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Federal appeals court upholds FERC's Order No. 1000 on transmission planning


From the August 18, 2014 issue of Public Power Daily

Originally published August 18, 2014

By Jeannine Anderson
Editor
A federal appeals court on Aug. 15 upheld Order No. 1000, the sweeping rule issued by the Federal Energy Regulatory Commission (FERC) in 2011 that requires utilities and grid operators to conduct large-scale planning of the nation's electric grid and share the cost of new transmission projects.

Dozens of petitioners — including APPA and a number of its member utilities — had urged the court to review parts of the landmark 2011 order. In a unanimous ruling by a panel of three judges last week, the U.S. Court of Appeals for the District of Columbia Circuit rejected those petitions. 

The D.C. Circuit held, among other things, that:
•  FERC had authority, under Section 206 of the Federal Power Act, to require transmission providers to participate in a regional planning process;
•  the commission had authority under Section 206 to require the "up front" allocation of the costs of new transmission facilities among beneficiaries;
•  FERC reasonably determined that regional planning must include consideration of transmission needs driven by public policy requirements; and
•  the commission reasonably relied upon the reciprocity condition in Order 1000 to encourage non-public utility transmission providers to participate in a regional planning process. 

In its brief to the court, APPA had raised only the issue concerning the "public power requirements" provision in Order No. 1000, arguing that it ran afoul of FERC’s obligations under Section 217(b)(4) of the Federal Power Act. That section of law requires FERC to use its authority to facilitate the planning and expansion of the transmission grid to meet the reasonable needs of load-serving entities.

The D.C. Circuit’s opinion rejecting all of the challenges to FERC’s Order No. 1000 "comes as no real surprise" to the association, said APPA Regulatory Counsel Randy Elliott, who argued APPA's case before the appeals court in March 2014. "Issues of transmission planning and cost allocation are technical by their nature, and courts are generally reluctant to second-guess the expert agency," he said.

"APPA is disappointed that the court rejected the argument that Order No. 1000 ran afoul of FERC’s obligation under Section 217(b)(4) of the Federal Power Act," said Elliott. However, he said, APPA is pleased that the court said the statute "creates a requirement for the Commission."

In its Aug. 15 ruling, the court held that Section 217(b)(4) "requires the Commission to facilitate the planning of a reliable grid," and added that this "is exactly what the Commission has done" in Order No. 1000. 

The D.C. Circuit's ruling "is significant because the court’s opinion will require FERC to honor this statutory obligation as it implements Order No. 1000, and in all future cases involving transmission planning and expansion," said Elliott.

Elliott said APPA also is pleased that the court rejected an argument by the Edison Electric Institute saying that FERC was required to use Section 211A of the Federal Power Act to mandate the participation by public power in the Order 1000 planning and cost-allocation process. 

"The court correctly held that Section 211A gives FERC discretionary authority," and that the commission had no obligation to act in this instance, Elliott said. The court "wisely left that issue to another day." 
 

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