On March 21, 2019, the Federal Energy Regulatory Commission (Commission or FERC) held its monthly open meeting. Highlights of the meeting included the following:
- Electric Transmission Incentives Policy (Docket No. PL19-4-000)
- The Commission issued a Notice of Inquiry (NOI) seeking comments on the scope and implementation of its electric transmission incentives regulation and policy.
- Section 219 of the Federal Power Act directs the Commission to use transmission incentives to help ensure reliability and reduce the cost of delivered power by reducing transmission congestion. The Commission issued Order No. 679 in 2006 to establish its approach to transmission incentives and set forth a series of potential incentives that it would consider. The Commission subsequently refined its approach in a 2012 policy statement.
- The NOI seeks comments in response to questions addressing many matters, including several that have not previously been addressed by the Commission’s transmission incentive policy, including:
- Whether incentives should continue to be granted based on a project’s risks and challenges or should be based on the benefits that a project provides.
- Whether incentives should be used to incentivize projects that promote reliability, economic efficiency, address persistent geographic needs, make transmission system operation more flexible, enhance physical and cyber security, increase grid resilience, improve existing transmission facilities, encourage interregional transmission projects, unlock locationally constrained resources, place non-incumbent transmission developers on a level playing field with incumbents, and encourage development of transmission in non-RTO/ISO regions.
- Whether the types of incentives the Commission currently awards remain relevant and appropriate and whether the goals of the incentives could be incentivized more efficiently. This includes the ROE adder incentives for transmission-only companies, for joining an RTO/ISO, and for the use of advanced technology. This also includes non-ROE incentives, such as regulatory asset/deferred recovery of pre-commercial costs/CWIP, hypothetical capital structure, recovery of costs of abandoned plant, and accelerated depreciation.
- The mechanics, implementation, and evaluation of the effectiveness of incentives (including the potential development of metrics to evaluate their impacts).
- Commissioner LaFleur highlighted a number of matters in which she looked forward to comments. This included the Transco adder and the RTO participation adder, which she stated had been controversial in recent Commission or court orders. In addition, she referenced the interplay between Order No. 1000 and the Commission’s incentives policy. She noted that there was a clear need to construct new transmission to ease the interconnection of location-constrained renewables. She also noted that interregional transmission has proven tremendously difficult to site and construct and looked forward to comments regarding whether anything in the incentive policies could help this transmission built. Finally, she indicated that she looked forward to comments on changes to support competitive transmission processes.
- Commissioner Glick continued to express concern that the Commission has been too generous in rewarding incentives.
- Comments are due 90 days after the notice is published in the Federal Register, and reply comments are due 30 days later.
For more coverage of the FERC Open Meeting, visit our sister site, The Nickel Report.