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FERC order on Southeastern regional transmission plan may pose dilemma for public power utilities

From the July 25, 2013 issue of Public Power Daily

Originally published July 25, 2013

By Robert Varela
Editorial Director
The Federal Energy Regulatory Commission partially approved a transmission planning and cost allocation filing by Southeastern utilities--the Southeastern Regional Transmission Planning (SERTP) group--but called for changes that the group warned may leave the region’s public power and other non-jurisdictional transmission providers no choice but to not participate. The order drew a partial dissent from Commissioner Tony Clark. The filing was in response to FERC’s Order No. 1000.

At issue is the July 18 order’s directive that the group remove a requirement that a sponsor of a transmission project obtain all governance and regulatory approvals before the project will be selected in a regional transmission plan for purposes of cost allocation.

Clark dissented over the commission’s continuing insistence that utilities remove language from their Order 1000 filings "that acknowledges the reality of certain state laws or other statutory constructs that govern, and sometimes limit, the bounds of transmission planning." The commission’s "boilerplate response fails to accommodate the unique characteristics of this non-market, non-RTO region," Clark said. State commissions "inevitably greatly influence transmission-related decisions" by vertically integrated utilities with significant retail load-serving responsibilities, he said. "Similarly, the Tennessee Valley Authority also retains decision-making authority for the construction of transmission lines."

The SERTP group argued to no avail that public power and other non-jurisdictional sponsors of transmission projects "cannot, however, surrender their responsibility to conduct the necessary cost and benefits evaluations and determine whether to participate in any given project." Any attempt to bind a non-jurisdictional sponsor to a cost allocation determination without first obtaining its board’s approval of the transmission project and its detailed financial terms would impermissibly intrude on its decision-making authority, the group said. 

The SERTP group warned that failure to respect the unique responsibilities of public power and other non-jurisdictional sponsors may leave them no choice but to depart from the group. The SERTP plan was filed by the region’s investor-owned utilities (Louisville Gas and Electric, Kentucky Utilities; Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Ohio Valley Electric Corp.), but the group includes Associated Electric Cooperative Inc., Dalton (Ga.) Utilities, Georgia Transmission Corp., the Municipal Electric Authority of Georgia, PowerSouth Energy Cooperative, the South Mississippi Electric Power Association, and the Tennessee Valley Authority.
However, the commission ruled that the FERC-jurisdictional (i.e., investor-owned) transmission providers in the region must ultimately decide which transmission projects are selected for purposes of cost allocation. "While we encourage state entities or regional state committees to consult, collaborate, inform, and even recommend a transmission project, the [investor-owned] utility transmission providers in a transmission planning region must make the selection decision with respect to the transmission project."

The commission also directed the SERTP group "to eliminate the proposed condition that a transmission project may be selected in a regional transmission plan for purposes of cost allocation only if each beneficiary finds acceptable the financial terms of the contract required by the regional transmission planning process." As in previous orders on Order No. 1000 filings, FERC rejected use of only an avoided-cost method to measure benefits of all transmission projects. An avoided-cost method "may be appropriate to measure benefits for transmission projects driven by reliability concerns, but it does not account for other benefits associated with projects addressing economic or public policy-related transmission needs," FERC said.


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Senior Vice President, Publishing 
Jeanne Wickline LaBella

Editorial Director
Robert Varela

Editor, Public Power Daily
Jeannine Anderson

Communications Assistant
Fallon W. Forbush

Manager, Integrated Media 
David L. Blaylock

Integrated Media Editor 
Laura D’Alessandro