Clean energy groups urge FERC to support transmission investment incentives

Dive Brief:

Eighteen groups dubbed the Grid Advancement Coalition told federal regulators they support new policies to increase investment in the transmission grid, specifically to improve operational efficiency and expand access to "low-cost remote resources."
The Federal Energy Regulatory Commission (FERC) in March launched a proceeding to consider changes to its transmission policy, including how incentives could improve grid resilience and whether they should be based on potential benefits.
Edison Electric Institute (EEI), which represents investor-owned utilities, called for FERC to implement a "robust transmission incentive policy" that provides the commission flexibility to evaluate proposals using multiple criteria. The American Public Power Association (APPA) and other groups struck a moderate tone, and asked regulators to "remain mindful" of rising costs.

Dive Insight:

It's been 13 years since FERC Order No. 679 established the commission's basic approach to transmission incentives, including basing them on an evaluation of project risks and challenges. Given changes to the industry since then, commenters say the commission is right to revisit the issue — though some are taking a sober view.

A group of Consumer Organizations told FERC in comments filed Monday that so far there have been "no surprises."

"Those who profit from transmission incentives believe incentives should remain the same, or be increased. Those who pay transmission incentives believe incentives should be reduced or phased out entirely," said the group. "And those who believe transmission incentives are key to saving the planet champion new incentives at any cost."

There is concern for the rising costs of transmission: The New England States Committee on Electricity (NESCE) told FERC that incentives remain sufficient and the commission "should focus any reforms on ensuring that consumers do not pay more for transmission investments than is necessary."

In New England, the group said, regional investments in transmission identified to promote system reliability exceeded $10 billon over the last two decades.

"This data and industry experience demonstrate that there is no reasonable basis for the commission to reverse course from its risks and challenges framework," wrote NESCE. "Nor is there a need for more generous incentives to drive transmission investments."

The Grid Advancement Coalition was among the most vocal supporters of beefing up incentives.

The group called for FERC to issue a notice of proposed rulemaking to revise the current risks and challenges framework, and to adopt incentives "allowing for the identification of net benefits, and the sharing of them between utilities adopting these new technologies or measures and their customers."

EEI called for flexibility in FERC's approach, saying the commission "should largely retain the existing transmission rate incentive regime."

But IOUs also said the commission should "allow applicants to support requests for incentives by demonstrating that a project merits an incentive based on the benefits the project provides or a combination of the benefits and the project’s risks and challenges."

APPA, along with the California Municipal Utilities Association, National Rural Electric Cooperative Association, and Transmission Access Policy Study Group, asked FERC to keep in mind rising costs — but also said they understand the necessity.

"The commission should not equate our concern about rising transmission costs with opposition to transmission investment in general," the groups said. "Prudently planned and constructed transmission facilities can increase supply options, reduce congestion-related costs, integrate renewable resources, and promote grid reliability.

"We support such beneficial transmission investment," they said, but added, "the potential increased cost burden on transmission customers must always remain a principal consideration."