Dive Brief:

  • The Federal Energy Regulatory Commission advanced a draft plan to reduce its planned grid incentives for utilities to join regional transmission organizations (RTOs), by modifying a March 2020 notice of proposed rulemaking (NOPR) during its monthly meeting on Thursday.
  • Changing the proposed RTO adder will provide less reasons for utilities to join RTOs, Commissioner Neil Chatterjee said, opposing the draft plan. Chair Richard Glick maintained that utilities would still see “significant benefits” after joining an RTO, and FERC staff projected that eliminating the adder after three years would save $350 million annually for consumers.
  • FERC also announced a new coordination effort with state regulators through the National Association of Regulatory Utility Commissioners (NARUC), and a Sept. 10 workshop on a shared-savings approach to the wider deployment of grid-enhancing technologies.

Dive Insight:

Transmission planning remains a top priority for utilities, regulators and energy resource developers, as utility executives continue to highlight the need to streamline permitting at federal, state and local levels.

Glick told reporters he hopes the effort to coordinate with NARUC will lead to joint proposals on state transmission planning, without sharing specifics on the current deliberations.

The American Clean Power Association (ACP) “commends FERC for its continued inquiry into incentivizing needed transmission, especially the focus on Grid-Enhancing Technologies that can help dramatically expand capacity on existing lines,” Gene Grace, ACP general counsel, said in a statement.

FERC’s Sept. 10 workshop on a shared-savings model for grid-enhancing technology that could maximize the use of transmission infrastructure comes after an inquiry from FERC participants, including the WATT Coalition, led by former FERC staffer Rob Gramlich.

“The existing regulatory structure puts utilities in the impossible position of choosing between the interests of their customers and their shareholders. The shared savings model proposed by the WATT Coalition aligns incentives to accelerate deployment of grid enhancing technologies which will improve the efficiency and resilience of the grid, and position utilities to play a central role in the transition to an electrified and renewable-powered future,” the Watt Coalition said in a statement.

Industry participants have extensive wishlists for FERC to ease transmission planning.

In the short term, Rao Konidena, president of Rakon Energy, said FERC could extend competitive transmission incentives to lower voltage projects, remove “right of first refusal” barriers to transmission planning and ask RTOs “to look at both generator interconnection upgrades and transmission projects together.”

“[O]ther key transmission reforms are sorely needed from FERC, such as planning and cost allocation to enable the development of the grid of the future, and we look forward to working with FERC on those,” ACP’s Grace added.

Meanwhile, FERC advanced a supplemental NOPR seeking savings for consumers by limiting incentives to three years for utilities that would join RTOs or Independent System Operators. More RTO and ISO participation would lead to coordinated transmission planning, and other benefits such as dispatching the cheapest available resources across a specific region, grid planning experts say.

FERC is required to incentivize utilities to join the grid operators under its jurisdiction, according to the Federal Power Act, Chatterjee said.

The NOPR on transmission incentives was issued when Chatterjee chaired FERC, and he criticized the supplemental proposal on Thursday to take away an incentive while RTO expansion has “generally stalled,” he said. Much of the Southeast and the West remain outside of wholesale power markets regulated by FERC.

Glick countered that incentives are not required “in perpetuity” under the Federal Power Act.

“Utilities may need an incentive to join an RTO but once they’re there, they’re going to have significant benefits,” Glick said.

Glick was joined by Commissioners Allison Clements and Mark Christie in support of foregoing some of the proposed incentives.