Dive Brief:
- The D.C. District Court of Appeals upheld the Federal Energy Regulatory Commission (FERC) Order 1000, the Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities rulemaking. It opens up the process of new transmission building by requiring transmission providers to use a formal planning process, implement cost allocation methods, and remove from commission-approved tariffs any federal right of first refusal.
- State regulatory commissions argue Order 1000 exceeds FERC's authority, is not supported by evidence, and is unlawful. The appeals court concluded the mandate is within FERC’s jurisdiction under the Federal Power Act, the transmission planning process had real and significant problems because existing regulations were inadequate to meet current and future challenges, and basic economic principles make the right of first refusal just and reasonable.
- The court specifically affirmed Order 1000’s stipulation that the planning process must consider needs driven by public policy requirements the same way it considers needs driven by economic or reliability concerns, and noted planners might need to respond to the EPA's new greenhouse gas regulations by approving more new transmission for remote resources like solar, wind and geothermal.
Dive Insight:
Order 1000 is expected to face further legal challenges.
Public utility transmission owners and transmission developers are likely to see more competition in the selection and construction of transmission facilities from non-incumbent developers.
The cost allocation provision is expected to evolve new methods for spreading development costs among owners, developers, customers and states.
Order 1000 is likely to provoke more interaction between FERC and state regulators on transmission siting and construction and over the need for new transmission to meet the EPA rules and state renewables mandates.
