Dive Brief:
- States, renewable energy groups and others on Thursday urged the Federal Energy Regulatory Commission to approve ISO New England’s proposal to adopt a long-range transmission process that includes competitive solicitations.
- However, some groups said ultimately changes will be needed to ensure competitive transmission companies could effectively bid on projects, and to comply with FERC’s recent transmission planning reform rule, according to filings with the agency.
- “The [Longer-Term Planning Phase 2 Changes] will capture the benefits of competitive dynamics for consumers, ensure that costs are commensurate with consumer benefits and are fairly allocated, and create a process that solves the region’s needs and provides opportunities for stakeholder feedback at every step of the way,” said the New England States Committee on Electricity, which represents the region’s governors.
Dive Insight:
ISO-NE and its stakeholders have developed planned reforms to the grid operator’s transmission process in two stages. Under the first stage approved by FERC in February 2022, ISO-NE will perform state-requested, scenario-based and forward-looking transmission analyses.
ISO-NE in February issued its first-ever study under that process — the 2050 Transmission Study — which showed New England needs $16 billion to $26 billion in transmission investments by mid-century to meet state policy goals.
The second stage reflected in the pending proposal creates an ISO-run process to solicit and select long-term transmission solutions. It also includes a cost allocation process for states wanting to build a project that doesn’t meet a cost-benefit threshold.
ISO-NE’s current process of connecting generators one-by-one is slow, expensive and threatens state efforts to meet their climate and economic development goals, according to RENEW Northeast, which represents energy companies and environmental groups.
“Implementing a state-driven transmission procurement process will overcome these challenges and accelerate clean energy deployment,” the group told FERC.
However, the proposed process fails to fully take advantage of competitive solicitations, which could reduce benefits to consumers and the environment, RENEW said.
Under the proposal, solicitations will only be open to projects that fully meet identified transmission needs, according to the group. Competitive developers are barred from offering projects that alter a transmission owner’s use and control of its existing right-of-way, unless they partner with the incumbent utility, RENEW said.
ISO-NE should launch a stakeholder process to revise the bidding procedures, RENEW said, noting that the PJM Interconnection is allowed to “mix and match” bid elements in its transmission procurement process.
LS Power and NextEra Energy transmission subsidiaries agreed with RENEW in joint comments. The proposal effectively gives incumbent transmission owners a right of first refusal, which FERC declined to include in its transmission planning and cost allocation rule, New Hampshire Transmission and LSP Transmission Holdings II said.
The proposed solicitation process is the same one that ISO-NE previously used, and then revised, for Reliability Transmission Upgrades and Market Efficiency Transmission Upgrades, the companies said.
ISO-NE changed that process to allow competitive offers to solve “all or some” identified needs or a subset of needs, according to the LS Power and NextEra subsidiaries.
The limits of ISO-NE’s proposed provisions for competitive bidding are highlighted by the grid operator’s 2050 Transmission Study, which shows that perhaps the majority of the needed transmission capacity will be most cost-effectively addressed through upgrades to existing lines, according to Advanced Energy United.
The trade group urged ISO-NE, NESCOE and utilities to continue developing the project selection framework to improve opportunities for competition and ensure that ISO-NE selects “the best, least-cost solutions for New England ratepayers.”
ISO-NE and its stakeholders can build on the proposal to meet the requirements of FERC’s new transmission planning and cost allocation rules, according to joint comments filed by the Acadia Center, Conservation Law Foundation, Earthjustice, Natural Resources Defense Council, Sustainable FERC Project, Sierra Club and Union of Concerned Scientists.
Many aspects of ISO-NE’s proposal align with FERC Order No. 1920, but additional changes will be needed in areas that include scenario development and timelines, benefits analysis, selection criteria, cost allocation and consideration of advanced transmission technologies, the groups said.
