When state commissioners sat down with two FERC commissioners and FERC staff at the 123rd Annual Meeting of the National Association of Regulatory Utility Commissioners (NARUC), it was made clear the commissioners are still grappling with the dictates of FERC Order 1000.

FERC commissioner John Norris acknowledged that transmission planning and cost allocation are challenging areas. “You have the convergence of public policy and economics and due process, and then you throw in a little physics and it makes it all complicated.”

Order No. 1000 requires public utility transmission providers to improve transmission planning processes and allocate costs for new transmission facilities to beneficiaries of those facilities. It also requires public utility transmission providers to align transmission planning and cost allocation. These changes will remove barriers to development of transmission facilities, says FERC.

The reliability needs are relatively easy to understand and to reach a determination of what must be built to continue operating the system. “I envision Order 1000 as giving license for us to think bigger and broader than that,” Norris said. “Building transmission is for the long term. To think about what we want to achieve with public policy and what’s the most economical way to achieve those public policy objectives is how I see this converging."

But others said at the meeting in St. Louis this month that the details were still anything but clear.

Paul Centolella, commissioner of the Public Utilities Commission of Ohio, wondered aloud about FERC’s reasons for changing the fundamental way transmission planning is carried out. Under Order 1000, that planning “incorporate[is] greater consideration of economics, greater consideration of uncertainty,” and that has a material impact on his role as a regulator.  
“Before I could even tell you that yes, this line is needed for public policy, I would need to understand the economics, I would need to understand how this addition would fare” over the long term, Centolella said.

Other regulators expressed concerns about the deadlines imposed by Order 1000.
Dana Murphy, chair of the Oklahoma Corporation Commission, questioned the wisdom of FERC telling the states and regions, “'We’re looking at long-term planning but we’ll give you a year to do it.'"

Empowering Folks

Norris countered that the time frame is reasonable for the two-step process: “Deciding what public policy you’re going to put on the table and what’s the process for considering it. The tough part will be implementing that process.”

Garry Brown, chairman of the New York State Public Service Commission raised the issue of defining public policy. “We know we don’t have much of a federal energy policy so the states have been busy filling in the blanks.  But we all fill it in a little differently.” With that type of system, he said, the same public policy objective can yield two totally different results.

Illinois Commerce Commissioner Sherman Elliott expressed his apprehension that decisions made in one area of a sub-region could affect other areas of that subregion. “My concern is how to isolate the effects of other states’ non-market intrusions in to my state’s market.”

Public policy decisions have a cost and “eventually, the price makes it through to the consumer,” Elliott said. “The consumer takes that economic implication into the voting booth, and we get a four-year cycle of whipsawing public policy.”

“Given the nebulous quality of cost allocation, I’m unsure about how I’m going to be able to protect ratepayers in my state from actions taken in other states,” Elliott said.

Norris said the questions were all good questions, but that the answers should come from those who posed the questions. “We’ve really empowered folks to come up with your own answers. You’ve certainly identified some common questions; I’m hopeful this will spur some discussion about common approaches” to Order 1000 compliance.

Copyright © 1996-2011 by CyberTech, Inc. All rights reserved.

To subscribe or visit go to:  http://www.energycentral.com

To subscribe or visit go to:  http://www.energybiz.com