Docket No. ER24-1978-000
I concur in today’s order because the role of the states in longer-term planning and cost allocation of public policy projects in a multi-state region in this proposal exemplifies what the Commission should approve and encourage. As we approve this proposal, it is indeed ironic to observe the stark contrast between this proposal and the state role allowed in the long-term transmission planning and cost allocation rule that a 2-1 majority of this Commission approved on May 13th, known as Order No. 1920, from which I dissented.[1] The state role in this proposal is utterly contrary to the insufficient one allowed in Order No. 1920, which does not require that states consent to planning and selection criteria, does not require that states consent to an ex ante cost allocation formula, and does not even require that transmission providers have to file a state-agreed alternative to an ex ante formula.[2]
To develop this proposal, the New England states worked with ISO-NE. In fact, the New England States Committee on Energy (NESCOE), “the Regional State Committee for New England, representing the collective positions of the six New England states in regional electricity matters,”[3] notes that after its Vision Statement was issued in late 2020 requesting that the ISO do so,[4] ISO-NE began to work with the New England states and stakeholders to develop a longer-term, optional regional transmission planning process.[5] Important to my concurring here is that the New England states, through NESCOE, strongly support this proposal:
NESCOE strongly supports the Filing and respectfully requests that the Commission approve the [Longer-Term Transmission Planning (LTTP)] Phase 2 Changes. The LTTP Phase 2 Changes are the culmination of a multi-year collaborative process between ISO-NE, the New England states, and stakeholders.[6]
The LTTP Phase 2 revisions accepted by today’s order are just and reasonable because the proposal began with “a state-led process”[7] and creates for the states a central decision-making role in that process.[8] At a high-level, as ISO-NE explains, the revisions set up a process by which “the New England states can request proposals for the development of transmission infrastructure needed to address the findings of an LTTS (or follow-on studies . . .), and advance their energy and environmental policy-based objectives.”[9]
To that end, let me highlight certain aspects of the LTTP Phase 2 revisions: (i) they address public policy projects; (ii) they address the process by which the states can move forward with Requests for Proposal (RFPs) to select transmission solutions for those policy objectives;[10] (iii) the states have—as part of what is known as the “core process” in LTTP Phase 2—agreed to the process for selecting projects as well as the default ex ante cost allocation formula (across all six states on a load share basis) or the states can also propose an alternative to the ex ante cost allocation if they wish;[11] and (iv) the states have agreed to a benefit-to-cost ratio to select a potential transmission solution, but one or more states may agree to pay the costs of a project that does not meet that ratio, as part of what is called the “supplemental process” in LTTP Phase 2.[12] Let me emphasize that this proposal will produce just and reasonable rates precisely because the states must agree to the cost allocation formula. The specific benefit-to-cost ratio referenced herein is just and reasonable because the states agreed to it[13]—not because of any intrinsic principle, set number, or mathematical formula—and because the states can select an alternative cost allocation methodology under the “core process” or, in part, in the “supplemental process” by agreeing to pay any excess to the benefit-to-cost ratio limit.
It is worth noting that various aspects of the LTTP Phase 2 are remarkably similar to PJM’s State Agreement Approach (SAA),[14] as ISO-NE also recognized.[15] The PJM SAA requires that states drive the process for planning and cost allocation of public policy projects, exactly as will happen here, and must agree to any ultimate cost allocation for public policy projects. Another irony to our approval of this proposal is that the PJM SAA will not be allowed in its current form under Order No. 1920.[16] Indeed, one may speculate that if Order No. 1920 takes effect in its current form, over time this very proposal we approve today will also not survive in its current form either because, as described below,[17] the obvious objective of Order No. 1920 is to force all projects, including public policy related projects, into the same bucket with other types of projects for planning and cost allocation purposes.
The core role of the New England states and the ability of those states to pursue their public policies through this process is paramount to the New England states’ support of this proposal. NESCOE makes clear:
The central role of the states in the Phase 2 process underpins the unanimous state support for the project selection and cost allocation creation methodologies in the core and supplemental processes.[18]
However, just eight weeks ago, the Commission issued Order No. 1920, a final rule which is utterly contrary to the proposed process accepted here today and which outlines a fundamentally smaller and less robust role for the states than the state role integral to this proposal. First, as I pointed out in my dissent to Order No. 1920, that final rule throws all transmission projects into the same bucket—those that solve specific reliability problems or reduce congestion costs along with those designed to promote public policies or corporate purchased-power preferences—and disguises their very different purposes by “re-labeling” all projects in the new bucket with the same name.[19] This device makes it impossible to break out the specific costs of public policy projects for purposes of cost allocation,[20] which the proposal we are approving today permits.
Moreover, Order No. 1920 requires the same ex ante cost allocation process to be applied to all of the projects in the single bucket.[21] Far from creating the single bucket required by Order No. 1920, the LTTP Phase 2 process accepted today recognizes that it is about addressing state public policies and provides cost allocation methodologies for that process. There are several important qualities of the LTTP Phase 2 process that would not be welcome in Order No. 1920’s world. First, it is very important to remember that in the LTTP Phase proposal, the New England states led the charge to request that ISO-NE develop the process and those states actively participated in its development, which includes the default ex ante cost allocation. And, as noted above, NESCOE strongly supports the LTTP Phase 2 proposal.[22] Second, if NESCOE does not exercise its right to cancel a project upon ISO-NE’s identification of the preferred solution, NESCOE is empowered to itself identify for application an alternative cost allocation that it would submit to this Commission for approval. Finally, under the “supplemental process,” a state or states can agree to pay the costs in excess of the benefit-to-cost ratio limit, thereby continuing to pursue a project that is deemed to be important to that state or states. In sum, contrary to Order No. 1920, the LTTP Phase 2 process does not fit the “single bucket” mold.
Another contrast with today’s proposal is that Order No. 1920 determined that transmission providers may ignore any agreement or alternative proposed by the states.[23] As just outlined, NESCOE is entitled to propose an alternative cost allocation methodology in the core process and the states are entitled to agree to move forward pursuant to their own agreement in the “supplemental process.” Those cost allocations cannot be ignored here because NESCOE has the right to exercise them. So, for these reasons as well, LTTP Phase 2 stands in stark contrast to Order No. 1920.[24]
This proposal from ISO-NE, initiated and strongly supported by the New England states, is the type of planning and cost allocation construct for public policy projects that the Commission should encourage and approve. The very reasons this proposal deserves our approval, however, provide an indictment of Order No. 1920 and present a compelling case why Order No. 1920 needs major revisions. In another irony, the proposal from ISO-NE we approve today exemplifies the role of the states promised in the Notice of Proposal Rulemaking (in FERC lingo, the “NOPR”)[25] that preceded Order No. 1920. This proposal today also illustrates some of the major changes that should be made to Order No. 1920 for it to work. To begin with, Order No. 1920 must be amended to allow long-term planning and cost allocation constructs such as this one and the PJM SAA—which has been used in PJM for a decade—to continue as preferred constructs to address public policy projects.
For these reasons, I respectfully concur.
[1] Building for the Future Through Electric Regional Transmission Planning and Cost Allocation, Order No. 1920, 187 FERC ¶ 61,068 (2024) (Order No. 1920) (Christie, Comm’r, dissenting) (Order No. 1920 Dissent) (available at https://www.ferc.gov/news-events/news/e-1-commissioner-christie-dissent-transmission-planning-and-cost-allocation-rule).
[2] With due respect to the Chairman, the statement in his concurrence that the ISO-NE proposal that we approve today “includes many of the significant components” of Order No. 1920 simply misses the point. In terms of the actual state role and actual state authority permitted in Order No. 1920, there exists a chasm between ISO-NE’s proposal and Order No. 1920 that is long and wide, as detailed herein and in my dissent to Order No. 1920.
[3] NESCOE May 30, 2024 Comments (NESCOE Comments) at 1 n.1.
[4] That Vision Statement, among other things, “set out the states’ transmission planning recommendations, which included a request that [ISO-NE] revise the Tariff to incorporate a longer-term regional transmission planning process authorizing the ISO’s performance of state-requested studies that could inform the region of the amount and type of infrastructure needed to meet the states’ clean energy goals based on state-identified scenarios, assumptions and inputs on a routine basis.” ISO-NE Transmittal at 4 (emphasis added) (footnote omitted).
[5] NESCOE Comments at 2.
[6] Id. at 4 (emphasis added). I also note that Public Systems, which include political subdivisions of Connecticut (Connecticut Municipal Electric Energy Cooperative) and Massachusetts (Massachusetts Municipal Wholesale Electric Company) and a state created, joint action agency (Vermont Public Power Supply Authority), as well as a consumer-owned electric distribution cooperative (New Hampshire Electric Cooperative, Inc.), also support the LTTP Phase 2 revisions and request that the Commission accept them. Public Systems May 30, 2024 Comments passim.
[7] ISO-NE Transmittal at 9.
[8] The LTTP Phase 2 is a continuation of the LTTP Phase 1 process accepted by the Commission on February 24, 2022, which began with NESCOE’s 2020 Vision Statement and put the New England states at the forefront of this process. As ISO-NE describes it, the LTTP Phase 1 changes “incorporated in a new . . . optional, non-Order No. 1000 required process for the New England states to advance policy-based objectives. The LTTP Phase 1 Changes established the rules that enable the states to request that the ISO perform state-requested, scenario-based transmission planning studies that may extend beyond the ten-year planning horizon (. . . [Longer-Term Transmission Study (LTTS)]) on a routine basis. Under these procedures, the New England states, through NESCOE, may request that the LTTS identify high-level transmission infrastructure (and, if requested, associated cost estimates) that could meet states’ energy policies, mandates or legal requirements (i.e., State-identified Requirements). As a state-led process, the procedures provide for the ISO to rely on the states to determine the range of scenarios, drivers, inputs, assumptions, and timeframes for use in the studies.” Id. at 6 (footnote omitted) (emphases added).
[9] Id. at 8.
[10] Id. at 9 (“If NESCOE requests that [ISO-NE] issue a longer-term RFP, [ISO-NE], in consultation with NESCOE, will develop the RFP and issue it by posting a public notice on its website inviting Qualified Transmission Project Sponsors (‘QTPS’) to submit Longer-Term Proposals (individually or jointly with other QTPSs), together with a $100,000 deposit (per proposal), that comprehensively address all of the needs identified in the RFP.”).
[11] ISO-NE explains that this cost-allocation optionality is important to the states: “As this is a state-led process, this optionality is designed to provide the New England states the opportunity to negotiate and ultimately ensure their support for the Longer-Term Transmission Solution.” Id.
[12] This is referred to as the “supplemental process” in LTTP Phase 2 and is described as “an add-on to the core process that enables the New England states to agree to move forward with a transmission project where none of the proposals that meet the identified needs satisfy the Tariff-specified [benefit-to-cost] criterion . . . .” Id. at 8 (emphasis added).
[13] This order recognizes that NESCOE “strongly supports” the LTTP Phase 2 proposal as it is “a culmination of a multi-year collaborative process between ISO-NE, the New England States, and stakeholders.” Order at P 25.
[14] See, e.g., PJM Interconnection, L.L.C., 142 FERC ¶ 61,214, order on reh’g,
147 FERC ¶ 61,128 (2014).
[15] ISO-NE Transmittal at 35.
[16] Order No. 1920 Dissent at PP 11, 80.
[17] See infra at P 7.
[18] NESCOE Comments at 4 (emphases added).
[19] See, e.g., Order No. 1920, 187 FERC ¶ 61,068 at P 1474; Order No. 1920 Dissent at PP 6-7.
[20] Order No. 1920 Dissent at P 7.
[21] See, e.g., Order No. 1920, 187 FERC ¶ 61,068 at P 1291; Order No. 1920 Dissent at P 9.
[22] See supra at P 2.
[23] See, e.g., Order No. 1920, 187 FERC ¶ 61,068 at PP 1359, 1429; see also id. P 1356 n.2895 (citation omitted); Order No. 1920 Dissent at PP 76, 81.
[24] As I stated in my dissent to Order No. 1920: “[G]iven the final rule’s determinations undercutting the states’ role, I highly doubt that PJM’s [SAA] or other existing mechanisms involving the states in other RTOs will remain viable with respect to the cost allocation of Long-Term Regional Transmission Facilities.” Order No. 1920 Dissent at P 80.
[25] Bldg. for the Future Through Elec. Reg’l Transmission Planning & Cost Allocation & Generator Interconnection, Notice of Proposed Rulemaking, 179 FERC ¶ 61,028, at P 303 (2022).