CAISO FERC ISO-NE Transmission West

Highlights from the May FERC Open Meeting

May 26, 2015

ISO New England Inc., Docket No. ER13-1957-000, et al.

FERC conditionally accepted the Order 1000 interregional transmission coordination and cost allocation compliance filings submitted by neighboring transmission planning regions ISO-NE, NYISO, and PJM. This is the last of FERC’s initial reviews of the Order 1000 interregional compliance filings. As with prior interregional compliance orders, FERC disagreed with the public interest organizations that the transparency proposed in the compliance filings was insufficient and should require posting of all transmission studies. FERC also found that the proposed avoided cost-only method of allocating costs was a permissible on the interregional level under Order 1000 even though it rejected the approach for regional compliance.

The avoided-costs cost allocation method considers the only benefit of a proposed interregional transmission facility the quantified cost savings of displacing regional transmission projects with the proposed interregional facility. FERC disagreed with the public interest organizations that an avoided cost-only interregional cost allocation method failed to consider all of the benefits of an interregional transmission facility, and that a selected interregional transmission facility may address regional transmission needs but have different attributes, functions, and location than a displaced regional transmission project.

Concerns remain that Order 1000 is insufficient to drive interregional projects forward. Chairman Bay indicated interest in monitoring Order 1000 implementation with regards to interregional coordination and cost allocation, and noted that if it does not promote transmission infrastructure development as intended, then FERC may have to consider additional measures. Commissioner Moeller mentioned that FERC may have to revisit the interregional provisions of Order 1000 in a few years. He also noted that in retrospect, he wished FERC had beefed up the interregional coordination parts of Order 1000 and that there are many benefits to interregional transmission that are hard to identify.

Public Service Company of Colorado, Docket No. ER13-75-006, et al.

FERC accepted in part the third Order 1000 regional compliance filings of ten western utilities and denied requests for rehearing of FERC’s second compliance order. These utilities are located in the WestConnect transmission planning region, which contains a mix of public utilities subject to FERC jurisdiction and non-public utilities. Thus, not all transmission owners in this region are enrolled in Order 1000 cost allocation. Under FERC’s directive in its second compliance order, these non-enrolled entities could benefit from transmission projects not cost allocated to them, which could create a free-rider problem. The filing utilities therefore sought rehearing of this aspect of the compliance order. FERC, however, maintains that these transmission projects may be efficient or cost-effective and should not be excluded from mandatory cost allocation because they may benefit non-public transmission owners not paying for them.

WestConnect Planning Area

West Connect Transmission Planning Area (Source: WestConnect)

FERC also ruled on issues pertaining to the planning participation agreement filed by the utilities, which governs the terms for membership in the planning decision-making body in WestConnect. Unfortunately, the agreement as filed exposes voting members to unlimited legal liability, which effectively precludes nonprofit public interest organizations from participating as voting members because these organizations typically have small budgets and no means of recovering liability-related expenses from rates.

Avista Corporation, Docket No. ER13-94-004, et al.

FERC conditionally accepted ColumbiaGrid Public Utilities’ third Order No. 1000 compliance filings, effective January 1, 2015. Among other things, FERC noted in its partial approval that the filing complies with its earlier directive to remove provisions that would have permitted non-public utility transmission providers to opt into or out of ColumbiaGrid Order 1000 transmission planning in a way that created too much uncertainty in the planning process. FERC similarly found that ColumbiaGrid Public Utilities’ revisions to eliminate provisions allowing for advisory rather than binding cost allocation also complies with FERC’s latest directive and helps reduce uncertainty in the planning process.

Nevada Power Company, Docket Nos. ER15-1196-000 and -001.

FERC conditionally accepted, subject to further filings, NV Energy’s proposed revisions enabling its participation in CAISO’s Energy Imbalance Market (EIM). NV Energy is the second entity to join the EIM, after PacifiCorp. FERC stated that it expects NV Energy’s participation in the EIM will benefit its customers through interregional dispatch savings, reduced flexibility reserve requirements, reduced renewable energy curtailment, and improved reliability. NV Energy will have to submit a compliance filing after the outcome of a pending investigation into EIM price spikes is determined.

Northern States Power Company, Docket No. QM15-2-000.

FERC denied Northern States Power Company’s (NSP) application to terminate its PURPA obligation to purchase electric energy and capacity from a qualifying facility owned by Twin Cities Hydro LLC (Twin Cities). PURPA does not require purchase from qualifying facilities with nondiscriminatory access to certain markets, such as the MISO capacity market. FERC found that Twin Cities’ access to MISO’s capacity market was restricted by transmission constraints and that NSP failed to show that Twin Cities had nondiscriminatory access to MISO’s capacity market.