The Federal Energy Regulatory Commission (FERC) is facing a significant request from a group of large energy consumers and advocates. They are urging FERC to prohibit transmission owners from planning local transmission projects that exceed 100-kV on their own. This request arises from concerns about the efficiency and cost-effectiveness of current planning practices.
The coalition argues that local planning, combined with the lack of an independent planner for transmission systems, has led to projects that are both inefficient and costly. They highlight that these methods contribute to higher rates for consumers and poor project outcomes.
In a recent rule revision known as Order 1920, FERC recognized that local planning tends to be less efficient and more expensive when compared to broader regional planning. However, the commission did not tackle the issues raised in the complaint. The coalition states that for nearly two decades, FERC has attempted, without success, to motivate transmission owners to engage in regional planning while allowing exceptions for local planning that undermine these efforts.
According to the complaint, within the PJM region, there are 1,584 local transmission projects expected to cost around $18.1 billion and set to begin operation between 2024 and 2028. The coalition argues that these projects often receive minimal independent scrutiny, raising concerns about their cost-effectiveness and overall efficiency.
Utilities are said to prefer local projects because these contracts do not undergo competitive bidding and have limited scrutiny under FERC’s ratemaking process. The coalition believes that FERC should enforce independent regional planning to prioritize consumer welfare over the interests of existing transmission providers and owners.
They suggest that regional organizations and independent system operators could serve as these independent planners if certain standards are met. However, some experts warn that this complaint could lead to more bureaucratic hurdles for transmission development. Larry Gasteiger, director of WIRES, a utility advocacy group, criticized the complaint, stating that it introduces unnecessary complexities and could detract from ongoing important planning projects.
The complaint specifically targets over two dozen utilities, including major players like Florida Power & Light and Duke Energy Carolinas, along with principal grid operators overseen by FERC. The coalition behind the complaint includes various groups, ranging from industrial energy consumers to ratepayer advocates from multiple states, highlighting a broad concern over transmission planning practices.