FERC Issues Key Order Delineating Scope of Transmission Planning Covered by Order Nos. 890 and 1000
On August 31, 2018, the Federal Energy Regulatory Commission (FERC) issued an important order that clarifies in detail what activities are and are not considered transmission planning activities subject to the requirements of Order Nos. 890 and 1000. This issue arose as a result of show cause order relating to the California Independent System Operator Corporation’s (CAISO) transmission planning process and a voluntary proposal by Southern California Edison Company to enhance transparency around certain types of capital projects and activities that also were not subject to CAISO review. A May Technical Conference was held to further shed light on the issue of what types of projects and activities should and should not be subject to CAISO review in its annual transmission planning process.
In its order, FERC agreed with the CAISO and certain of its transmission owners (TOs) that Order Nos. 890 and 1000 were focused on planning for the expansion of transmission systems: “[T]he Commission adopted the transmission planning requirements in Order No. 890 to remedy opportunities for undue discrimination in expansion of the transmission grid.” FERC thus ruled that transmission-related maintenance and compliance activities—characterized at the Technical Conference as asset management projects and activities—were not subject to Order No. 890’s transmission planning requirements. Although the August 31, 2018 order largely speaks in terms of Order No. 890, the scope of Order No. 1000 also rests on FERC’s view of what is and is not “transmission planning.” FERC explained that the concept of expansion does not include activities such “as maintenance, compliance, work on infrastructure at the end-of-useful life, and infrastructure security undertaken to maintain a transmission owner’s existing electric transmission system and meet its regulatory compliance requirements.”
Even if an asset management project or activity results in an incidental increase in transmission capacity, if it is not reasonably severable from an asset management project or activity, such increase “would not render the asset management project or activity in question a transmission expansion that is subject to the transmission planning requirements of Order No. 890.” In contrast, if a TO’s asset management project results in an increase in transmission capacity that is not incidental, it would fall under transmission planning.
The order largely confirmed the CAISO’s view of its planning role. As noted in the order, the CAISO’s transmission planning process, as filed at FERC, was limited to: “reliability needs; economic needs; public policy requirements and directives; location-constrained resource interconnection facilities (which are radial generation tie facilities ultimately paid for by generators as they come on-line); [and] maintaining the feasibility of long-term [congestion revenue rights].” Another factor in the decision may have been the CAISO’s position that it does not have access to the system information needed to take on asset management activities, nor the skillsets of personnel required to assess them.
This decision should ensure that ISOs and RTOs remain focused on the activities that comprise transmission planning, i.e., the expansion of the grid to meet future needs, not dealing with each of their TOs’ thousands of transmission components that must be periodically replaced due to wear or upgraded because of obsolescence or the various regulatory and compliance requirements each TO must address to ensure its transmission facilities operate in a safe and reliable manner.