Dive Brief:
- ISO New England on Monday asked federal regulators to approve a plan that aims to provide increased oversight of “asset condition” transmission projects, a class of projects that are chosen and built by transmission owners mainly to replace aging infrastructure.
- Under the proposal — unanimously approved by ISO-NE’s stakeholders — the grid operator would review and report on planned asset condition projects, partly to ensure that they are needed and cost-effective. ISO-NE’s role would be advisory; it would have no decision-making authority over the projects, but its findings could give stakeholders ammunition to challenge cost recovery later.
- Reflecting concerns about electricity costs, Sen. Richard Blumenthal, D-Conn., on Friday asked the Federal Energy Regulatory Commission to increase its oversight of asset condition projects in New England, which have been the subject of complaints from states and ratepayer advocates. Also, on Monday, he said he introduced a bill that would require FERC to consider “affordability” in its definition of just and reasonable electric rates and to deem potential transmission rate increases unaffordable if they would drive up overall retail rates by 5% or more.
Dive Insight:
The action in New England comes amid increased concerns about electricity affordability across the United States — and about the role transmission construction plays in overall electric rates. Transmission rates make up about 15% of an electric bill in Connecticut, according to Blumenthal.
In many parts of the U.S., utilities build local transmission projects, primarily to replace old infrastructure, with relatively little oversight. In New England, asset condition projects make up 73% of all annual transmission owners’ capital projects, according to Blumenthal.
New England transmission owners expect to add about $5 billion in asset condition projects by 2034, including about $1.3 billion next year, according to a June ISO-NE presentation.
“FERC must provide greater oversight over asset condition projects, including at a minimum, the establishment of an independent review mechanism,” Blumenthal said in his letter to the agency.
In May, New England ratepayer advocates filed a complaint at FERC over a roughly $360-million asset condition project planned by Eversource Energy in New Hampshire.
“Eversource mischaracterized its X-178 transmission project, thereby subjecting it to a lesser level of scrutiny than it should have received while receiving a higher rate of return on these expenditures than those provided for costs of other capital projects and operating expenses,” Blumenthal said.
However, oversight would increase if ISO-NE becomes an “asset condition reviewer” starting Jan. 1, as proposed on Monday.
“The [asset condition review] changes reflect the New England region’s consensus approach to address the New England states’ and stakeholders’ requests for independent oversight and scrutiny of [transmission owner] capital projects to replace or reconstruct aging, deteriorating, or obsolete transmission elements,” ISO-NE said in its filing at FERC.
Under the proposal, ISO-NE said it will review and report its conclusions on asset condition projects and utility asset condition programs.
ISO-NE said the asset condition review process will have three main goals:
- reporting on transmission owner asset monitoring and evaluation practices, identify variations and inefficiencies, and facilitate consideration of improvements and best practices;
- reporting on individual projects; and,
- providing annual and periodic reporting to the grid operator’s Planning Advisory Committee on asset condition-related matters.
The reviewers’ role would be advisory. ISO-NE said it “will not make decisions about whether to proceed with specific asset condition projects, nor will it be the petitioning party in any local, state or federal regulatory or siting proceeding concerning an asset condition project.”
Having the review process in place next year will facilitate coordination with other regional planning activities, such as project right-sizing, which stakeholders have said is “essential to maximizing efficiency and reducing long-term costs,” ISO-NE said.
