FERC Proposes New Transmission Planning and Cost Sharing

June 23, 2010

The Federal Energy Regulatory Commission (FERC) took several actions on June 17 to boost effective planning and cost sharing for new transmission lines. The regulatory agency approved a new "Highway/Byway" method of sharing costs for new electric transmission in the Southwest Power Pool (SPP) region, which includes all or parts of Arkansas, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma, and Texas. This approach, which assigns costs of high-voltage transmission regionally and lower-voltage locally, is designed to help members build a stronger transmission grid that will benefit the entire region. New transmission capacity is particularly important for the continued development of renewable energy in the region. SPP’s proposal took effect June 19. See the FERC press release and the full decision (PDF 211 KB). Download Adobe Reader.

And in a move hailed by a leading U.S. renewable energy group, FERC issued a Notice of Proposed Rulemaking (NOPR) for open access transmission reforms by establishing a closer link between regional electric transmission planning and cost allocation to help ensure that needed transmission facilities are actually built. The NOPR includes proposals to require that: transmission providers establish a closer link between cost allocation and regional transmission planning; transmission planning take into account the needs driven by state or federal laws or regulations, such as renewable energy standards; neighboring transmission planning regions improve their coordination of facilities that are proposed in two adjacent regions to address transmission needs more efficiently than separate facilities; and provisions that provide an undue advantage to an incumbent developer must be removed, allowing others to build and own new transmission projects. The American Wind Energy Association (AWEA) applauded the action, saying that it will allow much-needed transmission lines to be built. According to AWEA, grid constraints in a few U.S. regions are holding up tens of thousands of megawatts of wind power development. See the press releases from FERC and AWEA, as well as the full NOPR (PDF 388 KB).

FERC also released a report, two years in the making, saying that public institutions and private sector organizations nationwide should form a coalition to help states, localities, and regions develop and deploy successful and cost-effective electric demand response programs. Demand response refers to the ability of customers to adjust their electricity use by responding to price signals, reliability concerns, or other signals from the grid operator, and it can help avoid the need for new power plants and power lines that are intended primarily to meet peak power demands. See the FERC press release and the National Action Plan on Demand Response (PDF 3.8 MB).