FERC's proposed rulemaking on transmission planning draws mixed reviews

The Federal Energy Regulatory Commission's notice of proposed rulemaking regarding transmission planning has positive and negative aspects for the future of the US power grid from the standpoint of reliability, renewable integration and cost, industry observers said during an R Street Institute webcast.

FERC's proposed rule (RM21-17) contains the following provisions:

• Regional grid operators and public transmission providers must plan at least 20 years into the future.
• Such plans must include scenarios accounting for federal and state policies, plus market trends, power and generation demand expectations, and extreme weather.
• Transmission providers must seek agreement in each state regarding cost allocation.
• FERC Order 1000's transmission competitive bidding process could be sidestepped by incumbent transmission owners if they establish joint ownership of such facilities.
• Transmission providers must consider grid-enhancing technologies such as dynamic line ratings and power flow converters.

Jennifer Chen, World Resources Institute senior manager for clean energy, said the NOPR makes "good first steps" in advancing "progress on planning through better identifying benefits and looking out further in the future, so looking at an evolving resource mix and demand as other sectors electrify."

"It also requires that public utility transmission providers more fully consider dynamic line ratings and power flow control devices in regional transmission planning," Chen said during the July 27 webcast entitled "Electric Transmission Reform: The Promise and Pitfalls of FERC's Proposed Rule."

Concern about 'roll back on competition'

"This NOPR does roll back on competition, and that's a real concern, not just from the customer perspective, but also from a clean energy perspective ... as we transition to a renewable future, particularly as we electrify transportation, potentially industrial processes and other sectors," Chen said. "If we're looking at transmission without competition, we're looking at a mark-up of around 50%. ... We do have to be very careful about being cost effective, being efficient with how we're spending customer money."

Paul Cicio, Industrial Energy Consumers of America president and CEO and organizer of the Electricity Transmission Competition Coalition, said his organization's priorities are "competition, competition, competition."

"This is especially important given where we are as a country," Cicio said. "We have rampant inflation. I can't think of a better anti-inflation policy than competition to help drag down unnecessary cost."

Kent Chandler, Kentucky Public Service Commission chairman, said he favors "greater competition across the board – less exceptions," about which the NOPR represents "a step in the wrong direction," but the NOPR makes progress in reducing the "bifurcation between transmission needs that are considered local and regional" and by providing states more authority.

'Robust, holistic' approach advocated

Jeff Dennis, Advanced Energy Economy managing director and general counsel, said the NOPR makes progress in extending the planning at least 20 years into the future, but lacks the "robust" and "holistic" approach required by the grid's current circumstances.

"We need a real refocus on robust regional planning that's conducted on a long-term basis and to some extent holistic ... in capturing the realities of how the resource mix and how consumer demands are changing," Dennis said. "That includes not only the fact that we have market forces, state policies and consumer demands driving a significant uptick in the adoption of advanced energy technologies like wind, solar, storage and distributed energy, but also how electrification of sectors like transportation and buildings are going to drive demand higher in the future and are going to potentially drive demand in different ways. Demand is going to look a lot different than how it did in the past."

FERC should also include provisions designed to optimize the benefits of distributed energy resources, Dennis said.

"We're going to install a lot of transmission and a lot of DER for a lot of reasons, not the least of which is customers are demanding more control of their technology, and DERs have come down in costs," Dennis said. "So, we've got to account for that growth in planning scenarios, because otherwise we're going to have questions about need and cost."