 1361, 1368 (D.C. Cir. 2004) (Midwest ISO
frequently made similar statements with presented with concerns about parallel later conditionally accepted a proposal
respect to the cost causation principle. path flow,153 the Commission has that Midwest ISO and PJM submitted in
For example, as noted above, the offered repeatedly that if a public utility compliance with that directive on the
Commission stated in Order No. 890 can demonstrate that a transaction is a grounds that it ‘‘more accurately
that one factor it weighs when burden on its system, then that utility identifies the beneficiaries and allocates
considering a dispute over cost can propose a transmission service rate the associated costs’’ than did the cost
allocation is whether a cost allocation for Commission consideration that allocation methods that were previously
proposal fairly assigns costs among would account for the unauthorized use in place.157
participants, including those who cause of its system.154 The Commission has 145. These examples show that the
the costs to be incurred and those that cautioned against the hasty submittal of Commission has asserted its authority to
otherwise benefit from them.151 such unilateral filings, describing its allocate the costs of jurisdictional
141. In applying the cost causation general policy as expecting owners and facilities to beneficiaries whether or not
principle, the Commission has generally controllers of transmission facilities to those beneficiaries have entered into a
allocated costs to beneficiaries that have attempt to resolve parallel path flow voluntary agreement with the public
entered a voluntary arrangement with issues on a consensual, regional utility that is seeking to recover those
the public utility that is seeking to basis.155 Nonetheless, if approved by the costs.
recover those costs. One example of a Commission, such a proposal to address 146. In addition, courts have affirmed
voluntary cost recovery arrangement parallel path flow would allow a public that the cost causation principle allows
with a public utility is voluntary utility to recover costs from a the Commission to allocate at least some
membership in an RTO or ISO that beneficiary of its system in the absence types of costs to beneficiaries that are
makes an entity subject to the cost of a voluntary arrangement between the not customers of the public utility that
allocation provisions of the RTO’s or utility and that beneficiary. is seeking to recover the costs in
ISO’s tariff.152 The Commission also has 144. The Commission also question. For example, the D.C. Circuit
permitted joint-ownership agreements affirmatively required costs of addressed this issue in a case that
where the owners share the costs of the transmission facilities to be allocated to involved a proposal for Midwest ISO to
new transmission facilities. beneficiaries in the absence of a recover administrative costs through a
142. The cost causation principle, voluntary arrangement in a series of charge that would apply to transmission
however, is not limited to voluntary orders involving the Midwest loads subject to the Midwest ISO’s tariff
arrangements. Indeed, if the Independent Transmission System rates: i.e., new wholesale loads and
Commission were limited to allocating Operator, Inc. (Midwest ISO) and PJM unbundled retail loads, but not bundled
costs only to beneficiaries that Interconnection, L.L.C. (PJM). retail loads and loads served pursuant to
voluntarily accept those costs, then the Specifically, the Commission directed grandfathered contracts.158 Describing
Commission could not fulfill its Midwest ISO and PJM to develop cost the core issue as whether the
responsibilities under the FPA. If the allocation methods for new facilities in Commission’s orders comported with
Commission could not address free rider one of their footprints that benefit the cost causation principle, the D.C.
problems associated with new entities in the other’s footprint.156 Circuit found that the Commission
transmission investment, then it could Echoing precedent applying the cost reasonably allocated the administrative
not ensure that transmission rates are causation principle, the Commission costs more broadly than Midwest ISO
just and reasonable and not unduly proposed.159 After stating that the
153 The Commission has described the
discriminatory. The cost causation subject costs were the administrative
phenomenon of parallel path flow as follows: ‘‘In
principle provides that costs should be general, utilities transact with one another based on costs of having an ISO, the D.C. Circuit
allocated to those who cause them to be a contract path concept. For pricing purposes, found that the Commission correctly
incurred and those that otherwise parties assume that power flows are confined to a determined that bundled and
specified sequence of interconnected utilities that
benefit from them, as the Commission are located on a designated contract path. However,
grandfathered loads should share the
also recognized in Order No. 890. In in reality power flows are rarely confined to a cost of having an ISO because they drew
other words, the Commission may designated contract path. Rather, power flows over benefits from Midwest ISO.160
determine that an entity’s status as a multiple parallel paths that may be owned by 147. Thus, in applying the cost
several utilities that are not on the contract path.
beneficiary of a transmission facility The actual power flow is controlled by the laws of
causation principle, the Commission
identified through an appropriate physics which cause power being transmitted from may allocate costs of a transmission
process is relevant for purposes of one utility to another to travel along multiple facility to a beneficiary identified
parallel paths and divide itself along the lines of through an appropriate process, such as
applying the cost causation principle, least resistance. This parallel path flow is
even if that beneficiary has not entered sometimes called ‘loop flow.’ ’’ Indiana Michigan a Commission-approved transmission
a voluntary arrangement with (e.g., as a Power Co. and Ohio Power Co., 64 FERC ¶ 61,184, planning process, even if that
customer of) the public utility that is at 62,545 (1993). beneficiary has not entered a voluntary
154 See, e.g., Amer. Elec. Power Svc. Corp., 49
seeking to recover the costs of that arrangement with the public utility that
FERC ¶ 61,377, at 62,381 (1989).
facility. 155 Id. See also Southern California Edison Co., 70
157 Midwest Indep. Transmission Sys. Operator,
143. The Commission has expressed a FERC ¶ 61,087, at 61,241–42 (1995).
Inc., 113 FERC ¶ 61,194, at P 10 (2005). See also
willingness to make such a 156 Midwest Indep. Transmission Sys. Operator,
Midwest Indep. Transmission Sys. Operator, Inc.,
determination. For example, when Inc., 109 FERC ¶ 61,168, at P 60 (2004) (citing
122 FERC ¶ 61,084 (2008); Midwest Indep.
Midwest Indep. Transmission Sys. Operator, Inc.,
Transmission Sys. Operator, Inc., 129 FERC ¶

106 FERC ¶ 61,251, at P 56–57 (2004)). The
Transmission Owners); Alcoa Inc. v. FERC, 564 61,102 (2009).
Commission noted that Midwest ISO and PJM had
F.3d 1342 (D.C. Cir. 2009); Sithe/Independence committed in a Joint Operating Agreement to
158 Midwest ISO Transmission Owners, 373 F.3d
Power Partners, L.P. v. FERC, 285 F.3d 1, 4–5 (D.C. develop such a method for allocating the costs of 1361. The D.C. Circuit stated that the subject costs
Cir. 2002) (Sithe); 16 U.S.C. 824d). certain facilities through their joint regional ‘‘are primarily MISO’s startup expenses—
151 Order No. 890, FERC Stats. & Regs. ¶ 31,241
planning committee. Id. The Commission did not particularly those pertaining to the MISO Security
at P 559. base the above-noted directive on the existence of Center—and certain expenses pertaining to the
152 The Commission notes that RTO or ISO the Joint Operating Agreement, which Midwest ISO creation and administration of MISO’s open access
membership does not eliminate the need to satisfy and PJM developed in order to comply with a tariff.’’ Id. at 1369.
159 Id. at 1370.
the other aspects of the cost causation principle that previous Commission directive. See Alliance Cos.,
are discussed above. 100 FERC ¶ 61,137, at P 48, 53 (2002). 160 Id. at 1370–71.
is seeking to recover the costs of that flexibility with respect to transmission because it is difficult to reach an
facility. After satisfying this standard pricing.164 allocation of costs that is perceived as
with respect to beneficiary 150. Many of those changes have not fair. Some comments filed in response
identification, the cost causation only continued but also accelerated in to the October 2009 Notice present these
principle also requires the Commission recent years. For example, as types of concerns and state the resultant
to ensure that the costs allocated to a commenters stated in response to the uncertainty regarding cost allocation
beneficiary under a cost allocation October 2009 Notice, the further remains an impediment to development
method are at least roughly expansion of regional power markets of needed transmission facilities.
commensurate with the benefits that are has led to a growing need for new 153. The risk of the free rider
expected to accrue to that entity.161 On transmission facilities that cross several problems associated with new
this point, the D.C. Circuit has utility, RTO, ISO or other regions. The transmission investment that the
explained that ‘‘the cost causation industry’s continuing transition from Commission described in Order No. 890
principle does not require exacting relatively localized trading to larger is also particularly high for projects that
precision in a ratemaking agency’s regional power markets also results, affect multiple utilities’ transmission
allocation decisions.’’ 162 among other effects, in broader diffusion systems and therefore may have
of the benefits associated with multiple beneficiaries. With respect to
2. Need for Reform transmission upgrades and new such projects, any individual
transmission facilities. beneficiary has an incentive to defer
148. The Commission’s responsibility 151. Similarly, the increasing investment in the hopes that other
under FPA sections 205 and 206 to adoption of State resource policies, such beneficiaries will value the project
ensure that transmission rates are just as renewable portfolio standard enough to fund its development. On one
and reasonable and not unduly measures, has contributed to rapid hand, a cost allocation method that
discriminatory or preferential is not growth of location-constrained relies exclusively on a participant
new, nor is the Commission’s renewable energy resources that are funding approach, without respect to
recognition of the cost causation frequently remote from load centers, as other beneficiaries of a transmission
principle. However, the circumstances well as a growing need for new facility, increases this incentive and, in
in which the Commission must fulfill its transmission facilities that cross several turn, the likelihood that needed
statutory responsibilities change with utility and/or RTO or ISO regions. transmission facilities will not be
developments in the electric industry, Transmission facilities that are needed constructed in a timely manner. On the
such as changes with respect to the to comply with State renewable other hand, if costs are allocated to
demands placed on the transmission portfolio standard measures illustrate entities that will receive no benefit from
grid. the increasing potential for benefits a transmission facility, then those
149. The Commission has previously associated with meeting public policy- entities are more likely to oppose
recognized changes in circumstances driven transmission needs. inclusion of the facility in a regional
that warranted changes in the manner 152. More generally, as stated above, transmission plan or to otherwise
challenges associated with allocating impose obstacles that delay or prevent
by which public utilities recover
the cost of transmission appear to have the facility’s construction.
transmission costs. In the early 1990s,
become more acute as the need for 154. In light of these challenges and
the Commission identified ‘‘dramatic
transmission infrastructure has grown. recent developments affecting the
changes which the electric industry has
As noted above, constructing new industry, the Commission is concerned
faced, and will face in the near term,’’
transmission facilities requires a that existing cost allocation methods
such as ‘‘increased reliance on market
significant amount of capital. Therefore, may not appropriately account for
forces to meet power supply needs; new
a threshold consideration for any benefits associated with new
market entrants such as exempt
company considering investing in transmission facilities and, thus, may
wholesale generators; a significant
transmission is whether it will have a result in rates that are not just and
number of utility mergers and reasonable opportunity to recover its
combinations; more highly integrated reasonable or are unduly discriminatory
costs. However, there are few rate or preferential.
operation of various power pools; and structures in place today that provide
substantial bulk power trading among both for analysis of the beneficiaries of C. Proposed Reforms
electric systems,’’ as well as the initial a transmission facility that is proposed 155. The Commission proposes to
filing of open access transmission to be located within a transmission amend its regulations to address the
tariffs.163 To account for those planning region that is outside of an concerns discussed above.
developments and the industry’s RTO or ISO, or in more than one 156. First, we propose to more closely
changing needs, the Commission issued transmission planning region, and for align transmission planning and cost
a policy statement that increased corresponding allocation and recovery allocation processes. A transmission
of the facility’s costs. The lack of such planning process includes a facility in a
161 Illinois Commerce Commission, 576 F.3d at
rate structures creates significant risk for transmission plan in order to achieve a
476–77 (‘‘We do not suggest that the Commission
has to calculate benefits to the last penny, or for
transmission developers that they will specific purpose or purposes, such as to
that matter to the last million or ten million or have no identified group of customers avoid an impending violation of a
perhaps hundred million dollars.’’). See also from which to recover the cost of their Reliability Standard, reduce congestion
Midwest ISO Transmission Owners, 373 F.3d 1361 investment. In addition, cost allocation and thereby increase access to lower-
at 1369 (‘‘we have never required a ratemaking
agency to allocate costs with exacting precision.’’);
within RTO or ISO regions, particularly cost resources, or enable compliance
Sithe, 285 F.3d 1 at 5. those that encompass several states, is with public policy requirements
162 Midwest ISO Transmission Owners, 373 F.3d often contentious and prone to litigation established by State or Federal laws or
1361 at 1371 (citing Sithe, 285 F.3d 1 at 5). regulations. Because such purposes
163 See Notice of Technical Conference and 164 Policy Statement in Inquiry Concerning the
involve the identification of expected
Request for Comments in Inquiry Concerning the Commission’s Pricing Policy for Transmission
Commission’s Pricing Policy for Transmission Services Provided by Public Utilities under the
beneficiaries—either explicitly or
Services Provided by Public Utilities under the Federal Power Act, FERC Stats. & Regs., Regulations implicitly—establishing a closer link
Federal Power Act, 58 FR 36400, at 36401 (1993). Preambles January 1991–June 1996 ¶ 31,005 (1994). between transmission planning and cost
allocation will address in part the 159. Accordingly, the Commission principles set out in the following
Commission’s concern that existing cost proposes to require that every public sections, one set of principles for
allocation methods may not utility transmission provider have in intraregional facilities and another for
appropriately account for benefits place a method, or set of methods, for interregional facilities. To reiterate, we
associated with new transmission allocating the costs of new transmission propose that the cost allocation method
facilities. facilities that are included in the or methods be applied to new
157. The Commission has previously transmission plan produced by the transmission facilities included in the
suggested that transmission planning at transmission planning process in which transmission plan produced by the
least on a regional basis is closely it participates. If the public utility transmission planning process in which
related to cost allocation. As noted transmission provider is an RTO or ISO, the public utility transmission provider
above, this premise underlies the then the method or methods would be participates.
Commission’s establishment in Order required to be set forth in the RTO or 163. Finally, we note that under our
No. 890 of a transmission planning ISO tariff. In other transmission proposals, public utility transmission
principle on cost allocation for new planning regions, each public utility providers will have the first opportunity
transmission facilities. In addition, the transmission provider located within to develop cost allocation methods for
the region would be required to set forth intraregional and interregional
Commission has explained that it may
in its tariff the method or methods for transmission facilities in consultation
be appropriate to have different cost
cost allocation used in its transmission with customers and other stakeholders.
allocation methods for facilities that are
planning region. In the event that no agreement can be
planned for different purposes or 160. An RTO or ISO or the public
pursuant to different transmission reached, the Commission would use the
utility transmission providers in a record in the relevant compliance filing
planning processes. For example, the transmission planning region may have
Commission distinguished between proceeding as a basis to develop a cost
a single cost allocation method for all allocation method or methods that
existing facilities in Midwest ISO and new transmission facilities or different
PJM for which it found that license plate meets the Commission’s proposed
methods for different types of facilities. requirements.
rates are appropriate, and new facilities For example, cost allocation methods
in those regions for which it approved may distinguish among facilities that are 1. Intraregional Cost Allocation
broader cost allocation methods.165 The driven by needs associated with
Commission found it significant that 164. An intraregional transmission
maintaining reliability, relieving facility is defined as a transmission
Midwest ISO and PJM plan the congestion, and achieving public policy
construction of new facilities based on facility located entirely within the
requirements established by State or geographic boundaries of one
each RTO’s independent transmission Federal laws or regulations, all of which
planning process, which helps to ensure transmission planning region. As
would be required to be considered in proposed here, each RTO or ISO on
that new projects are necessary to meet the regional transmission planning
the reliability and economic needs of behalf of its transmission owning
process as explained elsewhere in this members, or the individual public
each RTO’s system as a whole. The Proposed Rule. The Commission
Commission also noted that Midwest utility transmission providers in a non-
recognizes that several transmission RTO or ISO transmission planning
ISO and PJM plan certain new facilities planning regions that have different cost
pursuant to a joint RTO planning region, would be required to
allocation methods by type of project demonstrate through a compliance filing
process under a Joint Operating currently have transmission planning
Agreement. By contrast, the that it has a cost allocation method or
procedures and cost allocation methods methods that address cost recovery for
Commission stated that decisions to that refer only to the first two categories
build existing facilities within Midwest each new transmission facility included
of transmission projects. The Proposed in its regional transmission plan and
ISO and PJM were not made as part of Rule would permit a public utility
any regional planning process.166 that satisfy the following principles:
transmission provider or transmission (1) The cost of transmission facilities
158. The Commission recognizes that planning region to distinguish or not must be allocated to those within the
identifying which types of benefits are distinguish among these three types of transmission planning region that
relevant for cost allocation purposes, transmission facilities, as long as each of benefit from those facilities in a manner
which entities are receiving those the three is considered in the that is at least roughly commensurate
benefits, and the relative benefits that transmission planning process and there
with estimated benefits.167 In
accrue to various beneficiaries can be is a means for allocating the costs of
determining the beneficiaries of
difficult and controversial. The each type of facility to beneficiaries.
161. Second, we propose to require transmission facilities, a regional
Commission believes that a transparent transmission planning process may
transmission planning process is the that each public utility transmission
provider within a transmission planning consider benefits including, but not
appropriate forum to address these limited to the extent to which
issues. In addition, addressing these region develop a method for allocating
the costs of a new interregional transmission facilities, individually or
issues through the transmission in the aggregate, provide for maintaining
planning process would increase the transmission facility between the two
neighboring transmission planning reliability and sharing reserves,
likelihood that facilities included in production cost savings and congestion
transmission plans are actually regions in which the facility is located
or among the beneficiaries in the two relief, and/or meeting public policy
constructed, rather than being included
in a transmission plan only to later neighboring transmission planning 167 Illinois Commerce Commission, 576 F.3d at
encounter cost allocation disputes that regions. 476–77 (‘‘We do not suggest that the Commission
prevent their construction. 162. Third, to ensure that the cost has to calculate benefits to the last penny, or for
allocation method or methods are just that matter to the last million or ten million or
and reasonable and not unduly perhaps hundred million dollars.’’). See also
165 Amer. Elec. Power Serv. Corp. v. Midwest
Midwest ISO Transmission Owners, 373 F.3d 1361
Indep. Transmission Sys. Operator, Inc., 122 FERC discriminatory or preferential, we at 1369 (‘‘we have never required a ratemaking
¶ 61,083, at P 13–24 (2008). propose to assess each cost allocation agency to allocate costs with exacting precision.’’);
166 Id. P 96. method based upon the cost allocation Sithe, 285 F.3d 1 at 5.
requirements established by State or (6) A transmission planning region appropriate, provided that the method
Federal laws or regulations that may may choose to use a different cost reflects an evaluation of beneficiaries
drive transmission needs.168 allocation method for different types of and is adequately defined and
(2) Those that receive no benefit from transmission facilities in the regional supported by the transmission planning
transmission facilities, either at present plan, such as transmission facilities region.
or in a likely future scenario, must not needed for reliability, congestion relief, 168. In addition, the principles
be involuntarily allocated the costs of or to achieve public policy requirements proposed in this rulemaking do not
those facilities. established by State or Federal laws or foreclose the opportunity for a
(3) If a benefit to cost threshold is regulations. Each cost allocation method transmission developer or individual
used to determine which facilities have must be set out clearly and explained in customer to voluntarily assume the
sufficient net benefits to be included in detail in the compliance filing for this costs of a new transmission facility. In
a regional transmission plan for the rule. other words, the proposed principles
purpose of cost allocation, it must not 165. In proposing these principles, the would not prohibit voluntary
be so high that facilities with significant Commission does not intend to participant funding. However, if a
positive net benefits are excluded from prescribe a uniform approach to cost transmission developer believes that
cost allocation. A transmission planning allocation for new intraregional others in the transmission planning
region or public utility transmission transmission facilities. To the contrary, region may benefit from a new
provider may want to choose such a we recognize that regional differences transmission facility and want to seek
threshold to account for uncertainty in may warrant distinctions in cost broader cost allocation, then that
the calculation of benefits and costs. If allocation methods among transmission developer must be permitted to propose
adopted, such a threshold may not planning regions. Therefore, this its project in the regional transmission
include a ratio of benefits to costs that Proposed Rule would allow the public planning process that will evaluate the
exceeds 1.25 unless the transmission utility transmission providers in each project’s beneficiaries. If the facility is
planning region or public utility transmission planning region to develop included in the regional transmission
transmission provider justifies and the a transmission cost allocation method plan, the costs of that facility must be
Commission approves a greater ratio. that best suits the needs of that eligible for allocation pursuant to the
(4) The allocation method for the cost transmission planning region. Commission-approved method for
of an intraregional facility must allocate 166. However, the Commission allocating the cost of a new transmission
costs solely within that transmission proposes that, if the public utility facility in that plan.170 As stated above,
planning region unless another entity transmission providers in a a cost allocation method that relies
outside the region or another transmission planning region, in exclusively on a participant funding
transmission planning region consultation with customers and other approach, without respect to other
voluntarily agrees to assume a portion of stakeholders, cannot agree on a cost beneficiaries of a transmission facility,
those costs.169 However, the allocation method for new intraregional exacerbates the free rider problem that
transmission planning process in the transmission facilities that satisfies the Commission described in Order No.
original region must identify these principles, the Commission would 890. Such a cost allocation method
consequences for other transmission use the record in the relevant would not satisfy the proposed
planning regions, such as upgrades that compliance filing proceeding as a basis principles.
may be required in another region and, for applying these principles to develop 169. With regard to a new
if there is an agreement for the original a cost allocation method that meets the transmission facility that is located
region to bear costs associated with such Commission’s requirements. Consistent entirely within one transmission
upgrades, then the original region’s cost with the Commission’s intention not to owner’s service territory, a transmission
allocation method or methods must prescribe a uniform approach, this cost owner may not unilaterally invoke the
include provisions for allocating the allocation method would not regional cost allocation method to
costs of the upgrades among the entities necessarily be the same for every require the allocation of the costs of a
in the original region. transmission planning region where the new transmission facility to other
(5) The cost allocation method and public utility transmission providers are entities in its transmission planning
data requirements for determining unable to agree on a cost allocation region. However, if the regional
benefits and identifying beneficiaries for method that satisfies the principles. transmission planning process
a transmission facility must be 167. The Commission recognizes that determines that a new facility located
transparent with adequate several approaches to cost allocation solely within a transmission owner’s
documentation to allow a stakeholder to may satisfy the proposed principles. For service territory would provide benefits
determine how they were applied to a example, a postage stamp cost allocation to others in the region, allocating the
proposed transmission facility. method may be appropriate where all facility’s costs according to that region’s
customers within a specified intraregional cost allocation method
168 As discussed above, the Commission proposes transmission planning region are found would be permitted.
to require each public utility transmission provider to benefit from the use or availability of
to amend its OATT such that its local and regional a facility or class or group of facilities 2. Interregional Cost Allocation
transmission planning processes explicitly provide
for consideration of public policy requirements (e.g., all transmission facilities at 345 kV 170. An interregional transmission
established by state or Federal laws or regulations or higher), especially if the distribution facility is one that in located within two
that may drive transmission needs. of benefits associated with a class or or more transmission planning regions.
169 In addition, the Commission preliminarily
group of facilities is likely to vary In the past, most transmission upgrades
finds that this principle does not affect the cross-
border cost allocation methods developed by PJM
considerably over the long depreciation
and the Midwest ISO in response to Commission life of the facilities amid changing 170 However, certain transmission developers may
directives related to their intertwined configuration. power flows, fuel prices, population seek to participate in the regional transmission
Midwest Indep. Transmission Sys. Operator, Inc., patterns, and local economic planning process only for coordination purposes
113 FERC ¶ 61,194, at P 10 (2005); Midwest Indep. (e.g., to perform a reliability check for a participant-
Transmission Sys. Operator, Inc., 122 FERC ¶
developments. Similarly, other methods funded or merchant transmission project), in which
61,084 (2008); Midwest Indep. Transmission Sys. that propose cost allocation to a case the transmission plan would not include a cost
Operator, Inc., 129 FERC ¶ 61,102 (2009). narrower class of beneficiaries may be allocation for such projects.
were planned and constructed to meet 174. Each cost allocation method filed upgrades that may be required in a third
the needs of customers within a given in accordance with this proposal would transmission planning region and, if
transmission planning region. However, be required to comply with the there is an agreement among the
new transmission facilities located following principles: transmission providers in the regions in
within multiple transmission planning (1) The costs of a new interregional which the facility is located to bear
regions are now being considered by facility must be allocated to each costs associated with such upgrades,
transmission providers in various parts transmission planning region in which then the interregional cost allocation
of the nation. For example, as discussed that facility is located in a manner that method must include provisions for
above, development of renewable is at least roughly commensurate with allocating the costs of the upgrades
energy resources is increasing rapidly, the estimated benefits of that facility in within the transmission planning
in part in response to State renewable each of the transmission planning regions in which the facility is located.
portfolio standard requirements. regions. In determining the beneficiaries (5) The cost allocation method and
However, many of these resources are of interregional transmission facilities, data requirements for determining
located far from load centers. New transmission planning regions may benefits and identifying beneficiaries for
transmission facilities located within consider benefits including, but not an interregional facility must be
multiple transmission planning regions limited to, those associated with transparent with adequate
may be necessary to deliver the output maintaining reliability and sharing documentation to allow a stakeholder to
of these renewable energy resources. reserves, production cost savings and determine how they were applied to a
171. There are few rate structures in congestion relief, and meeting public proposed transmission facility.
place today that provide for the policy requirements established by State (6) The public utility transmission
allocation and recovery of costs of or Federal laws or regulations that may providers located in neighboring
interregional transmission facilities. We drive transmission needs.171 transmission planning regions may
are concerned that the absence of clear (2) A transmission planning region choose to use a different cost allocation
cost allocation rules for interregional that receives no benefit from an method for different types of
transmission facilities could impede the interregional transmission facility that is interregional facilities, such as
development of such facilities, because located in that region, either at present transmission facilities needed for
of uncertainty regarding recovery of or in a likely future scenario, must not reliability, congestion relief, or to
associated costs. In addition, the be involuntarily allocated any of the achieve public policy requirements
combined size of the multiple costs of that facility.172 established by State or Federal laws or
transmission planning regions in which (3) If a benefit-cost threshold ratio is regulations. Each cost allocation method
an interregional facility would be used to determine whether an must be set out and explained in detail
located may increase the potential for interregional transmission facility has in the compliance filing for this rule.
both free ridership and the allocation of sufficient net benefits to qualify for 175. As with intraregional cost
costs to those that receive no benefit interregional cost allocation, this ratio allocation, we are not proposing to
from a facility. must not be so large as to exclude a require a uniform method of cost
172. Therefore, we propose to require facility with significant positive net allocation for interregional transmission
that the public utility transmission benefits from cost allocation. The public facilities. There may be legitimate
providers located in each pair of utility transmission providers located in reasons for the public utility
neighboring transmission planning the neighboring transmission planning transmission providers located in
regions develop a mutually agreeable regions may choose to use such a neighboring transmission planning
method for allocating between the two threshold to account for uncertainty in regions to adopt different cost allocation
transmission planning regions the costs the calculation of benefits and costs. If methods. The Commission recognizes
of a new transmission facility that is adopted, such a threshold, may not that several approaches to cost
located within both regions and that is include a ratio of benefits to costs that allocation may satisfy the proposed
eligible for interregional cost recovery exceeds 1.25 unless the pair of regions principles.173
pursuant to the region’s interregional justifies and the Commission approves a 176. Therefore, we propose to allow
transmission planning agreement higher ratio. methods for allocating the costs of new
developed in accordance with the (4) Costs allocated for an interregional interregional facilities to differ among
requirement proposed above. In an RTO facility must be assigned only to pairs of transmission planning regions,
or ISO region, we propose that the transmission planning regions in which as long as each method satisfies the
method must be filed to become a part the facility is located. Costs cannot be proposed interregional cost allocation
of the relevant tariffs. In other assigned involuntarily under this rule to principles listed above. Moreover, the
transmission planning regions, we a transmission planning region in which method used for allocating interregional
propose that the cost allocation method that facility is not located. However, the transmission facility costs between any
be filed as part of the OATT of each interregional planning process must two transmission planning regions may
public utility transmission provider in identify consequences for other be different from the method used by
the region. transmission planning regions, such as the public utility transmission providers
173. A group of three or more located in either of those transmission
transmission planning regions within an 171 As discussed above, the Commission proposes
planning regions to allocate the costs of
interconnection—or all of the to require each public utility transmission provider
new intraregional facilities. In addition,
transmission planning regions within an to amend its OATT such that its local and regional
the cost allocation method used by the
interconnection—may agree on and file transmission planning processes explicitly provide
for consideration of public policy requirements
a common method for allocating the established by state or Federal laws or regulations 173 For the reasons discussed above with respect
costs of a new interregional that may drive transmission needs. to cost allocation for intraregional transmission
transmission facility. However, the 172 For example, a DC line that runs from a first facilities, a cost allocation method that relies
Commission does not propose to require transmission planning region, through a second exclusively on a participant funding approach,
transmission planning region, and into a third without respect to other beneficiaries of a
such agreements among more than two transmission planning region, with no tap in the transmission facility, would not satisfy the
neighboring transmission planning second region, may not provide any benefits to the proposed principles for interregional cost
regions. second region. allocation.
public utility transmission providers intraregional or interregional 180. The Commission would assess
located in a transmission planning transmission facilities, the Commission whether each compliance filing satisfies
region to allocate the costs of new asks commenters to submit and explain the proposed requirements and
intraregional facilities could be different the need for those principles. principles stated above and issue
from the cost allocation method by additional orders as necessary to ensure
VI. Compliance Filings
which the public utility transmission that each public utility transmission
providers in the same transmission 179. The Commission proposes that provider meets the requirements of this
planning region further allocate costs to each public utility transmission Proposed Rule.
be borne by that transmission planning provider must comply with the
requirements of this Proposed Rule. 181. The Commission proposes that
region pursuant to an agreed-upon
method for allocating the costs of With the exception of the proposed transmission providers that are not
interregional facilities. requirements with respect to public utilities would have to adopt the
177. Similar to our proposal for interregional transmission planning requirements of this Proposed Rule as a
intraregional transmission facilities, we agreements and an interregional cost condition of maintaining the status of
propose that if the public utility allocation method or methods, the their safe harbor tariff or otherwise
transmission providers in coordination Commission proposes to require each satisfying the reciprocity requirement of
with their customers and other public utility transmission provider to Order No. 888.175
stakeholders in a pair of neighboring submit a compliance filing within six VII. Information Collection Statement
transmission planning regions cannot months of the effective date of the final
agree on a cost allocation method for rule in this proceeding revising its 182. The following collection of
new interregional transmission facilities OATT or other document(s) subject to information contained in this Proposed
that satisfies these principles, then the the Commission’s jurisdiction as Rule is subject to review by the Office
Commission would use the record in the necessary to demonstrate that it meets of Management and Budget (OMB)
relevant compliance filing proceedings the proposed requirements set forth in under section 3507(d) of the Paperwork
as a basis for applying the principles to this Proposed Rule.174 The Commission Reduction Act of 1995.176 OMB’s
develop an interregional cost allocation proposes to require each public utility regulations require approval of certain
method that meets the Commission’s transmission provider to submit a information collection requirements
requirements. Such a cost allocation compliance filing within one year of the imposed by agency rules.177 The
method would not necessarily be the effective date of the final rule in this Commission solicits comments on the
same for every pair of neighboring proceeding to demonstrate that it meets Commission’s need for this information,
transmission planning regions that is the proposed requirements set forth in whether the information will have
unable to agree on a cost allocation the Proposed Rule with respect to practical utility, the accuracy of the
method that satisfies the principles. interregional transmission planning
burden estimates, ways to enhance the
178. We seek comment on any issue agreements. The Commission proposes
quality, utility and clarity of the
of interest or concern related to the to require each public utility
information to be collected or retained,
requirements proposed in this section of transmission provider to submit a
the Proposed Rule. In particular, we compliance filing within one year of the and any suggested methods for
seek comment on the appropriateness effective date of the final rule in this minimizing respondents’ burden,
and application of the proposed cost proceeding revising its OATT as including the use of automated
allocation principles with respect to necessary to demonstrate that it meets information techniques.
new intraregional and interregional the proposed requirements set forth in Burden Estimate: The estimated
transmission facilities. If commenters this Proposed Rule with respect to an public reporting burdens for the
believe that additional principles interregional cost allocation method or proposed reporting requirements are as
should apply to cost allocation for either methods. follows:
Annual Total annual

Annual Total annual
FERC–917—Proposed reporting requirements in number of hours in
number of Hours per response hours in
RM10–23 respondents subsequent
responses year 1
(Filers) years
Participation in a transparent and open 134 134 100 hrs. in Year 1; 50 13,400 6,700
intraregional transmission planning process hrs. in subsequent
that meets transmission planning principles, in- years.
cludes consideration of public policy require-
ments, identifies and evaluates facilities to
meet needs, develops cost allocation method,
and produces an intraregional transmission
plan that describes and incorporates a cost al-
location method that meets the Commission’s
principles.
174 See Appendix B for the proposed pro forma
Attachment K consistent with this NOPR.

175 Order No. 888, FERC Stats. & Regs. ¶ 31,036
at 31,760–63.
176 44 U.S.C. 3507(d).
177 5 CFR 1320.11.
Annual Total annual

Annual Total annual
FERC–917—Proposed reporting requirements in number of hours in
number of Hours per response hours in
RM10–23 respondents subsequent
responses year 1
(Filers) years
Coordination, development, and filing with the 134 134 125 hrs. in Year 1; 50 16,750 6,700
Commission of interregional planning agree- hrs. in subsequent
ments that meet the Commission’s require- years.
ments, that include consideration of public pol-
icy requirements, and that incorporate cost al-
location methods that meets the Commission’s
principles; provide or post ongoing commu-
nications, and provide annual data exchange.
Conforming tariff changes for local transmission 134 134 50 hrs. in Year 1; 25 6,700 3,350
planning, including those related to consider- hours in subsequent
ation of public policy requirements; and con- years.
forming tariff changes for intraregional and
interregional planning.
Total Estimated Additional Burden Hours, ........................ ........................ ....................................... 36,850 16,750
Proposed for FERC–917 in NOPR in
RM10–23.
Cost To Comply: The Commission has reforming electric transmission VIII. Environmental Analysis
projected costs of compliance for the planning requirements and establishing 186. The Commission is required to
reporting requirements as follows: a closer link between cost allocation and prepare an Environmental Assessment
Year 1: $4,200,900 [36,850 hours × $114 regional transmission planning or an Environmental Impact Statement
per hour 178] processes. for any action that may have a
Subsequent Years: $1,909,500 [or 16,750 184. Internal Review: The significant adverse effect on the human
hours × $114 per hour] Commission has reviewed the proposed environment.179 The Commission
OMB’s regulations require it to approve changes and has determined that the concludes that neither an
certain information collection changes are necessary. These Environmental Assessment nor an
requirements imposed by an agency requirements conform to the Environmental Impact Statement is
rule. The Commission is submitting Commission’s need for efficient required for this Proposed Rule under
notification of this Proposed Rule to information collection, communication, section 380.4(a)(15) of the Commission’s
OMB. The Commission proposes to and management within the energy regulations, which provides a
make the reporting requirements industry. The Commission has assured categorical exemption for approval of
mandatory. itself, by means of internal review, that actions under sections 205 and 206 of
Title: FERC–917. there is specific, objective support the FPA relating to the filing of
Action: Proposed Collection. schedules containing all rates and
associated with the information
OMB Control No. 1902–0233. charges for the transmission or sale of
Respondents: Electric Utility requirements.
electric energy subject to the
Transmission Providers. RTOs and ISOs 185. Interested persons may obtain Commission’s jurisdiction, plus the
also may file some materials on behalf information on the reporting classification, practices, contracts and
of their members. requirements by contacting the regulations that affect rates, charges,
Frequency of responses: Initial filing following: Federal Energy Regulatory classifications, and services.180
and subsequent filings. Commission, 888 First Street, NE.,
Necessity of the Information: Washington, DC 20426 [Attention: Ellen IX. Regulatory Flexibility Act Analysis
183. Building on the reforms in Order Brown, Office of the Executive Director, 187. The Regulatory Flexibility Act of
No. 890, the Federal Energy Regulatory e-mail: DataClearance@ferc.gov, Phone: 1980 (RFA) 181 generally requires a
Commission is proposing amendments (202) 502–8663, fax: (202) 273–0873. description and analysis of final rules
to the pro forma OATT to correct certain For submitting comments concerning that will have significant economic
deficiencies in transmission planning the collection of information and the impact on a substantial number of small
and cost allocation requirements for associated burden estimate(s), please entities. This Proposed Rule applies to
public utility transmission providers. send your comments to the contact public utilities that own, control or
The purpose of this proposed listed above and to the Office of operate interstate transmission facilities
rulemaking is to strengthen the pro Information and Regulatory Affairs, other than those that have received
forma OATT, so that the transmission Office of Management and Budget, 725 waiver of the obligation to comply with
grid can better support wholesale power 17th Street, NW., Washington, DC 20503 Order Nos. 888, 889 and 890. The total
markets and ensure that Commission- [Attention: Desk Officer for the Federal estimated number of public utility
jurisdictional services are provided at Energy Regulatory Commission, phone: transmission providers that, absent
rates, terms and conditions that are just (202) 395–4638, fax: (202) 395–7285]. waiver, would have to modify their
and reasonable and not unduly Due to security concerns, comments current OATTs by filing the revised pro
discriminatory or preferential. We should be sent electronically to the
propose to achieve this goal by following e-mail address: 179 Regulations Implementing the National
Environmental Policy Act, Order No. 486, 52 FR

178 The estimated cost of $114 an hour is the
oira_submission@omb.eop.gov. Please 47897 (Dec. 17, 1987), FERC Stats. & Regs.,
average of the hourly costs of: attorney ($200),
reference OMB Control No. 1902–0233 Regulations Preambles 1986–1990 ¶ 30,783 (1987).
consultant ($150), technical ($80), and and the docket number of this proposed 180 18 CFR 380.4(a)(15).
administrative support ($25). rulemaking in your submission. 181 5 U.S.C. 601–612.
forma OATT is 134. Of these public XI. Document Availability § 35.28 Non-discriminatory open access
utility transmission providers, an transmission tariff.
192. In addition to publishing the full
estimated 10 filers, or 7.3% percent, * * * * *
text of this document in the Federal (c) Non-discriminatory open access
have output of four million MWh or less
Register, the Commission provides all transmission tariffs.
per year.182 The Commission does not
interested persons an opportunity to (1) Every public utility that owns,
consider this a substantial number and,
view and/or print the contents of this controls, or operates facilities used for
in any event, each of these entities
document via the Internet through the transmission of electric energy in
retains its rights to waiver of these
FERC’s Home Page (http://www.ferc.gov) interstate commerce must have on file
requirements. The criteria for waiver
and in FERC’s Public Reference Room with the Commission a tariff of general
that would be applied under this
during normal business hours (8:30 a.m. applicability for transmission services,
rulemaking for small entities is
to 5 p.m. Eastern time) at 888 First including ancillary services, over such
unchanged from that used to evaluate
Street, NE., Room 2A, Washington, DC facilities. Such tariff must be the open
requests for waiver under Order Nos.
20426. access pro forma tariff contained in
888, 889 and 890. Accordingly, the
Commission certifies that the proposed 193. From FERC’s Home Page on the Order No. 888, FERC Stats. & Regs.
rule will not have a significant Internet, this information is available on ¶ 31,036 (Final Rule on Open Access
economic impact on a substantial eLibrary. The full text of this document and Stranded Costs), as revised by the
number of small entities. is available on eLibrary in PDF and open access pro forma tariff contained
Microsoft Word format for viewing, in Order No. 890, FERC Stats. & Regs.
X. Comment Procedures printing, and/or downloading. To access ¶ 31,241 (Final Rule on Open Access
188. The Commission invites this document in eLibrary, type the Reforms) and further revised in Order
interested persons to submit comments docket number excluding the last three No. ___, FERC Stats. & Regs. ¶ ___ (Final
on the matters and issues proposed in digits of this document in the docket Rule on Transmission Planning and
this notice to be adopted, including any number field. Cost Allocation by Transmission
related matters or alternative proposals 194. User assistance is available for Owning and Operating Public Utilities),
that commenters may wish to discuss. eLibrary and the FERC’s web site during or such other open access tariff as may
Comments are due 60 days from normal business hours from FERC be approved by the Commission
publication in the Federal Register. Online Support at 202–502–6652 (toll consistent with Order No. 888, FERC
Comments must refer to Docket No. free at 1–866–208–3676) or e-mail at Stats. & Regs ¶ 31,306, Order No. 890,
RM10–23–000, and must include the ferconlinesupport@ferc.gov, or the FERC Stats. & Regs. ¶ 32,241, and Order
commenter’s name, the organization Public Reference Room at (202) 502– No. ___, FERC Stats. & Regs. ¶ ___.
they represent, if applicable, and their 8371, TTY (202) 502–8659. E-mail the (i) Subject to the exceptions in
address in their comments. Public Reference Room at paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(iv)
189. The Commission encourages public.referenceroom@ferc.gov. and (c)(1)(v) of this section, the pro
forma tariff contained in Order No. 888,
comments to be filed electronically via List of Subjects in 18 CFR Part 35 FERC Stats. & Regs. ¶ 31,036, as revised
the eFiling link on the Commission’s
Electric power rates, Electric utilities, by the open access pro forma tariff
Web site at http://www.ferc.gov. The
Reporting and recordkeeping contained in Order No. 890, FERC Stats.
Commission accepts most standard
requirements. & Regs. ¶ 31,241 and further revised in
word processing formats. Documents
Order No. ___, FERC Stats. & Regs. ¶ ___,
created electronically using word By direction of the Commission. and accompanying rates, must be filed
processing software should be filed in Commissioner Moeller is concurring with a no later than 60 days prior to the date
native applications or print-to-PDF separate statement attached.
on which a public utility would engage
format and not in a scanned format. Nathaniel J. Davis, Sr., in a sale of electric energy at wholesale
Commenters filing electronically do not Deputy Secretary. in interstate commerce or in the
need to make a paper filing. In consideration of the foregoing, the transmission of electric energy in
190. Commenters that are not able to Commission proposes to amend part 35, interstate commerce.
file comments electronically must send Chapter I, Title 18, Code of Federal (ii) If a public utility owns, controls,
an original and 14 copies of their Regulations, as follows: or operates facilities used for the
comments to: Federal Energy Regulatory transmission of electric energy in
Commission, Office of the Secretary, PART 35—FILING OF RATE interstate commerce as of [60 days after
888 First Street, NE., Washington, DC SCHEDULES AND TARIFFS date of publication of the Final Rule in
20426. the Federal Register], it must file the
191. All comments will be placed in 1. The authority citation for part 35
revisions to the pro forma tariff
the Commission’s public files and may continues to read as follows:
contained in Order No. 890, FERC Stats.
be viewed, printed, or downloaded Authority: 16 U.S.C. 791a–825r, 2601– & Regs. ¶ 31,241, as amended by Order
remotely as described in the Document 2645; 31 U.S.C. 9701; 42 U.S.C. 71–7352. No.___, FERC Stats. & Regs. ¶ ___,
Availability section below. Commenters pursuant to section 206 of the FPA and
on this proposal are not required to 2. Amend § 35.28 as follows:
a. Paragraph (c)(1) introductory text accompanying rates pursuant to section
serve copies of their comments on other 205 of the FPA in accordance with the
and (c)(1)(i) through (c)(1)(iii) are
commenters. procedures set forth in Order No. 890,

revised.
FERC Stats. & Regs. ¶ 31,241 and Order
182 A firm is ‘‘small’’ if, including its affiliates, it b. Paragraph (c)(1)(vi) is revised.
is primarily engaged in the generation, No. ___, FERC Stats. & Regs ¶ ___.
c. Paragraphs (c)(3) introductory text, (iii) If a public utility owns, controls,
transmission, and/or distribution of electric energy
for sale and its total electric output for the (c)(3)(i), and (c)(3)(ii) are revised. or operates transmission facilities used
preceding fiscal year did not exceed 4 million d. Paragraph (c)(4) is revised. for the transmission of electric energy in
megawatt hours. Based on the filers of the annual e. Paragraph (d) (1) is revised.
FERC Form 1 and Form 1–F, as well as the number
interstate commerce as of [60 days after
of companies that have obtained waivers, we f. Paragraph (e)(1) introductory text, is date of publication of the Final Rule in
estimate that 7.3% of the filers are ‘‘small.’’ revised. the Federal Register], such facilities are
jointly owned with a non-public utility, (i) For any power pool, public utility ¶ 31,036, Order No. 890, FERC Stats. &
and the joint ownership contract holding company or other multi-lateral Regs. ¶ 31,241, and Order No. ___, FERC
prohibits transmission service over the arrangement or agreement that contains Stats. & Regs. ¶ ___.
facilities to third parties, the public transmission rates, terms or conditions (i) Subject to paragraph (c)(4)(ii) of
utility with respect to access over the and that is executed after [60 days after this section, a Commission-approved
public utility’s share of the jointly date of publication of the Final Rule in ISO or RTO must file the revisions to
owned facilities must file the revisions the Federal Register], this requirement the pro forma tariff contained in Order
to the pro forma tariff contained in is effective on the date that transactions No. 890, FERC Stats. & Regs. ¶ 31,241
Order No. 890, FERC Stats. & Regs. begin under the arrangement or as amended by Order No. ___, FERC
¶ 31,241 as amended by Order No. ___, agreement. Stats. & Regs. ¶ ___, pursuant to section
FERC Stats. & Regs. ¶ ___, pursuant to (ii) For any power pool, public utility 206 of the FPA and accompanying rates
section 206 of the FPA and holding company or other multi-lateral pursuant to section 205 of the FPA in
accompanying rates pursuant to section arrangement or agreement that contains accordance with the procedures set
205 of the FPA. transmission rates, terms or conditions forth in Order No. 890, FERC Stats. &
and that is executed on or before [60 Regs. ¶ 31,241 and Order No. ___, FERC
* * * * * days after date of publication of the Stats. & Regs. ¶ ___.
(vi) Any public utility that seeks a Final Rule in the Federal Register], a
deviation from the pro forma tariff public utility member of such power (ii) If a Commission-approved ISO or
contained in Order No. 888, FERC Stats. pool, public utility holding company or RTO can demonstrate that its existing
& Regs. ¶ 31,036, as revised in Order No. other multi-lateral arrangement or open access tariff is consistent with or
890, FERC Stats. & Regs. ¶ 31,241 and agreement that owns, controls, or superior to the revisions to the pro
Order No. ___, FERC Stats. & Regs. ¶ ___, operates facilities used for the forma tariff contained in Order No. 888,
must demonstrate that the deviation is transmission of electric energy in FERC Stats. & Regs. ¶ 31,036, as revised
interstate commerce must file the by the pro forma tariff in Order No. 890,
consistent with the principles of Order
revisions to its joint pool-wide or FERC Stats. & Regs. ¶ 31,241 and further
No. 888, FERC Stats. & Regs. ¶ 31,036,
system-wide open access transmission revised in Order No. ___, FERC Stats. &
Order No. 890, FERC Stats. & Regs.
Regs. ¶ ___, or any portions thereof, the
¶ 31,241, and Order No. ___, FERC Stats. tariff consistent with Order No. 890,
Commission-approved ISO or RTO may
& Regs. ¶ ___. FERC Stats. & Regs. ¶ 31,241 as
amended by Order No.___, FERC Stats. instead set forth such demonstration in
* * * * * its filing pursuant to section 206 in
& Regs. ¶ ___, pursuant to section 206
(3) Every public utility that owns, of the FPA and accompanying rates accordance with the procedures set
controls, or operates facilities used for pursuant to section 205 of the FPA in forth in Order No., FERC Stats. & Regs.
the transmission of electric energy in accordance with the procedures set ¶ ___.
interstate commerce, and that is a forth in Order No. 890, FERC Stats. & (d) Waivers. * * *
member of a power pool, public utility Regs. ¶ 31,241 and Order No. ___, FERC (1) No later than [60 days after date of
holding company, or other multi-lateral Stats. & Regs ¶ ___. publication of the Final Rule in the
trading arrangement or agreement that * * * * * Federal Register], or
contains transmission rates, terms or (4) Consistent with paragraph (c)(1) of * * * * *
conditions, must have on file a joint this section, every Commission- (e) Non-public utility procedures for
pool-wide or system-wide open access approved ISO or RTO must have on file tariff reciprocity compliance.
transmission tariff, which tariff must be with the Commission a tariff of general
the pro forma tariff contained in Order applicability for transmission services, (1) A non-public utility may submit a
No. 888, FERC Stats. & Regs. ¶ 31,036, including ancillary services, over such transmission tariff and a request for
as revised by the pro forma tariff facilities. Such tariff must be the pro declaratory order that its voluntary
contained in Order No. 890, FERC Stats. forma tariff contained in Order No. 888, transmission tariff meets the
& Regs. ¶ 31,241 and further revised in FERC Stats. & Regs. ¶ 31,036, as revised requirements of Order No. 888, FERC
Order No. ___, FERC Stats. & Regs. ¶ ___, by the pro forma tariff contained in Stats. & Regs. ¶ 31,036, Order No. 890,
or such other open access tariff as may Order No. 890, FERC Stats. & Regs. ¶ FERC Stats. & Regs. ¶ 31,241, and Order
be approved by the Commission 31,241 and further revised in Order No. No. ___, FERC Stats. & Regs. ¶ ___.
consistent with Order No. 888, FERC ___, FERC Stats. & Regs. ¶ ___, or such * * * * *
Stats. & Regs. ¶ 31,036, Order No. 890, other open access tariff as may be Note: The following appendices will not be
FERC Stats. & Regs. ¶ 31,241, and Order approved by the Commission consistent published in the Code of Federal
No. ___, FERC Stats. & Regs. ¶ ___. with Order No. 888, FERC Stats. & Reg. Regulations.
APPENDIX A—LIST OF SHORT NAMES OF COMMENTERS ON THE FEDERAL ENERGY REGULATORY COMMISSION’S NOTICE
OF REQUEST FOR COMMENTS ON TRANSMISSION PLANNING PROCESSES UNDER ORDER NO. 890—DOCKET NO.
AD09–8–000, OCTOBER 2009
Short name or acronym Commenter
3M ............................................................................................................. 3M Company, High Capacity Conductors.

AEP ........................................................................................................... American Electric Power Service Corporation.
Alabama PSC ........................................................................................... Alabama Public Service Commission.
Allegheny Companies ............................................................................... Allegheny Power and Trans-Allegheny Interstate Line Company.
Ameren ..................................................................................................... Ameren Services Company.
American Antitrust Institute ...................................................................... American Antitrust Institute.
American Forest and Paper ..................................................................... American Forest & Paper Association.
American Transmission ............................................................................ American Transmission Company LLC.
APPA ........................................................................................................ American Public Power Association.
AREVA T&D ............................................................................................. AREVA T&D Inc.
AD09–8–000, OCTOBER 2009—Continued
AWEA ....................................................................................................... American Wind Energy Association.

Baltimore Gas and Electric ....................................................................... Baltimore Gas and Electric Company.
Barbara Luchsinger .................................................................................. Barbara Luchsinger.
Bay Area Municipal Transmission Group ................................................. City of Santa Clara, California; the City of Palo Alto, California; and the
City of Alameda, California.
Bonneville ................................................................................................. Bonneville Power Administration.
BP Energy ................................................................................................ BP Energy Company.
The Brattle Group ..................................................................................... Peter Fox-Penner, Johannes Pfeifenberger, and Delphine Hou.
California ISO ........................................................................................... California Independent System Operator Corporation.
Californians for Renewable Energy .......................................................... Californians for Renewable Energy, Inc.
California PUC .......................................................................................... California Public Utilities Commission.
California State Water Project .................................................................. California Department of Water Resources State Water Project.
Calvin Daniels ........................................................................................... Calvin Daniels.
Chinook and Zephyr ................................................................................. Chinook Power Transmission, LLC and Zephyr Power Transmission,
LLC.
Clean Line ................................................................................................ Clean Line Energy Partners, LLC.
Coalition To Advance Renewable Energy Through Bulk Energy Storage Coalition To Advance Renewable Energy Through Bulk Energy Stor-
age.
ColumbiaGrid ............................................................................................ ColumbiaGrid.
Consolidated Edison, et al. ...................................................................... Consolidated Edison Company of New York, Inc. and Orange and
Rockland Utilities, Inc.
Dayton Power and Light ........................................................................... Dayton Power and Light Company.
Delaware Municipal and Southwestern Electric ....................................... Delaware Municipal Electric Corporation, Inc. and Southwestern Elec-
tric Cooperative, Inc.
Dominion ................................................................................................... Dominion Resources Services, Inc.
Duke ......................................................................................................... Duke Energy Corporation.
Eastern Interconnection Planning Collaborative Analysis Team ............. Eastern Interconnection Planning Collaborative Analysis Team.
Eastern PJM Governors ........................................................................... Governors of New Jersey, Delaware, Maryland, and Virginia.
EEI ............................................................................................................ Edison Electric Institute.
Electricity Consumers Resource Council ................................................. Electricity Consumers Resource Council.
ENE (Environment Northeast) .................................................................. ENE Environment Northeast.
Energy Future Coalition ............................................................................ Energy Future Coalition.
Entergy ..................................................................................................... Entergy Services, Inc.
E.ON ......................................................................................................... E.ON U.S. LLC.
E.ON Climate & Renewables North America ........................................... E.ON Climate & Renewables North America.
EPSA ........................................................................................................ Electric Power Supply Association.
Exelon ....................................................................................................... Exelon Corporation.
Federal Trade Commission ...................................................................... Federal Trade Commission.
FirstEnergy ............................................................................................... FirstEnergy Affiliates.
Florida Transmission Providers ................................................................ Florida Power & Light, Progress Energy Florida, Tampa Electric Com-
pany, and JEA.
Georgia Transmission Corporation .......................................................... Georgia Transmission Corporation.
Great River Energy ................................................................................... Great River Energy.
Green Energy Express ............................................................................. Green Energy Express, LLC.
Illinois Commission ................................................................................... Illinois Commerce Commission.
Imperial Irrigation District .......................................................................... Imperial Irrigation District (CA).
Independent Power Producers Coalition-West ........................................ Independent Power Producers Coalition-West.
Indicated Partners .................................................................................... Green Energy Express LLC; Transmission Technology Solutions LLC;
SouthWestern Power Group II, LLC; Nevada Hydro Company; LS
Power Transmission, LLC; and Pattern Transmission LP.
Integrys, et al. ........................................................................................... Wisconsin Public Service Corporation, Upper Peninsula Power Com-
pany, and Integrys Energy Services, Inc.
ISO New England ..................................................................................... ISO New England Inc.
ITC Holdings ............................................................................................. ITC Holdings Corp.
Kelson Companies ................................................................................... Cottonwood Energy Company LP; Dogwood Energy LLC; and Mag-
nolia Energy LP.
Large Public Power Council ..................................................................... Austin Energy; Chelan County Public Utility District No. 1; Clark Public
Utilities; Colorado Springs Utilities; CPS Energy (San Antonio); IID
Energy; JEA (Jacksonville, FL); Long Island Power Authority; Lower
Colorado River Authority; MEAG Power; Nebraska Public Power Dis-

trict; New York Power Authority; Omaha Public Power District; Or-
lando Utilities Commission; Platte River Power Authority; Puerto Rico
Electric Power Authority; Sacramento Municipal Utility District; Salt
River Project; Santee Cooper; Seattle City Light; Snohomish County
Public Utility District No. 1; and Tacoma Public Utilities.
Long Island Power Authority, et al. .......................................................... Long Island Power Authority, Consolidated Edison Company of New
York, Inc., and Orange and Rockland Utilities, Inc.
Lorraine Fleming ....................................................................................... Lorraine Fleming.
LS Power .................................................................................................. LS Power Transmission, LLC.
Maine PUC and Public Advocate ............................................................. Maine Public Utilities Commission and the Maine Office of the Public
Advocate.
Massachusetts Attorney General ............................................................. Massachusetts Attorney General.
Massachusetts Departments .................................................................... Massachusetts Department of Public Utilities and Massachusetts De-
partment of Energy Resources.
MEAG Power ............................................................................................ MEAG Power.
MidAmerican ............................................................................................. MidAmerican Energy Holdings Company.
Midwest ISO ............................................................................................. Midwest Independent Transmission System Operator, Inc.
Midwest ISO Transmission Owners ......................................................... Ameren Services Company (as agent for Union Electric Company,
Central Illinois Public Service Company, Central Illinois Light Co.,
and Illinois Power Company); City of Columbia Water and Light De-
partment (Columbia, MO); City Water, Light & Power (Springfield,
IL); Great River Energy; Hoosier Energy Rural Electric Cooperative,
Inc.; Indiana Municipal Power Agency; Indianapolis Power & Light
Company; (Minnesota Power (and its subsidiary Superior Water,
L&P); Montana-Dakota Utilities Co.; Northern Indiana Public Service
Company; Northern States Power Company (Minnesota and Wis-
consin corporations); Northwestern Wisconsin Electric Company;
Otter Tail Power Company; Southern Illinois Power Cooperative;
Southern Indiana Gas & Electric Company; Southern Minnesota Mu-
nicipal Power Agency; Wabash Valley Power Association, Inc.; and
Wolverine Power Supply Cooperative, Inc.
Modesto Irrigation District ......................................................................... Modesto Irrigation District.
NARUC ..................................................................................................... National Association of Regulatory Utility Commissioners.
National Audubon Society, et al. .............................................................. National Audubon Society; Conservation Law Foundation; Energy Fu-
ture Coalition; ENE (Environment Northeast); Environmental Defense
Fund; Natural Resources Defense Council; Piedmont Environmental
Council; Sierra Club; Sustainable FERC Project; and Union of Con-
cerned Scientists.
National Grid ............................................................................................. National Grid USA.
National Nuclear Security Administration Service Center ........................ National Nuclear Security Administration Service Center in Albu-
querque, New Mexico.
National Rural Electric Coops .................................................................. National Rural Electric Cooperative Association.
NationalWind ............................................................................................ NationalWind.
NEPOOL Participants ............................................................................... New England Power Pool Participants Committee.
Nevada Hydro ........................................................................................... Nevada Hydro Company, Inc.
New England Clean Energy Council ........................................................ New England Clean Energy Council.
New England States’ Committee on Electricity ........................................ New England States’ Committee on Electricity.
New Jersey Board .................................................................................... New Jersey Board of Public Utilities.
New York ISO ........................................................................................... New York Independent System Operator, Inc.
New York PSC ......................................................................................... New York State Public Service Commission.
NextEra ..................................................................................................... NextEra Energy Resources, LLC.
Northeast Utilities ..................................................................................... Northeast Utilities Service Company.
Northern Tier Transmission Group ........................................................... Northern Tier Transmission Group.
Northwest State Commissions and Consumer Counsel .......................... Idaho Public Utilities Commission, Montana Consumer Counsel, Mon-
tana Public Service Commission, Public Utility Commission of Or-
egon, Utah Public Service Commission, and Wyoming Public Service
Commission.
NRG .......................................................................................................... NRG Energy, Inc.
Ohio Commission ..................................................................................... Public Utilities Commission of Ohio.
Old Dominion ............................................................................................ Old Dominion Electric Cooperative.
Organization of MISO States ................................................................... Organization of MISO States.
Pacific Gas and Electric ........................................................................... Pacific Gas and Electric Company.
Pattern Transmission ................................................................................ Pattern Transmission LP.
Peter C. Luchsinger M.D. ......................................................................... Peter C. Luchsinger M.D.
PHI Companies ........................................................................................ Pepco Holdings, Inc.; Potomac Electric and Power Company; Del-
marva Power & Light Company; and Atlantic City Electric Company.
Pioneer Transmission ............................................................................... Pioneer Transmission, LLC.
PJM ........................................................................................................... PJM Interconnection, LLC.
PPL ........................................................................................................... PPL Electric Utilities Corporation.
Progress Energy ....................................................................................... Progress Energy, Inc.
PSEG Companies .................................................................................... Public Service Electric and Gas Company; PSEG Power LLC; PSEG
Energy Resources & Trade LLC.
Public Interest Organizations & Renewable Energy Groups ................... Alliance for Clean Energy New York; American Wind Energy Associa-
tion; Center for Energy Efficiency & Renewable Technologies; Citi-
zens Utility Board of Wisconsin; Conservation Law Foundation; Envi-
ronmental Defense Fund; Environmental Law & Policy Center; Fresh
Energy; National Audubon Society; Natural Resources Defense
Council; Northeast Energy Efficiency Partnerships; Northwest Energy
Coalition; Office of the Ohio Consumers’ Counsel; Pace Energy and
Climate Center; Piedmont Environmental Council; Project for Sus-
tainable FERC Energy Policy; Sierra Club; Southern Alliance for
Clean Energy; Union of Concerned Scientists; Western Grid Group;
and Wind on the Wires.
Public Power Council ............................................................................... Public Power Council.
Renewable Energy Systems Americas .................................................... Renewable Energy Systems Americas Inc.
RRI Energy ............................................................................................... RRI Energy, Inc.
Salt River Project ...................................................................................... Salt River Project Agricultural Improvement and Power District.
San Diego Gas & Electric ........................................................................ San Diego Gas & Electric Company.
Solar Energy Industries ............................................................................ Solar Energy Industries Association.
South Carolina Electric & Gas ................................................................. South Carolina Electric & Gas Company.
Southern California Edison ....................................................................... Southern California Edison Company.
Southern Companies ................................................................................ Southern Company Services, Inc.
SPP ........................................................................................................... Southwest Power Pool, Inc.
Startrans ................................................................................................... Startrans IO, LLC.
Starwood ................................................................................................... Starwood Energy Group Global, LLC.
State Representative Sloan ...................................................................... State Representative Tom Sloan.
Sunflower and Mid-Kansas ...................................................................... Sunflower Electric Power Corporation and Mid-Kansas Electric Com-
pany, LLC.
Trans-Elect ............................................................................................... Trans-Elect Development Company, LLC.
Transmission Access Policy Study Group ............................................... Transmission Access Policy Study Group.
Transmission Agency of Northern California ........................................... Transmission Agency of Northern California.
Transmission Dependent Utility Systems ................................................. Arkansas Electric Cooperative Corporation, Golden Spread Electric Co-
operative, Inc., Kansas Electric Power Cooperative, Inc., North Caro-
lina Electric Membership Corporation, Old Dominion Electric Cooper-
ative, and Seminole Electric Cooperative, Inc.
Upper Great Plains Transmission Coalition ............................................. Upper Great Plains Transmission Coalition.
WECC ....................................................................................................... Western Electricity Coordinating Council.
WestConnect Planning Parties ................................................................. Arizona Public Service Company, Basin Electric Power Cooperative,
Black Hills Corporation, El Paso Electric Company, Imperial Irrigation
District, NV Energy, Public Service Company of Colorado, Public
Service Company of New Mexico, Sacramento Municipal Utility Dis-
trict, Salt River Project Agricultural Improvement and Power District,
Southwest Transmission Cooperative, Inc., Transmission Agency of
Northern California, Tri-State Generation and Transmission Associa-
tion, Inc., Tucson Electric Power Company.
WIRES ...................................................................................................... Working Group for Investment in Reliable and Economic Electric Sys-
tems.
Xcel ........................................................................................................... Xcel Energy Services Inc.
Appendix B: Pro Forma Open Access provided as an attachment to the with the Final Rule in Docket No. RM05–25–
Transmission Tariff Transmission Provider’s Tariff. 000.
The Transmission Provider’s planning The description of the Transmission
Attachment K process shall satisfy the following nine Provider’s planning process must include
Transmission Planning Process principles, as defined in the Final Rule in sufficient detail to enable Transmission
Docket No. RM05–25–000: Coordination, Customers to understand:
Local Transmission Planning (i) The process for consulting with
openness, transparency, information
The Transmission Provider shall establish exchange, comparability, dispute resolution, customers and neighboring transmission
a coordinated, open and transparent planning providers;
regional participation, economic planning
process with its Network and Firm Point-to- (ii) The notice procedures and anticipated
studies, and cost allocation for new projects.
Point Transmission Customers and other frequency of meetings;

The planning process shall also include the
interested parties to ensure that the (iii) The methodology, criteria, and
procedures and mechanisms for evaluating processes used to develop a transmission
Transmission System is planned to meet the transmission projects proposed to achieve plan;
needs of both the Transmission Provider and public policy requirements established by (iv) The method of disclosure of criteria,
its Network and Firm Point-to-Point State or Federal laws or regulations assumptions and data underlying a
Transmission Customers on a comparable consistent with the Final Rule in Docket No. transmission plan;
and not unduly discriminatory basis. The RM10–23–000. The planning process shall (v) The obligations of and methods for
Transmission Provider’s coordinated, open also provide a mechanism for the recovery Transmission Customers to submit data to
and transparent planning process shall be and allocation of planning costs consistent the Transmission Provider;
(vi) The dispute resolution process; (iii) The methodology, criteria, and transmission planning regions the costs of a
(vii) The Transmission Provider’s study processes used to develop a transmission new interregional transmission facility that is
procedures for economic upgrades to address plan; located within both transmission planning
congestion or the integration of new (iv) The method of disclosure of criteria, regions. Such cost allocation method or
resources; assumptions and data underlying methods must satisfy the six principles set
(viii) The Transmission Provider’s transmission plan; forth in the final rule in Docket No. RM10–
procedures and mechanisms for evaluating (v) The obligations of and methods for 23–000.
transmission projects proposed to achieve transmission customers to submit data;
public policy requirements established by (vi) The dispute resolution process; United States of America Federal Energy
State or Federal laws or regulations; and (vii) The study procedures for economic Regulatory Commission
(ix) The relevant cost allocation method or upgrades to address congestion or the Transmission Planning and Cost Allocation
methods. integration of new resources; by Transmission Owning and Operating
(viii) The procedures and mechanisms for Public Utilities
Intraregional Transmission Planning
evaluating transmission projects proposed to
The Transmission Provider shall Docket No. RM10–23–000
achieve public policy requirements
participate in a regional transmission established by State or Federal laws or Issued June 17, 2010.
planning process through which regulations; and MOELLER, Commissioner, concurring:
transmission facilities and non-transmission (ix) The relevant cost allocation method or As I have repeatedly stressed in my years
solutions may be proposed and evaluated. methods. on this Commission, promoting investment
The regional transmission planning process The regional transmission planning in our nation’s transmission infrastructure
also shall develop a regional transmission process must include a cost allocation has been my top policy priority.1 Robust
plan that identifies the transmission facilities method or methods that satisfy the six electric transmission infrastructure is the
necessary to meet the needs of transmission principles set forth in the final rule in Docket ultimate ‘‘enabling’’ energy technology, as it
providers and transmission customers in the No. RM10–23–000. can provide a more efficient electric system,
transmission planning region. The regional enhanced reliability, increased access to less
transmission planning process must not be Interregional Transmission Planning expensive and often cleaner resources, and
unduly discriminatory and must be The Transmission Provider, through its the ability to harness location-constrained
consistent with the provision of Commission- regional transmission planning process, must renewable resources. Conversely, the lack of
jurisdictional services at rates, terms and coordinate with the public utility adequate transmission investments often
conditions that are just and reasonable, as transmission providers in each neighboring disproportionately raises consumer rates due
described in the Final Rule in Docket No. transmission planning region within its to congestion, threatens the reliability of the
RM10–23–000. The regional transmission interconnection to address transmission nation’s bulk power system, and increases
planning process shall be described in an planning issues related to interregional reliance on older and dirtier generating
attachment to the Transmission Provider’s transmission facilities. This coordination resources.
Tariff. between each pair of transmission planning While I am not certain that every policy in
The Transmission Provider’s regional regions must be reflected in an interregional this proposed rule will ultimately be
transmission planning process shall satisfy transmission planning agreement filed with adopted, I am certain that building needed
the following seven principles, as set out and the Commission. The interregional transmission lines is often the lowest-cost
explained in the Final Rule in Docket No. transmission planning agreement must way to improve the delivery of electricity
RM05–25–000: coordination, openness, include a detailed description of the process service. Although the Commission could
transparency, information exchange, for coordination between public utility have addressed regional cost allocation
comparability, dispute resolution, and transmission providers in neighboring several years ago when it first became
economic planning studies. The regional transmission planning regions (i) With apparent that the organized markets were not
transmission planning process shall also respect to each interregional transmission reaching consensus on the issue, that wait is
include the procedures and mechanisms for facility that is proposed to be located in both over and the Commission is now considering
evaluating transmission projects proposed to transmission planning regions and (ii) to specific proposals to resolve cost allocation.
achieve public policy requirements identify possible interregional transmission Given that the U.S. Congress is examining
established by State or Federal laws or facilities that could address transmission cost allocation at this time, our issuance of
regulations consistent with the Final Rule in needs more efficiently than separate this proposed rule comes at a potentially
Docket No. RM10–23–000. The regional intraregional transmission facilities. sensitive time. While Congress is now
transmission planning process shall provide The Transmission Provider must ensure considering several measures that deal
a mechanism for the recovery and allocation that the following elements are included in directly with issues addressed in this
of planning costs consistent with the Final any interregional transmission planning proposed rule, I expect that this Commission
Rule in Docket No. RM05–25–000. agreement in which it participates: will defer to the legislative branch as we
Nothing in the regional transmission (1) A commitment to coordinate and share move forward in our deliberations. This
planning process shall include an unduly the results of each transmission planning proposed rule, and the comments to follow,
discriminatory process for transmission region’s regional transmission plans to will provide the Congress with the
project submission and selection. The identify possible interregional facilities that
regional transmission planning process shall could address transmission needs more 1 NSTAR Elec. Co., 125 FERC ¶ 61,313 (2008)
provide on a not unduly discriminatory basis efficiently than separate intraregional (Moeller, Comm’r, dissenting in part) (‘‘* * * the
for the sponsor of a facility that is selected facilities; Commission should do what it can to encourage
through the regional transmission planning (2) An agreement to exchange at least capital investment in needed transmission
process for inclusion in the regional annually planning data and information; infrastructure projects.’’); Commonwealth Edison
Co. and Commonwealth Edison Co. of Indiana, 125
transmission plan to have a right, consistent (3) A formal procedure to identify and FERC ¶ 61,250 (2008) (Moeller, Comm’r, dissenting)
with State or local laws or regulations, to jointly evaluate transmission facilities that (‘‘* * * now is not the time for this Commission to
construct and own that facility and to recover are proposed to be located in both discourage investment in needed transmission
the cost of that facility through the applicable transmission planning regions; and infrastructure.’’); New York Indep. Sys. Operator,
regional cost allocation method. (4) A commitment to maintain a website or Inc., 129 FERC ¶ 61,045 (2009) (Moeller, Comm’r,
The description of the regional e-mail list for the communication of dissenting) (‘‘The main issue here is whether
transmission planning process must include information related to the coordinated needed transmission is being built * * * I have
sufficient detail to enable Transmission planning process. encouraged investment in transmission
infrastructure * * *’’); Southern California Edison
Customers to understand: The Transmission Provider must work Co., 129 FERC ¶ 61,013 (2009) (Moeller, Comm’r,
(i) The process for consulting with with transmission providers located in dissenting in part) (‘‘The transmission that is
customers; neighboring transmission planning regions to needed in this nation will not be built unless the
(ii) The notice procedures and anticipated develop a mutually agreeable method or companies that build it can attract adequate
frequency of meetings; methods for allocating between the two investment dollars.’’)
framework of the issues that we consider building a transmission project if the Staff’s efforts here have resulted in a
relevant and the opportunity for Congress to incumbent utility retains the right of first proposal that will lead to a much needed
provide further guidance to us. Thus, our refusal.2 While initial rulings have been conversation on how to best encourage
action today is not intended to interfere with rendered in these cases, the generic issue is needed capital investment. This will not be
that process, but rather to add helpful ready for further discussion in this an easy matter to address when it comes
information and evidence that will be useful rulemaking. before the Commission for a vote on the final
in the formation of Federal legislation. Resolving controversial issues is rarely
rule, and for that reason this Commission
Also controversial will be the question of easy and I expect today’s proposed rule to be
whether incumbent utilities should retain both lauded and criticized. The changes should carefully consider the comments that
rights of first refusal that were created under proposed here are significant, but the future we will receive. I will do my part to ensure
the Commission’s jurisdiction. Alas, the success of the organized markets and the that this Commission does not lose sight of
question of whether transmission developers nation’s electric transmission system depend the ultimate goal: A final rule that results in
can compete on par with an incumbent on resolving these long-debated and needed capital investment.
transmission-owning utility is no longer controversial issues. D. Moeller,
theoretical. In recent cases, the Commission Commissioner.
has been confronted with particular 2 Primary Power, LLC, 131 FERC ¶ 61,015 (2010)
situations where competitors could be [FR Doc. 2010–15735 Filed 6–29–10; 8:45 am]
(reh’g pending) and Cent. Transmission, LLC v. PJM
discouraged (or altogether blocked) from Interconnection L.L.C., 131 FERC ¶ 61,243 (2010). BILLING CODE P

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37884 Federal Register / Vol. 75, No.

125 / Wednesday, June 30, 2010 / Proposed Rules

DEPARTMENT OF ENERGY remove from Commission-approved • Agency Web Site: http://

C. Proposed Reforms ......................................................................................................................................................................... 155

public policy requirements established the provision of Commission-

45 ‘‘The coordination of planning on a regional

at P 240. 66 October 2009 Notice at 3. Comments, op. cit. at 6.

process. the requirements of Order No. 890. P 479, n.274.

transmission plan. In addition to addressing

101. We seek comment on how the at P 226. 106 October

& Renewable Energy Groups. 148 16 U.S.C. 824d, 824e.

Transmission Sys. Operator, Inc., 129 FERC ¶

Annual Total annual

174 See Appendix B for the proposed pro forma

Attachment K consistent with this NOPR.

177 5 CFR 1320.11.

Annual Total annual

Environmental Policy Act, Order No. 486, 52 FR

administrative support ($25). rulemaking in your submission. 181 5 U.S.C. 601–612.

commenters. procedures set forth in Order No. 890,

3M ............................................................................................................. 3M Company, High Capacity Conductors.

AWEA ....................................................................................................... American Wind Energy Association.

Colorado River Authority; MEAG Power; Nebraska Public Power Dis-

Point Transmission Customers and other frequency of meetings;

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