Commissioner Willie Phillips Joint Statement
April 21, 2022
Docket No. RM21-17-000
I concur in today’s Notice of Proposed Rulemaking (NOPR) to emphasize the importance of our action today and to call attention to the work that remains. I believe today’s NOPR represents a critical first step toward ensuring a 21st century electric grid that is capable of reliably and affordably accommodating new generation.
Most commenters urge the Commission to reexamine the transmission planning and cost allocation policies adopted in Order No. 1000 over a decade ago.[1] While Order No. 1000 was well intentioned, commentors argue that it fell short of its goal to spur competitive transmission buildout. Under section 206 of the Federal Power Act,[2] the Commission must ensure that transmission rates are just and reasonable. If there are deficiencies in the Commission’s existing regional transmission planning and cost allocation requirements, we must endeavor to remedy those deficiencies. For this reason, I support the NOPR’s proposal to revisit our existing policies.
This NOPR acknowledges the facts on the ground. It is an inescapable fact that our resource mix is changing, which is a key factor leading to a greater need for transmission. Due in large part to economies of scale, the cost of renewable energy has fallen rapidly over the last decade while the demand for those resources has increased.[3] As of the end of 2020, there were over 800 GW of wind, solar, and energy storage capacity seeking interconnection in the United States.[4] That figure has now risen to 1,300 gigawatts of wind, solar and storage capacity proposed for interconnection as of the end of 2021.[5] At the same time as the resource mix is changing, severe weather events and wildfires are becoming more frequent and extreme.[6] These are just a few of the factors contributing to a greater need for expansion of our nation’s grid.[7]
The record here appears to show that transmission expansion is increasingly occurring in a piecemeal and inefficient fashion outside of the regional transmission planning process, which may not be cost-effective for consumers in the long run.[8] While commenters’ views vary on how best to address this problem, nearly all commenters endorse some form of proactive planning for the future resource mix and demand.[9] I believe the NOPR proposal to require long-term scenario planning, including accounting for extreme weather events, is necessary to maintain the reliability of the grid and to ensure that transmission costs are just and reasonable. I also note that while this NOPR proposes to require the evaluation of benefits of long-term regional transmission facilities over a 20-year time horizon, it does not propose to prescribe any particular definition of “benefits” or “beneficiaries,” nor require use of any specific benefits.[10] Instead, we continue to acknowledge the benefits of regional flexibility. Nor does it propose to require that transmission providers select any particular transmission projects, instead proposing to provide transmission providers the flexibility to propose the selection criteria that they, in consultation with their stakeholders and states, believe will ensure that more efficient or cost-effective long-term regional transmission facilities ultimately are selected.[11] And I support the proposal to require transmission providers to consult with and incorporate states’ views in project selection and cost allocation. I invite comment on the value of such state involvement for increasing the likelihood that those facilities are sited and ultimately developed with fewer costly delays.
I also strongly support the NOPR proposal for greater consideration of dynamic line ratings and advanced power flow control devices in regional transmission planning processes. Grid-enhancing technologies (GETs) can optimize our existing transmission infrastructure and provide cost-effective solutions for consumers. For example, by allowing the measurement of transmission capacity in real-time, dynamic line ratings can provide net benefits to customers by allowing increased power flow and reducing congestion costs, as well as by detecting when power flows should be reduced to avoid unnecessary wear on transmission equipment. The role that these and other GETs could play in delaying or eliminating the need for new transmission facilities cannot be ignored. I urge the Commission to consider further reforms to incentivize the adoption and deployment of GETs.
Many commenters raise concerns about delays and significant backlogs in interconnection queues across the country.[12] Currently, less than a quarter of generator interconnection applications actually result in an interconnection.[13] Interconnection applicants submitting speculative interconnection requests can linger in the queue, only towithdraw at late stages, often necessitating the study of non-viable projects as well as restudies due to withdrawals. These often result in delays and cost risks for commercially viable projects that are otherwise ready to interconnect. Although the reforms we propose in this NOPR may help mitigate these issues in the long term, they are not enough to alleviate existing backlogs in the near term. While I recognize and commend the ongoing efforts in some regions to address the large volume of interconnection requests,[14] I encourage my colleagues to consider whether it is necessary to require certain best practices, such as first-ready, first-served cluster study approaches, to more efficiently process interconnection requests.
Similarly, many commenters have highlighted the importance of adopting interregional coordination and planning reforms, particularly for reliability.[15] Today’s NOPR does not, at this time, propose changes to the existing interregional transmission coordination and cost allocation requirements of Order No. 1000. As we continue to examine those issues, I urge the Commission to act expeditiously to propose interregional reliability planning reforms. Looking beyond regional boundaries is important so that cost-efficient regional and interregional projects can be considered and studied together. We should consider whether neighboring regions should adopt common planning assumptions and methods that allow for region-specific inputs. Additionally, I believe we must consider whether to adopt a requirement for a minimum amount of interregional transfer capacity to protect against generation shortfalls, especially during extreme weather events.
Finally, I note that this NOPR is merely a proposal and I am looking forward to reviewing the comments in response. In addition, I emphasize that the reforms in this NOPR are not intended to be one-size-fits-all, nor would I support such an approach. Recognizing the unique needs and characteristics of individual markets and regions, I am particularly interested in comments on whether the reforms proposed in this NOPR allow for a sufficient level of regional flexibility.
For these reasons, I respectfully concur.
[1] Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, 136 FERC ¶ 61,051 (2011), order on reh’g, Order No. 1000-A, 139 FERC ¶ 61,132, order on reh’g and clarification, Order No. 1000 -B, 141 FERC ¶ 61,044 (2012), aff’d sub nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014).
[2] 16 U.S.C. § 824e.
[3] For instance, after an 85% cost decline over the past decade, solar photovoltaic systems are among the most cost-competitive energy resources in the market. See Deloitte, 2022 Renewable Energy Outlook, https://www2.deloitte.com/us/en/pages/ energy-and-resources/articles/renewable-energy-outlook.html.
[4] Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection As of the End of 2020, Lawrence Berkeley National Laboratory, at 22 (May 2021).
[5] Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection As of the End of 2021, Lawrence Berkeley National Laboratory, at 3 (April 2022).
[6] As outlined in the November 2021 FERC-NERC-Regional Entity Staff Report on Winter Storm Uri, interregional transfers played a critical role in helping MISO and SPP compensate for generation outages during the event. The February 2021 Cold Weather Outages in Texas and the South Central United States, FERC, NERC and Regional Entity Staff Report, at 98 (November 2021).
[7] See National Association of Regulatory Utility Commissioners (NARUC) Comments at 17 (“Because certain clean energy resources are diffuse by nature, meaning the resources exist at disparate locations and cannot simply be placed near existing load centers, new transmission facilities may need to be developed to gather and transport energy from generation rich areas to load.”); Harvard Electricity Law Initiative Comments at 17 (“Transmission is needed to connect these location-constrained resources and to ensure that the system remains reliable with a larger share of intermittent generation.”).
[8] See Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, 179 FERC ¶ 61,028, at P 38 (2022) (NOPR) (discussing the dramatic increase in cost, size, and scope of interconnection-related network upgrades).
[9] See Americans for a Clean Energy Grid Reply Comments, Appendix A (listing 174 commenters).
[10] See NOPR, 179 FERC ¶ 61,028 at P 183.
[11] Id. P 242.
[12] See, e.g., Advanced Energy Economy Reply Comments at 17-23; American Electric Power Service Corporation Comments at 36-38; American Public Power Association Comments at 27; Edison Electric Institute Reply Comments at 27-30; NextEra Energy, Inc. Comments at 12.
[13] See Queued Up… But in Need of Transmission Unleashing the Benefits of Clean Power with Grid Infrastructure, U.S. Department of Energy, at 2 (April 2022).
[14] See, e.g., California Public Utilities Commission Comments at 70 (noting that California Independent System Operator Corporation is undertaking a stakeholder process focused on increasing efficiency of the interconnection study process); PJM Interconnection, L.L.C. Comments at 47-49.
[15] See, e.g., NARUC Comments at 8 (“The planning process should share system planning information on an interregional level whenever appropriate.”); id. at 19 (describing how during Winter Storm Uri, “usually a net exporter of energy, SPP relied significantly on imported energy to serve load during the winter event” and that “effective planning should strive to quantify benefits associated with enhancing interregional import and export capabilities, given the likelihood of future extreme weather events and related energy shortages. Further analysis and process improvements in interregional transmission development and imports and exports capability will be necessary, not only to accommodate demand for a clean energy transition, but also for reliability and defined resiliency benefits.”); PJM Interconnection, L.L.C. Comments at 72-73 (stating that greater interregional transfer capability has a significant reliability benefit as demonstrated by the February 2021 Cold Snap and the 2014 Polar Vortex, and the Commission should approach the issue of strengthening interregional ties as a broad reliability-based benefit); New York Independent System Operator, Inc. Comments at 55 (“Interconnections with neighboring systems are important tools to support grid reliability, resiliency, and market efficiency by providing opportunities for the exchange of capacity and energy.”).