Dive Brief:

  • The Federal Energy Regulatory Commission will not require participation in regional transmission organizations (RTOs) despite having the authority to do so, Chair Richard Glick said Thursday at an event hosted by the Solar Energy Industries Association (SEIA).
  • While the top federal energy regulator supports RTO participation, he said FERC will continue encouraging states through a bottom-up approach. Glick said he is also focused on ensuring disincentives to joining RTOs are not created by FERC’s orders. 
  • Glick’s approach was supported by fellow panelists and former FERC commissioners Suedeen Kelly and Tony Clark. However, as Glick noted, other former commissioners have asked FERC to use its authority to impose RTOs on regions that do not have those markets, along with certain utilities and developers, such as LS Power.

Dive Insight:

Glick will address the Western Governors’ Association next week to encourage progress on their pursuit of an RTO.

“Right now in the West there’s a couple of different planning organizations, so I think certainly consolidating that would be helpful,” Glick told reporters at SEIA’s 30×30 Policy Conference. He noted the discussions on resource planning and resource adequacy.

“The region needs to work together,” he said. “The subregions in the West … they’ve battled each other over the years. No one seems to like California, everyone doesn’t trust the governance process in the California [Independent System Operator],” he said, adding that the California state legislature has struggled to pass legislation that would expand their markets because of distrust of Wyoming.

Given the threat of extreme heat, drought and wildfires in the region, “they can’t only rely on themselves anymore” when it comes to resource adequacy, Glick said, and the region would be helped by “some sort of, again, central, one-stop shopping approach.”

There are multiple grid-based auction markets under FERC’s jurisdiction, “and what this commission is doing is asking themselves ‘how can we change how they work now for the better,'” Kelly, currently a partner at Jenner & Block, said on the SEIA panel. 

“I would add though, that it’s not just FERC’s responsibility,” Kelly said, highlighting a need for state and congressional action. “There’s a real opportunity here and it shouldn’t be imposed by FERC, but I really do believe that the states in the West have … seen a 20 year history of how RTOs have worked.”

“Most of those states want to see more renewables and they have the opportunity to create an RTO that is not a cookie cutter. … My sense is, this FERC would be a open to a construct … designed to achieve the goals that are current today,” said Kelly, who was a FERC commissioner when RTOs were being developed.

Panelists also highlighted the hurdles in transmission planning that Congress can address, including land rights issues.

“At least in the western U.S., it’s federal lands issues that prevent transmission from being built. Developers … go around federal lands as much as they can, and out West it’s impossible to get around federal lands,” Clark, currently senior advisor at Wilkinson, Barker, Knauer, said on the panel.

FERC hears from different states asking for RTO membership requirements, as well as states and parties that oppose that use of federal authority, according to Glick.

Some regulators have written FERC asking to maintain their authority to determine the RTO membership status of utilities in the state, while supporting mandatory RTO membership, including Kentucky Public Service Commission Chair Kent Chandler.

“But for this nuance in states like Kentucky, I would support mandatory RTO membership, and I understand why regulators in other jurisdictions that do not have the same authority as the Kentucky PSC may support it too,” Chandler said in his comments to the transmission Advance Notice of Proposed Rulemaking.

The Kentucky PSC has approved RTO participation for four utilities and allowed two utilities to exit an RTO, to date.

The current FERC is also on the lookout for how other policies will impact RTO participation. 

Glick cited the landmark energy storage Order 841, which he said prompted Xcel Energy to exit the Mountain Power Transmission Group in 2018. 

“It might have been an excuse. They said ‘we’re dropping out because if we’re in an RTO we have to comply with the storage order,'” Glick said.

A lot of recent FERC rulemakings have focused on creating similar requirements for non-RTO members, he said.