Transmission Planning a and Cost Allocation Final Rule CONTACT - - PDF document

Transmission Planning a Allocation Final Rule

July 25, 2011

On July 21, 2011, the FERC voted 5-0 to iss Transmission Planning and Cost Allocation and Operating Public Utilities (“Final Rule”) issued a partial dissent to the Final Rule on alert provides the highlights of the Final Ru depth summary. Highlights I. The Final Rule establishes th

• Three Requirements for transm
• Each public utility transmis

planning process which pro principles under Order No.

• Each transmission plannin

transmission needs driven

• Public utility transmission p

coordinate concerning mor

• Three requirements for transm
• Each public utility transmis

planning process which ha facilities that satisfies six re

• Public utility transmission p

interregional cost allocation satisfies six regional cost a

• Participant funding of new

regional or interregional co

• Federal Rights of First Refusal mu

agreements subject to four limitatio

• The requirement would no

transmission plan for purpo

• The requirement would no
• uts or reconductoring);
• The rule would allow, but n
• r developers; and
• Nothing in this requirement

transmission facilities, inclu

and Cost

issue a final rule on ion by Transmission Owning le”). Commissioner Moeller

• n a few discrete issues. This

Rule as well as a more in ghts of the Final Rule s the following: mission planning ission provider must participate in a regional transmission produces a single regional transmission plan and satisfie

• No. 890;

nning process at the local and regional level must consider en by federal or state laws or regulations; and

• n providers in neighboring transmission planning regions
• re efficient or cost- effective solutions.

smission cost allocation ission provider must participate in a regional transmission has a regional cost allocation method for new transmissi x regional cost allocation principles;

• n providers in neighboring planning regions must have a

ation method for new interregional transmission facilities w t allocation principles; and w transmission facilities is permitted but not as part of the cost allocation method. ust be removed from Commission-approved tariffs and tations not apply to a transmission facility not selected in a region rposes of cost allocation; not apply to upgrades to transmission facilities (ie: tower ut not require, competitive bidding to solicit transmission p ent impacts state or local laws concerning construction o luding siting or permitting.

CONTACT Clifford S. Sikora 202.274.2966 Daniel L. Larcamp 202.274.2841 >> Energy >> troutmansanders.com

ssion fies the der

• ns must

ssion ssion a common s which the and ional er change

• n projects
• f
• m

• Additional requirement
• Each public utility transmis

provider to reevaluate the need to be evaluated when Such alternative solutions

• Compliance
• All public utility transmission p

within 12 months of the eff planning and cost allocatio II. Comments made by the Comm

• Chairman Wellinghoff
• Policy drivers behind the d

since Order No. 890 and th rates.

• The existing transmission s

fleet.

• Enhancement to procedure

facilities needed for reliabili § Planning requirem commensurate wit unless that region

• Commissioner Moeller
• Noted the Final Rule does

too long and is way too exp

• The draft Final Rule also d

cases it is Federal agencie

• Commission Moeller identi

these will be the areas cov § Specific right of an they are NERC-manda § A right of first refus

• Commissioner Spitzer
• The Federal Right of First Re
• Commissioner Norris
• Stresses the importance o
• Commissioner LaFleur
• United States has underinv
• The draft Final Rule requir

development of a regional reliability of service obligat ission provider must add a tariff provision that requires t he regional transmission plan to determine if alternative s hen there is a delay in the development of a transmission

• ns can include those proposed by the incumbent.

ssion providers would be required to make a compliance f effective date of the Final Rule; compliance filings for the tion requirements will be due in 18 months.

• mmission:

he draft Final Rule include changes in the transmission sys nd the need for reliable transmission service at just and rea

• n system was not built to accommodate the shifting trans

edures required today will provide for fair allocation of costs bility. ements are technology neutral- costs must be allocated ro with benefits, and no costs should be allocated outside a

• n agrees.
• es not address the issues of siting, or the fact that it take

expensive to site transmission..

• does not address any state laws, or the fact that it in so

cies which are delaying transmission. ntified areas where rule could have gone farther. Appare

• vered in his partial dissent.

an incumbent to rely with reliability projects in its footprin mandated; and fusal is not a right to forever not build a project. rst Refusal is a barrier to entry. e of reliability as a main driver for new transmission devel rinvested in transmission infrastructure. uires adoption of a backstop mechanism to ensure that d al facility will not prevent incumbents from complying with ations. s the e solutions ion facility. e filing the regional system d reasonable ansmission sts for new d roughly a region kes way some pparently rint when velopment. t delays in with

III. Overall Impressions:

• The Final Rule does not impose one
• allocation. Regional differences wil

devil will be in the details” regardin

• Cost allocation must be “roughly co

any Eastern or Western interconne industry advocated, but many oppo

• Costs can only be allocated outside o

Commission appears to expect that We anticipate FERC will make many fact s This is consistent with the way FERC imple DE I. INTRODUCTION

• The Commission concludes there a

thus, through the Final Rule seeks transmission planning processes at th discriminatory basis, possible trans meet transmission needs more effi transmission solutions chosen to m who receive benefits from them. F

• First, the Commission requires pub

transmission planning process that may resolve the transmission plann through local planning processes.

• Second, the Commission requires

OATTs or other jurisdictional tariffs first refusal to transmission facilitie

• f cost allocation. Final Rule at P 7.
• Third, the Commission requires pu

across regional transmission plann joint evaluation and sharing of info planning regions, including identific planning regions of interregional tra

• Fourth, the Commission requires p

method to allocate costs for new tr and (ii) a method to allocate the co evaluated by two or more transmiss coordination procedures. Final Ru

• The Commission finds that the app

interregional cost allocation method is at least roughly commensurate w

• ther words, costs may not be invo

Rule at P 10.

• The Commission will hold informat

Final Rule to review and discuss tho e one size fits all requirements for either regional planning will likely be reflected in compliance filings. In many way ding how the Commission acts on such compliance filings commensurate” with expected benefits. This seems to r

• nnection-wide rolling in of transmission costs, which some

posed. side of a region with the agreement of the neighboring reg t that such seams issues to be dealt with on a negotiated b t specific decisions on the compliance filings that are sub plemented Order Nos. 888 and 890. DETAILED SUMMARY re are certain deficiencies in current transmission planning ks to accomplish two primary objectives: (i) ensure that s at the regional level consider and evaluate, on a non- nsmission alternatives and produce a transmission plan e efficiently and cost-effectively; and (ii) ensure that the cos meet regional transmission needs are allocated fairly to Final Rule at P 4. public utility transmission providers to participate in a regi that evaluates transmission alternatives at the regional lev anning region’s needs more cost-effectively and efficientl

• s. Final Rule at P 6.

es public utility transmission providers to remove from the iffs and agreements any provisions that grant a federal rig ilities that are selected in a regional transmission plan for pu P 7. public utility transmission providers to improve coordinati anning processes by developing and implementing procedu formation regarding transmission needs of the transmiss ntification and joint evaluation by neighboring transmission l transmission facilities. Final Rule at P 8. public utility transmission providers to have in place: (i) transmission facilities selected in a regional transmission costs of a new interregional transmission facility that is jo ission planning regions in their interregional transmission Rule at P 9. pproach adopted in the Final Rule requires that all region ethods allocate costs of new transmission facilities in a manne ate with the benefits received by those who will pay those c voluntarily allocated to entities that do not receive benefi ational conferences within 60 days of the effective date o those requirements set forth in the Final Rule. The Com ing or cost ays “the ngs. to rule out me in the

• region. The

ed basis. ubmitted. ing, and an that can

• sts of

to those gional level that ently than their l right of r purposes ation cedures for ission ion (i) a ion plan; jointly sion ional and anner that e costs. In

• benefits. Final

te of the he Commission

also encourages dialogue with staff compliance proposals. Final Rule at A. Background

• Order No. 890 required each public

planning process that satisfies nine transparency; (4) information excha participation; (8) economic planning at P 18. The Commission notes that

• No. 890 by addressing new concer

monitoring of such planning process

• The Commission held three techni

in 2009 and subsequently issued a questions with respect to enhancing cost of transmission. Final Rule at B. Developments Since Ord

• In February 2009, Congress enacte

providing $80 million for the U.S. De development of interconnection-ba

• interconnections. DOE awarded A

this funding is to develop a portfolio associated transmission requirement necessary under any future electri II. THE NEED FOR REFORM A. The Proposed Rule

• The Commission finds that Order No

requirements provide an inadequa the challenges they are currently fa enhance the ability of the transmiss Commission-jurisdictional transmiss are just and reasonable and not un

• Despite arguments that the Comm

rates, terms and conditions are nec narrow focus of current planning re practices create an environment that new transmission facilities, and add reasonable rates. Final Rule at PP

• The Commission encourages regio

use the objectives and principles in P 61. B. Use of Terms

• The Commission notes that there i

in a regional transmission plan” and plan for purposes of cost allocation. transmission plan for purposes of c pursuant to a transmission planning taff as transmission providers work with stakeholders to p le at P 14. blic utility transmission provider to develop a transmission ine principles, including: (1) coordination; (2) openness; ( xchange; (5) comparability; (6) dispute resolution; (7) region ing studies; and (9) cost allocation for new projects. Fin that the Final Rule expands upon those reforms begun i cerns that became apparent in the Commission’s ongoing

• cesses. Final Rule at P 21.

nical conferences regarding transmission planning requi ued a Notice of Request for Comments, presenting numerou cing regional transmission planning processes and alloca at PP 23-24. rder No. 890 cted the American Recovery and Reinvestment Act (“ARR . Department of Energy (“DOE”) to award in support of the based transmission plans with the Eastern, Western, and ARRA funding in December 2009, and has indicated the

• lio of long-term energy supply and demand for future ne
• ments. According to DOE, significant expansion of the g

tric industry scenario. Final Rule at PP 26-29. r No 890’s transmission planning and cost allocation uate foundation for public utility transmission providers to y facing or will face in the future. The Final Rule is intend ission grid to support wholesale power markets and ens ission services are provided at rates, terms, and conditio unduly discriminatory or preferential. Final Rule at P 42. mission has not met its burden to show that reforms to c e necessary, the Commission finds otherwise, concluding t ng requirements and shortcomings of current cost allocation ent that fails to promote efficient and cost effective developm addressing such issues is necessary to ensure just and P 48-52. egions with existing transmission planning processes in pl s in the Final Rule to guide continued development. Fina e is a distinction in the Final Rule between “a transmission and a “transmission facility selected in a regional transmis ion.” The latter term, “transmission facility selected in a re f cost allocation,” is a transmission facility that has been ing region’s Commission-approved regional transmission to prepare ion ss; (3) egional inal Rule n in Order ing equirements rous cating the ARRA”), the nd Texas the goal of e needs and the grid is to address nded to nsure that itions that 42. to current ng that the ation pment of n place to inal Rule at sion facility mission a regional been selected ion

planning process for inclusion in a Such a facility may be a regional tr Such transmission facilities often w transmission plan; rather such tran in the regional transmission plan. include a transmission facility in the pursuant to a Commission-approve merchant transmission facility. Fina

• The Commission notes that in som

regional transmission plan for cost a transmission plan for informational

• The requirements of the Final Rule

facility that occurs after the effectiv transmission planning and cost allo

• Rule. Final Rule at P 65. The Com

such, each region is to determine at to reevaluation and, as a result, whet Rule at P 65. Transmission provid will determine which facilities evalu subject to the requirements of the F

• The Commission notes that nothin

transmission plan or selected in a r built, nor does it give any entity per approvals required to build the faci III. PROPOSED REFORMS A. Regional Transmission P

• The Final Rule requires that each pu

transmission planning process whi Order No. 890 transmission planni that transmission needs driven by transmission planning processes.

• The Commission elaborates that “l

utility transmission provider underta footprint pursuant to Order No. 890 1. Need for Reform C

• The Commission concludes that it

regional transmission planning refo undue discrimination by public utili existing Order No. 890 requirement providers evaluate transmission alte needs more efficiently or cost-effec public utility transmission providers

• In the absence of reform, the Com

providers may not assess potentia level which may prove to meet reg Rule at P 81. n a regional transmission plan for purposes of cost allocat l transmission facility or an interregional transmission fac ten will not comprise all of the transmission facilities in the r ansmission facilities may be a subset of the transmission

• n. The Commission states that such transmission facilitie

n the regional transmission plan that has not been selected

• ved planning process, such as a local transmission facil

Final Rule at P 63.

• me regions, transmission facilities not selected for purpo

st allocation purposes may nonetheless be in a regional

• nal purposes. Final Rule at P 64.

Rule apply to the evaluation or reevaluation of any transmi tive date of the transmission provider’s filing adopting the t allocation reforms of the pro forma OATT required by the he Commission recognizes there are ongoing planning cycles ne at what point a previously approved project is no longe whether it is subject to the requirements of the Final Rule. viders are directed to explain in their compliance filings ho aluated in their local and regional planning processes will the Final Rule. Final Rule at P 65. ing in the Final Rule requires that a facility in a regional n a regional transmission plan for purposes of cost allocati permission to build a facility. Entities must still obtain nec

• acility. Final Rule at P 66.
• n Planning Process

h public utility transmission provider participate in a regio hich produces a regional transmission plan and complie ning principles. The Final Rule also adopts reforms to en y public policy requirements are considered in local and . Final Rule at P 68. that “local” means the transmission planning process which ertakes for its individual retail distribution service territory

• 90. Final Rule at P 58.

m Concerning Regional Transmission Planning that it is necessary to act under section 206 of the FPA to ado eforms in order to ensure just and reasonable rates and p utility transmission providers. The Commission concludes ents are inadequate to ensure that public utility transmiss

• n alternatives at the regional level which might meet region

fectively than local transmission plans indicated by individ

• ders. Final Rule at P 78.

mmission expresses concern that public utility transmiss tial benefits of alternative transmission solutions at the re egional needs in a more cost-effective or efficient manne ation. facility. he regional ion facilities ities do not ted cility or a rposes of a nal mission the he Final les, and as nger subject

• ule. Final

how they will be al ation be necessary egional lies with to ensure nd regional h a public ry or

• adopt

and prevent es that ission ional ividual ission t the regional

• anner. Final

• Each public utility transmission pro

consideration of transmission need regional transmission planning pro transmission provider has to consid requirements in order to avoid actin 2. Legal Authority fo

• The Commission’s proposed reform

transmission grid to support whole services are provided at rates, term discriminatory or preferential. Final

• The Commission concludes that it

transmission planning reforms in the

• No. 890 and the requirement that e
• pen and transparent regional tran

party sought judicial review of its au enhanced through the Final Rule.

• The Commission disagrees with co

Final Rule, as the Final Rule deals focused on in section 202(a). Final

• Nothing in the Final Rule concerns

should not create a conflict between exercising authority over substantiv

• Requiring a regional transmission p

policy requirements cannot be cha beyond matters under the Commis directly affect the need for interstate

• jurisdiction. Final Rule at P 111.
• The Proposed Rule did not violate

public policy requirements in the tran Commission gave fair notice to the

• comment. Final Rule at P 114.

3. Regional Transm

• The Final Rule requires that each pu

transmission planning process that p the transmission planning principle conditions of Commission-jurisdicti

• discriminatory. Final Rule at P 146
• During the regional transmission p

evaluate, with their stakeholders, a the transmission planning region in by individual providers in local tran also consider non-transmission alte comparability transmission planning transmission providers and similarl transmission planning, and the Com energy efficiency options are frequen transmission often is planned as a rovider must amend its OATT to explicitly provide for eeds which are driven by public policy requirements in loc

• rocesses. The Commission concludes that a public utilit

sider how to plan for transmission needs driven by public cting in an unduly discriminatory manner. Final Rule at PP y for Transmission Planning Reforms

• rms intend to correct deficiencies in order to allow the

lesale power markets and ensure Commission-jurisdiction , terms and conditions that are just and reasonable and not nal Rule at P 85. that it has authority under section 206 of the FPA to adopt th n the Final Rule. These reforms build on the Commission at each public utility transmission provider have a coordin ransmission planning process. The Commission notes th authority under Order No. 890 to adopt the reforms that a

• e. Final Rule at P 99.

commenters who argue section 202(a) of the FPA prohib als with activities that occur before the operational activiti nal Rule at P 104. ns an exercise of siting, permitting or construction author een state and federal requirements. The Commission is n tantive matters reserved to the states. Final Rule at P 107.

• n plan which considers transmission needs driven by pub

haracterized as pursuing “broad general welfare goals” th ission’s authority under the FPA. Public policy requirem tate transmission facilities, which is within the Commission te the due process clause because it did not identify how th transmission planning process would be fulfilled. The the parties of the issue involved and they had an opportun mission Planning Principles h public utility transmission provider take part in a region that produces a regional transmission plan which complies ples of Order No. 890. This will ensure that rates, terms and ictional services are just and reasonable and not unduly 146.

• n planning process, public utility transmission providers m

, alternative transmission solutions that might meet the ne in a more efficient or cost-effective manner than those id ansmission processes. Public utility transmission provide alternatives proposed on a comparable basis. Order No. nning principle requires that the interests of public utility ilarly situated customers be treated comparably in regiona

• mmission recognizes that generation, demand respons

equently considered in local resource planning and that a last resort. Final Rule at PP 148, 153-154. local and utility ublic policy at PP 82-83. tional not unduly t the

• n’s Order

dinated, that no that are

• hibits the

vities hority, and is not 07. public s” that reach ements can ssion’s

• w the

rtunity to

• nal

lies with s and ly must eet the needs of e identified iders must

• No. 890’s

nal ponse, and

• The Commission declines to estab

alternatives should be considered o alternatives against transmission a comparability principle will interfere exercise authority over substantive

• The Commission does not set a spe

provider must perform. Each publi procedures to evaluate a set of sol these mechanisms on compliance, transmission planning principles an guidance as necessary. Final Rule a

• The Final Rule builds on the follow

(1) coordination; (2) openness; (3) t dispute resolution; and (7) econom transmission providers adopt these p regional transmission plan. Final R

• Consistent with the Commission’s

exact way in which public utility tran regional transmission planning prin regional transmission planning pro

• region. These regional transmission p

approach or another approach, so Rule at PP 157-158.

• The Commission declines to impos

commitments to construct transmiss transmission providers’ obligations transmission plans and commitment P 159.

• In order to clarify the Final Rule, th
• ne in which public utility transmiss

states, have agreed to participate i development of a single regional tr Final Rule requirements are intended recognizes the Final Rule may be i transmission providers should expl requirements of the Final Rule. Fin

• Merchant transmission developers

planning, as they assume the finan transmission projects as those for than cost-based rates. Nothing in t from voluntarily participating in the encourages them to do so. Additio transmission developer’s obligation

• interconnection. Final Rule at PP 1
• It is necessary for the merchant tran

permit public utility providers in the t

• perational impacts of the merchant t

Public utility transmission providers required and include this in their co tablish minimum requirements for when non-transmission d or appropriate metrics to measure non-transmission

• n alternatives. Further, the Commission rejects the notion t

ere with integrated resource planning, as the Final Rule w ive matters reserved to the states. Final Rule at PP 155- et a specific set of analyses which a public utility transmission blic utility transmission provider has flexibility to develop solutions to meet the region’s needs. The Commission wi ce, using statutory requirements of the FPA, Order No. 89 and precedent regarding Order No. 890 compliance and Rule at P 149.

• wing transmission planning principles required in Order No.

(3) transparency; (4) information exchange; (5) comparab

• nomic planning. The Commission requires that public utilit

se principles in connection with the process used to produ l Rule at P 151. ’s approach to Order No. 890, the Commission will not or transmission providers must fulfill requirements of comply

• rinciples. Public utility transmission providers developing

rocesses may come up with requirements that work for the ssion planning processes may entail a “top down” or “botto so long as it complies with the Final Rule requirements. F pose obligations to build or mandatory processes to obtai ission facilities in the regional transmission plan. Public

• ns to post information on the status of transmission upgr

ents to build transmission facilities are adequate. Final R , the Commission states that a transmission planning regi ission providers, in consultation with stakeholders and aff pate in for purposes of regional transmission planning and l transmission plan. The Commission further clarifies that nded to apply to new transmission facilities, however, it be in the middle of a transmission planning cycle. Public ut xplain in their compliance filings how they will implement th Final Rule at PP 160, 162. rs are not required to participate in regional transmission ancial risk for their projects. The Commission defines m

• r which costs will be recovered through negotiated rates

in the Final Rule prevents the merchant transmission dev the regional transmission planning process, and the Comm itionally, the Final Rule does not limit or affect a merchant tions to fund network upgrades caused by its projects’ P 119, 164-165. transmission developer to give adequate information and n the transmission planning region to examine reliability and hant transmission developers’ proposed transmission fac ders, with stakeholders, should propose what information wo compliance filings to the Final Rule. Final Rule at PP 164 ion tion that the e will not

• 156.

ion

• p

will review

• No. 890

e and further der No. 890: rability; (6) utility roduce a t order the plying with ing r their bottom up” . Final tain lic utility grades in nal Rule at egion is and affected that the lic utility ent the ion merchant ates, rather eveloper mmission hant nd data to and acilities.

• n would be

164-165.

4. Consideration of Requirements

• The Commission requires public ut

procedures which provide for cons requirements in the local and regio remedy opportunities for undue discr they can provide input into what tra instead of a public utility transmiss needs only. Final Rule at P 203.

• In order to consider transmission n

public utility transmission provider requirements; and (2) evaluate pot

• The Commission further explains t

policy requirements, stakeholders m transmission needs they think are d needs, there is no obligation placed potential solutions. Final Rule at P

• There is regional and local flexibilit

by public policy requirements for w transmission planning processes. highly variable based on geograph Commission’s minimum requirement that the procedures establish a jus identify needs for which transmissi

• provider. Final Rule at PP 208-209.
• The Commission will allow public u

review on compliance, to determine p transmission needs will be evaluate transmission needs more efficiently

• The Final Rule is not intended to c

intended by the Commission to com transmission needs driven by publi and regional transmission planning p transmission needs driven by publi requirement to fulfill such public po public utility transmission provider’s

• f its OATT. Final Rule at PP 212
• The Commission declines to specif

public policy requirement, but inten suggestions, including Environmenta federal or state laws driving transm

• The Commission clarifies in respon

an obligation for a public utility tran consider transmission needs driven laws or regulations. If the public ut policy objectives not specifically re facilities made to meet these object planning process. Final Rule at P

• If consideration of transmission need

transmission costs, it must follow the

• Rule. Costs of new transmission fa

is at least roughly commensurate w

• f Transmission Needs Driven by Public Policy

utility transmission providers to amend their OATTs to deta

• nsideration of transmission needs driven by public policy

gional transmission planning processes. These reforms w discrimination by allowing stakeholders a process throug what transmission needs are driven by public policy requirements ission provider planning for its native load customers or it

• n needs driven by public policy, the Commission clarifies tha

der must: (1) identify transmission needs driven by public p

• tential solutions to meet those needs. Final Rule at P 2

s that in order to identify transmission needs driven by pu rs must be able to provide input and offer proposals on re driven by public policy requirements. If there are no id ced upon the public utility transmission provider to evaluate P 207. ility in designing procedures to identify transmission need r which solutions will be evaluated in the local or regional

• s. The Commission notes that effects of these requirement

phy, existing resources and transmission constraints. The ment is that procedures allow for input from stakeholders, and just and reasonable and not unduly discriminatory process ssion solutions will be evaluated by the public utility trans 209. c utility transmission providers and their stakeholders, sub ine procedures for how potential solutions to identified

• ated. The goal of these procedures is to meet identified

ently and cost-effectively. Final Rule at P 211. change the role of the states in transmission planning a complement state efforts to make sure that solutions to blic policy requirements of the states can be evaluated in ing processes. Further, the need to evaluate identified blic policy requirements does not establish an independe policy requirements. To clarify, the Commission states th der’s failure to fulfill the public policy requirement is not a v 212-213. cify consideration of transmission needs driven by a spe ntends that procedures be flexible to allow stakeholder ental Protection Agency regulations, FPA section 217 or smission needs. Final Rule at P 215. ponse to numerous comments that the Final Rule does not ransmission provider or the transmission planning process iven by a public policy objective not required by state or fede utility transmission provider, with stakeholders, identifies required by state or federal laws or regulations, transmiss jectives can be eligible for cost allocation in the transmiss t P 216. needs driven by public policy requirements results in new the cost allocation principles discussed in section IV of the

• n facilities in the planning region have to be allocated in a

ate with costs. Final Rule at P 219. to detail icy s will

• ugh which

ments, r its own es that a lic policy P 205. public identified luate eeds driven al ments are . The rs, and ess to nsmission , subject to ed g and is d in local dent that a a violation pecific

• r other

not create ess to r federal fies public ission ission ew

• f the Final

n a way that

• The Commission determines that t

transmission projects are in the reg may include within their complianc believe are necessary to implement submitted under section 206 of the changes if they do not wish to. The Co and flexible criteria to determine if th discrimination through planning cri transmission needs driven by publi B. Nonincumbent Transmission De

• The Commission clarifies that “non

developers: (1) a transmission dev

• r footprint; and (2) a public utility t
• utside of its existing retail distribut

for purposes of that project. Final 1. Need for Reform C

• The Commission concludes based

planning process does not conside nonincumbents, the regional transm planning principle of being “open.” and may be unjust and unreasonab has a federal right of first refusal, a investment to develop a transmissi planning process, thus presenting treatment against nonincumbent tr

• The Commission notes that Order No.

transmission solutions in an effort to en regional transmission plan. Howev practices that have the potential to cost-effective solutions to regional t

• Specifically, an incumbent transmis

act in its own economic self-interes transmission projects in the region

• The removal of the federal right of

facility) may have varying impacts transmission planning process. Fin

• While the Commission states that i

highlight their strengths to support should not categorically exclude a

• strengths. And while several publi
• bligation to build in relation to its m

necessarily dependent on the incu right of first refusal to prevent othe located in that region. Final Rule at

• In terms of reliability standards and

permit an incumbent transmission p choosing to build new transmission service territory or footprint and that 262. that there is merit in a flexible approach to determining whic regional transmission plan. Public utility transmission pro ance filings in response to the Final Rule tariff revisions the ent flexible transmission planning criteria. These change the FPA. Those with bright line criteria are not required to The Commission will evaluate compliance filings with brig ne if they permit unjust and unreasonable rates or undue criteria and whether they ensure fair consideration of blic policy requirements. Final Rule at P 224. Developers

• nincumbent transmission developer” includes two catego

eveloper that does not have a retail distribution service te ty transmission provider that proposes a transmission pro bution service territory or footprint, where it is not the incu al Rule at P 225. m Concerning Nonincumbent Transmission Develop ed on the comments it has received, if a regional transmis ider and evaluate transmission projects proposed by nsmission planning process cannot meet the Order No. 8 .” As such, the process may not result in cost-effective s

• nable. Moreover, whenever an incumbent transmission o

l, a nonincumbent transmission developer risks losing its ission project that it proposed in the regional transmission ng opportunities for undue discrimination and preferential bent transmission developers. Final Rule at P 229. der No. 890 required comparable evaluation of all potentia rt to ensure more efficient or cost-effective solutions in the ever, if the Commission did not act now, it would leave in l to undermine the identification and evaluation of more ef al transmission needs. Final Rule at PP 253-255. mission provider’s ability to use a federal right of first refu rest may discourage new entrants from proposing new

• nal transmission planning process. Final Rule at P 256.
• f first refusal (which does not apply to a local transmissi

ts in each region, but it will not fundamentally alter the re . Final Rule at PP 258-259. that incumbent public utility transmission providers are free to rt projects in a regional transmission plan, those strength a nonincumbent transmission developer from presenting blic utility transmission providers may have accepted an ts membership in an RTO or ISO, that obligation is not cumbent transmission provider having a corresponding fede her entities from constructing and owning transmission fa e at PP 260-261. and obligations to serve customers, the Final Rule continue

• n provider to meet its reliability needs and service obliga

ion facilities that are located solely within its retail distribut that are not submitted for regional cost allocation. Final R hich n providers they hanges will be ed to file right line ategories of e territory project ncumbent

• pers

mission

• No. 890

e solutions,

• n owner

its ion ial tial n the e in place e efficient or efusal to 56. ssion the regional ee to engths g its own n ng federal

• n facilities
• ntinues to

igations by ibution al Rule at P

• The Commission concludes that eli

discrimination against incumbent tr developers and clarifies that the re transmission providers in all region 2. Legal Authority T

• The Commission determines that i

the federal right of first refusal to in construction of transmission faciliti

• allocation. A federal right of first re

for jurisdictional transmission servi the Commission to revise terms in terms or conditions of transmission discriminatory or preferential. Fina

• Eliminating the federal right of first

the states because the reforms in the provider tariffs and agreements sub

• The Commission is focused on the

jurisdictional transmission services governance practices, drawing a c enlarging transmission facilities un sections 215 and 216 of the FPA. 3. Removal of a Fed Jurisdictional Tar

• The Commission clarifies that not e

transmission provider is, in effect, s subject to a federal right of first refu facilities that are evaluated at the r purposes of cost allocation. As su does not apply to a local transmiss provider to its own transmission fac alter an incumbent transmission pr Rule at PP 317-319. a. Qualificat in the Reg

• First, the Commission requires that e

demonstrate that the regional trans established appropriate qualificatio transmission project for selection in whether that entity is an incumbent t

• developer. The criteria must provide

demonstrate that it has the necess construct, own, operate and mainta

• The qualification criteria requirement

would be inappropriate. Final Rule a b. Submissi Transmissi that elimination of federal rights of first refusal does not resu bent transmission providers in favor of nonincumbent transm t the reforms in the Final Rule apply equally to public utility

• ions. Final Rule at P 265.

To Remove a Federal Right of First Refusal that it has the authority under section 206 of the FPA to elim incumbent transmission providers with respect to the ilities selected in a regional transmission plan for purpose t refusal is a “rule, regulation, practice or contract” affecting

• rvice. As such, section 206 of the FPA is broad enough t

in jurisdictional tariffs and agreements that may cause th ion service to become unjust and unreasonable or unduly inal Rule at PP 284-285. rst refusal does not result in the regulation of matters rese in the Final Rule are focused solely on public utility transm subject to the Commission’s jurisdiction. Final Rule at P the effect that federal rights of first refusal have on rates f es and on undue discrimination; it is not changing interna a conclusion regarding the prudence of any investment de under section 210 and 211 of the FPA, or making finding . Final Rule at PP 288-291. ederal Right of First Refusal from Commission- Tariffs and Agreements

• t every transmission facility being planned by an incumbent

t, sponsored by that entity and therefore, could no longer

• refusal. The Commission is focused on the set of transm

e regional level and selected in the regional transmission such, the requirement to remove a federal right of first ref ission facility or upgrades made by an incumbent transm

• n facilities. The reforms in the Final Rule are also not inten
• n provider’s use and control of its existing rights-of-way. F

ication Criteria to Submit a Transmission Project for S e Regional Transmission Plan for Purposes of Cost Allo that each public utility transmission provider revise its OA nsmission planning process in which it participates has tion criteria for determining an entity’s eligibility to propos n in the regional transmission plan for purposes of cost a bent transmission provider or a nonincumbent transmission vide each potential transmission developer the opportun ssary financial resources and technical expertise to deve intain transmission facilities. Final Rule at P 323. ment is necessary since adopting a one-size-fits-all requir Rule at P 324. sion of Proposals for Selection in the Regional ission Plan for Purposes of Cost Allocation sult in smission liminate ses of cost cting rates h to allow e the rates, uly eserved to ansmission t P 288. s for rnal ent decisions, ngs under mbent nger be smission ion plan for t refusal mission ntended to Final r Selection llocation ATT to s pose a t allocation, sion unity to velop, uirement

• Second, the Commission requires tha

identify: (a) the information that mu support of a transmission project it p (b) the date by which such informat transmission planning cycle. Each must have in that OATT the same providers in the same transmission

• The region may establish prima fac

itself what deadline is appropriate, c. Evaluation Plan for P

• Third, the Commission requires ea

describe a transparent and not und proposed transmission facility in th The process must be transparent, a determination that is sufficiently det transmission was selected or not s

• Public utility transmission providers

and procedures in which they will r in the development of a transmissi including those proposed by the in d. Cost Allo Plan for P

• Fourth, the Commission requires that

same eligibility as an incumbent tran

• r methods for any sponsored tran

that is not selected may not be rec method(s). Final Rule at P 333.

• The Commission does not adopt a

initially proposed to determine whic

• facility. However, public utility tran

with stakeholders, procedures to e in the regional transmission plan fo e. Rights to C

• Finally, the Commission declines to

transmission providers to revise th that provide a right to construct and developer to maintain for a defined that is proposed but not selected.

• With regard to ongoing sponsorshi

for transmission developers in disc that risk is outweighed by the poten a multitude of possible transmission p Rule at P 340. es that each public utility transmission provider revise its must be submitted by a prospective transmission develope t it proposes in the regional transmission planning process ation must be submitted to be considered in a given ch public utility transmission provider that had its own OA e information requirements as other public utility transmi ion planning region. Final Rule at P 325. ma facie showings of need for a project and may also determ , including rolling or flexible dates. Final Rule at P 327. tion of Proposals for Selection in the Regional Transm r Purposes of Cost Allocation each public utility transmission provider to amend its OATT nduly discriminatory process for evaluating whether to se the regional transmission plan for purposes of cost alloc ent, allow for stakeholder coordination, and culminate in a detailed for stakeholders to understand why a particular not selected. Final Rule at P 328. ders must also amend their OATTs to describe the circum ill reevaluate the regional transmission plan to determine ssion facility selected require evaluation of alternative sol e incumbent transmission provider. Final Rule at P 329. llocation for Projects Selected in the Regional Transm r Purposes of Cost Allocation s that a nonincumbent transmission developer must have t transmission developer to use a regional cost allocation ansmission facility selected. The cost of a transmission f ecovered through a transmission planning region’s cost a t a requirement to identify the most similar project to the o hich developer should have the right to construct and ow ansmission providers in a region must establish, in consu to ensure that all projects are eligible to be considered for n for purposes of cost allocation. Final Rule at PP 334-336. s to Construct and Ongoing Sponsorship s to include two additional features: (1) to require public u e their OATTs to contain a regional transmission planning t and own a transmission facility; and (2) to allow a transm ned period of time its right to build and own a transmission p

• ted. Final Rule at P 338.

rship rights, the Commission acknowledges that there is s isclosing their transmission projects for consideration. Ho

• tentially negative impacts where transmission developers

ssion projects simply to acquire future development rights. its OATT to loper in ess; and wn OATT mission ermine for 27. smission ATT to to select a location. n a ar mstances ne if delays

• lutions,

9. smission ve the

• n method

n facility st allocation e one

• wn the
• nsultation
• r selection

336. c utility ng process mission ion project s some risk

• n. However,

ers submit

• ghts. Final

4. Reliability Compl

• The Commission determines that p

elimination of a federal right of first

• perators to maintain reliability. In

transmission developer becomes s required to comply with all applicab that are users, owners or operators Final Rule at PP 342.

• The Commission clarifies that if a v

nonincumbent transmission develope address such a violation, the incum construct the nonincumbent’s proje mitigation plan to address the viola NERC approved mitigation plan, th

• action. Final Rule at P 344.

C. Interregional Transmiss

• First, the Commission requires the

for the sharing of information regar planning regions, as well as the id planning regions of potential interre Second, the Commission requires the neighboring public utility transmiss facilities that are proposed to be lo exchange of planning data and info least annually. Finally, the Commis individually or through their transm the communication of information r P 343. 1. Need for Interreg

• The Commission concludes that im

coordination activities are necessa

• No. 890 are too narrowly focused g

benefits associated with interregion

• regions. Final Rule at PP 368-369.
• The existing transmission planning p

proposed interregional transmission facilities that could address transm regional transmission facilities. Wh transmission planning initiatives, th account of those initiatives. Final R

• The Final Rule establishes coordin

transmission providers. If a public regional transmission planning pro requirements adopted in this Final R participation complies with the requ

• mpliance Obligations of Transmission Developers

that potentially increasing the number of asset owners throug irst refusal does not, by itself, make it more difficult for sys In terms of NERC compliance, when a nonincumbent s subject to the requirements of FPA section 215, it will be cable reliability obligations. As part of that process, all en ators of the electric bulk power system must register with N a violation of a NERC reliability standard would result fro eloper’s decision to abandon a transmission facility mean umbent transmission provider does not have the obligatio

• ject. Rather, the transmission provider must submit a N
• lation. If the public utility transmission provider follows t

n, the Commission will not subject the provider to enforcem ssion Coordination the development and implementation of procedures that p egarding the respective needs of neighboring transmission the identification and joint evaluation by the neighboring tran rregional transmission facilities that address those needs es the development and implementation of procedures fo ission providers to identify and jointly evaluate transmissi located in both regions. Third, the Commission requires information between neighboring transmission planning re mission requires public utility transmission providers, eith smission planning region, to maintain a website or e-mail

• n related to interregional transmission coordination. Fina

egional Transmission Coordination Reform that implementing those reforms to interregional transmission ssary at this time. Specifically, the planning requirements ed geographically and fail to provide for adequate analysis ional transmission facilities in neighboring transmission p 69. ing processes do not adequately provide for the evaluatio ssion facilities or the identification of interregional transmiss smission needs more efficiently or cost-effectively than sepa While there have been some positive developments in so , the Commission will not postpone its coordination reform al Rule at PP 370-371. dination requirements that are applicable to all public utili lic utility transmission provider believes that it participates rocess that fulfills the interregional transmission coordina nal Rule, it may describe in its compliance filing how such equirements of this Final Rule. Final Rule at PP 372-373. rough the system ll be entities th NERC. from a eant to gation to t a NERC s the ement that provide ion ansmission eds. for ssion res the ng regions at ither ail list for inal Rule at ion ents of Order sis of the

• n planning

tion of ission separate n some

• rms on

tility pates in a ination ch 73.

2. Interregional Tran a. Interregio

• The Commission requires each pu

transmission planning process, to e transmission planning regions in or transmission plans to identify poss transmission needs more efficiently

• facilities. Final Rule at P 396.
• The Commission intends that neighbo

existing processes to provide for: ( each region, and potential solution

• f interregional transmission faciliti

those regional needs. Final Rule at

• The Commission declines to impos

share information regarding their ne particular scenario analyses. Fina

• On compliance, public utility transm

identify and evaluate interregional t neighboring planning regions must will conduct to determine if interreg effective than regional facilities. Fi

• The Final Rule does not address o

should be undertaken by public uti

• facilities. However, public utility tra

regarding the status of transmission upg addition to the underlying transmiss requirements will apply to the porti individual region’s transmission pla

• The Commission neither requires n

including the identification of conceptu transmission needs driven by publi

• considerations. Final Rule at P 40
• The Commission does not intend to

closely as to intrude in the interreg utility transmission providers to con transmission coordination efforts and 402-404. b. Geograph

• The Commission clarifies that it wil

transmission providers in neighbor facilities that are proposed to be lo facilities that are not proposed but t separate intraregional transmission

• The coordination requirements do

facility proposed to be located sole 416. ransmission Coordination Requirements gional Transmission Coordination Procedures h public utility transmission provider, through its regional , to establish further procedures with each of its neighborin

• rder to coordinate and share the result of respective re

ssible interregional transmission facilities that could addr ently or cost-effectively than separate regional transmission ighboring transmission planning regions will enhance the r: (1) the sharing of information regarding the respective ne ions of those needs; and (2) the identification and joint ev ilities that may be more efficient or cost-effective solution e at P 396. pose specific obligations as to how neighboring regions m ir needs or specific planning horizons or the performance of nal Rule at P 397. smission providers must describe the methods by which al transmission facilities, and transmission providers in ust include a description of the type of transmission studie rregional transmission facilities would be more efficient or . Final Rule at P 398. ss or dictate which investments identified in a transmission utility transmission providers, including interregional trans transmission providers must make available information ssion upgrades identified in their regional transmission plan ission plans and related transmission studies. These inf rtions of the interregional transmission facilities within ea

• plans. Final Rule at P 400.

s nor precludes longer-term interregional transmission pl

• nceptual or contingent elements, the consideration of

blic policy requirements, or the evaluation of economic 401. d to infringe on state authority, monitor coordination effor egional transmission coordination activities, or require pu conduct periodic reviews of the effectiveness of their interr s and file information reports at the Commission. Final R phic Scope of Interregional Transmission Coordinati will require interregional coordination between public utili hboring transmission planning regions with respect to trans located in both regions, as well as interregional transmiss ut that could address transmission needs more efficiently ion facilities. Final Rule at P 405. do not require joint evaluation of the effects of a new trans

• lely in a single transmission planning region. Final Rule

ring e regional ddress sion e their e needs of evaluation

• ns to

s must ce of ich they will dies they

• r cost-

ion plan ansmission

• n

lans in e information n each of the

• n planning,

fforts so e public nterregional l Rule at PP ation utility ansmission ission tly than ansmission ule at P

• The Commission agrees that impo

requirements at this time could frus transmission planning initiatives. F

• The Commission declines to revisit

Rule at P 420. 3. Implementation of Requirements a. Procedur

• The Commission requires the deve

interregional transmission facilities planning regions. Final Rule at P 4 interregional transmission project to transmission planning processes o facility is proposed to be located. F

• The Commission directs, as part o

requirements, that each public utili region, develop procedures by whi horizons, and criteria used to study resolved for purposes of jointly eva Neighboring transmission planning designed and implemented. Final

• The Commission does not specify a

procedures, instead expecting pub planning regions to cooperate and interregional transmission projects “same general time frame,” the Co develop a timeline that provides a developed through the regional tran

• The Commission clarifies that publi

region will not be required to accept unless the region has selected that purposes of cost allocation. Final R b. Data Exch

• The Commission requires each pu

transmission coordination procedu information at least annually, which are aware of each others’ transmiss

• plans. Final Rule at P 454. Interre

specific obligations for sharing plan

• so. Final Rule at P 455.

c. Transpare

• The Commission requires public ut

transmission planning region, to m related to interregional transmission transmission coordination may be m website or a regional transmission posing multilateral or interconnection-wide coordination rustrate the progress being made in the ARRA-funded . Final Rule at P 417. isit how each transmission planning region defines itself.

• n of the Interregional Transmission Coordination

dure for Joint Evaluation velopment of a formal procedure to identify and jointly ev ies that are proposed to be located in neighboring transm

• 435. The Commission also requires the developer of an

t to first propose its transmission project in the regional s of each of the neighboring regions in which the transmiss

• ated. Final Rule at P 436.

t of compliance with the interregional transmission coordi utility transmission provider, through its transmission plann which differences in the data, models, assumptions, plann tudy a proposed transmission project can be identified and valuating the proposed interregional transmission facility ing regions may use discretion in the way this requirement al Rule at P 437. ify a timeline for the interregional transmission coordinatio ublic utility transmission providers in neighboring transmis nd develop timelines that allow for the development of ts in the same general time frame. Final Rule at P 438. Commission expects public utility transmission providers to a meaningful opportunity to review and evaluate informat transmission planning process. Final Rule at P 439. ublic utility transmission providers in a transmission plann ept allocation of the costs of an interregional transmission p hat transmission facility in the regional transmission plan al Rule at P 443. xchange h public utility transmission provider to adopt interregional edures that provide for the exchange of planning data and ich will ensure that neighboring transmission planning re ission plans and the assumptions and analysis that supp rregional transmission coordination procedures must incl lanning data and information rather than only an agreem arency utility transmission providers, either individually or throug n, to maintain a website or e-mail list to communicate informat ssion coordination procedures. Information related to interr be maintained on an existing public utility transmission pro

• n planning website. Final Rule at P 458.
• lf. Final

evaluate smission f an mission rdination anning anning and ility. ent is nation mission

• 8. By

rs to ation anning ssion project an for nal nd g regions upport such nclude ment to do

• ugh their

mation nterregional

• n provider’s

d. Stakehold

• The Commission does not require t

the requirements of the planning p regional planning (under this Final R an interregional transmission facilit for purposes of cost allocation to be notes that stakeholders will have the interregional transmission facilities at P 465.

• The Commission requires that eac
• pportunity to provide input into the d

procedures and the commonly agr 466. e. Tariff Pro Coordina

• The Commission requires that pub

transmission planning regions mus utility transmission provider’s OATT procedures for that particular pair o choose, these procedures may be agreement filed on compliance for app

• The Commission will accept the su

provided the compliance filing expl this Final Rule. Final Rule at P 477. IV. Proposed Reforms: Cost Allocat A. Need for Reform Concern

• The Commission states that it is ne

without these requirements, cost a may fail to account for the benefits rates that are not just and reasona 495. B. Legal Authority for Cost

• The Commission concludes that it

required by the Final Rule. Final R authority to require allocation of tran

• r formalized customer relationship

states that its jurisdiction is broad en provided by specific transmission f contractual relationship with the ow C. Cost Allocation Method f

• The Commission requires that a pu
• f methods, for allocating the costs

transmission plan for purposes of c RTO or ISO, then the cost allocation holder Participation re the interregional transmission coordination procedure ng principles required for local planning (under Order No. 8 nal Rule). Since the Commission requires in the Final Ru ity must be selected in each relevant regional transmiss be eligible for interregional cost allocation, the Commiss e the opportunity to participate fully in the consideration of ies during the regional transmission planning process. Fi ach public utility transmission provider give stakeholders

• the development of its interregional transmission coordina

agreed-to language to be included in its OATT. Final Rule Provisions and Agreements for Interregional Transmissi nation ublic utility transmission providers in each pair of neighbo ust develop the same language to be included in each p TT that describes the interregional transmission coordina ir of regions. If the public utility transmission providers so be reflected in an interregional transmission coordination for approval by the Commission. Final Rule at P 475. t the submission of existing interregional agreements on comp xplains how the existing agreement satisfies the requirem 477. cation erning Cost Allocation necessary to adopt the cost allocation requirements bec t allocation methods used by public utility transmission pr fits associated with new transmission facilities, and thus r

• nable or are unduly discriminatory or preferential. Final R

st Allocation Reforms that it has the legal authority to adopt the cost allocation refo l Rule at P 530. While commenters challenged the Com transmission costs to beneficiaries that do not have a cont hip with the entity that is collecting the costs, the Commis

• ad enough to allow it to ensure that all beneficiaries of ser
• n facilities bear the costs of those benefits regardless of the
• wner of those transmission facilities. Final Rule at P 531.

thod for Regional Transmission Facilities public utility transmission provider have in place a method, o sts of new transmission facilities selected in the regional f cost allocation. If the public utility transmission provider ation method(s) must be set forth in the OATT. In a non-R re to meet

• No. 890) and

Rule that ission plan ission n of . Final Rule rs the dination ule at P ission boring h public ination so

• n

mpliance, ements of because

• n providers

s result in l Rule at P eform mmission’s contractual mission ervices

• f their

531. ethod, or set al der is an RTO/ISO

transmission planning region, each in its OATT the same language rega planning region. Final Rule at P 55

• The Commission does not specify

transmission facility should be alloc develop methods for different types transmission facilities of the type in propose a different cost allocation method would have to be determined D. Cost Allocation Method f

• The Commission requires a public

to have, together with the public ut region and a neighboring transmiss allocating the costs of a new interreg transmission facility in the two neig transmission facility is located. The method(s) used by each region to within that region. Final Rule at P

• The Commission does not require a

and will allow each pair of neighbo method(s) consistent with the interr Final Rule at P 580. The Commiss interregional transmission facility s can develop a different cost allocat a cost allocation method(s) should a Rule at P 581.

• With respect to existing interregion

public utility transmission provider requirements should describe in its Final Rule at P 583. E. Principles for Regional a 1. Use of a Principles

• The Commission adopts the six reg

Commission recognizes that a vari Final Rule at PP 604 – 605.

• The Commission concludes that pu

planning region or pair of transmiss determine for themselves the cost regional needs and characteristics P 606.

• In the event of a failure to reach an ag

use the record in the relevant comp method(s) that meets its proposed make an individual compliance filing allocating costs, and groups of pub method or methods may make a coo at P 607. ch public utility transmission provider in the region must regarding the cost allocation method(s) used in its transm 558. ify in the Final Rule how the costs of an individual regiona llocated, but while each transmission planning region ma pes of transmission projects, such methods should apply e in question. If public utility transmission providers choo n method for different types of transmission facilities, ea ined in advance for each type of facility. Final Rule at P thod for Interregional Transmission Facilities lic utility transmission provider in a transmission planning utility transmission providers in its own transmission plan ission planning region, a common method or methods fo erregional transmission facility among the beneficiaries of eighboring transmission planning regions in which the The cost allocation method(s) may differ from the cost all n to allocate the cost of a new interregional transmission fa t P 578. re a single nationwide approach to interregional cost allo hboring regions flexibility in developing its own cost allocat nterregional cost allocation principles adopted in the Final ission does not specify here how the costs for an individu y should be allocated, but while transmission planning reg cation method(s) for different types of transmission projec ld apply to all transmission facilities of the type in question. ional transmission coordination and cost allocation agree der who believes its agreement satisfies the Final Rule’s n its compliance filing how the relevant requirements are m al and Interregional Cost Allocation ples-Based Approach regional and six interregional cost allocation principles. T ariety of methods may satisfy the set of cost allocation pr that public utility transmission providers in each transmission ission planning regions must be allowed the opportunity st allocation method or methods to adopt based on their ics, consistent with the six cost allocation principles. Fina h an agreement on a cost allocation method, the Commiss mpliance filing proceeding as a basis to develop a cost a ed requirements. Each public utility transmission provider iling that includes its own proposed method or set of method public utility transmission providers that agree on a propo e a coordinated filing or filings with their common views. Fin st set forth smission nal ay ly to all hoose to each at P 560. ing region lanning for

• f that

t allocation

• n facility

llocation, cation al Rule. vidual regions jects, such

• tion. Final

eements, a e met. . The principles. ion ity to ir own inal Rule at ission will t allocation der must ethods of posed Final Rule

2. Cost Allocation P commensurate w § The Commission adopts Regional cost allocation:

• Regional Cost Allo

allocated to those facilities in a manne

• benefits. In determ

transmission plann the extent to which t provide for mainta and congestion rel

• Interregional Cost

transmission facilit which that transmi commensurate wit the transmission p interregional trans benefits including, and sharing reserv Public Policy Requ § The Commission finds that it is app beneficiaries those that cause cost because it is fully consistent with th and the courts. Final Rule at P 623. § However, the Commission is not pr The Commission, though, provides transmission provider in a regional that the transmission facility cost a addition, beneficiaries are not limited to because other benefits may accrue 625. § Instead, the Commission prefers that ea method or methods for cost allocat to accommodate a variety of approa cost allocation methods. Concerns broadly or narrowly will be address stakeholders to develop its own co § The Commission further finds that allocation method because a depa cross-subsidization. Final Rule at P § Determination of the beneficiaries o

• nly to cost allocation for new trans

finding that the benefits of existing t for new transmission facilities, but Final Rule at P 627.

• n Principle 1—costs allocated in a way that is roughly

e with benefits al Cost Allocation Principle 1 for both regional and interre llocation Principle 1: “The cost of transmission facilities m se within the transmission planning region that benefit fro anner that is at least roughly commensurate with estimated rmining beneficiaries of transmission facilities, a regional nning process may consider benefits including, but not li ich transmission facilities, individually or in the aggregate, ntaining reliability and sharing reserves, production cost s

• n relief, and/or meeting Public Policy Requirements.”

st Allocation Principle 1: “The costs of a new interregiona cility must be allocated to each transmission planning reg mission facility is located in a manner that is at least roug with the estimated benefits of that transmission facility in

• n planning regions. In determining the beneficiaries of

ansmission facilities, transmission planning regions may c ng, but not limited to, those associated with maintaining re erves, production cost savings and congestion relief, and quirements.” Final Rule at P 622 appropriate to adopt a cost allocation principle that include

• sts to be incurred or that benefit from a new transmission

h the cost causation principle as recognized by the Comm 23. not prescribing a particular definition of “benefits” or “benefici des some guidance, stating that any benefit used by a pu al cost allocation method must be an “identifiable benefi t allocated must be roughly commensurate with that bene ited to those that make direct use of the transmission fa ccrue to an interconnected transmission grid. Final Rule at that each public utility transmission provider first develop cation, subject to Commission review. This will allow for f

• aches and regional differences that may warrant distin

rns that the definition of “benefits” could be interpreted too ssed as each public utility transmission owner consults w n cost allocation method. Final Rule at PP 624-625. that cost causation is the foundation of an acceptable cost parture from cost causation principles can result in inappr at P 626. s of transmission facilities “individually or in the aggregate ansmission facilities. This language is not intended to be ng transmission facilities in and of itself may justify cost s , but the Commission is not ruling on that matter in this Fina

• ughly

rregional s must be from those ated nal t limited to, gate, t savings nal egion in ughly in each of y consider g reliability , and meeting udes as ssion facility mmission beneficiaries.” public utility nefit” and

• enefit. In
• n facilities

at PP 624- lop its own r flexibility tinctions in eted too s with their st appropriate gate” refers be a t sharing inal Rule.

§ The Commission declines to expand such that costs may be involuntaril benefit from those facilities. The Co transmission facility that is located subject to a regional cost allocation transmission facility to beneficiaries agreement with those beneficiaries § However, if a non-public utility tran transmission planning region, then benefits if the transmission planning transmission facilities selected in the 3. Cost Allocation P beneficiaries § The Commission adopts the follow interregional cost allocation: § Regional Cost Allocati facilities, either at pres allocated any of the co § Interregional Cost Allo no benefit from an inte either at present or in a

• f the costs of that tran

§ The Commission finds that this is a cost allocation. Final Rule at P 637. § The Commission declines to estab ineligible for cost allocation in the F does require careful consideration 638. § The Commission finds that Princip roughly commensurate with the be received are trivial in relation to the believe that the application of the c that outweigh trivial benefits may m Rule at P 639. § Every cost allocation method or method incurred cost of a transmission proj not opt out of a Commission-appro merely assert that they receive no regional free rider problem. Final R § All cost allocation principles apply in the regional transmission plan fo Furthermore, the rule provides that t planning region may propose a cos and costs of a group of new transm project basis within the context of the and the scope of beneficiaries for new transmission facili ntarily allocated to those within an adjacent planning region he Commission clearly states that the allocation of the cost of ated entirely within one transmission planning region may n tion method or methods that assigns some or all of the co ries in another transmission planning region without reach

• ies. Final Rule at P 628.

ansmission provider makes the choice to become part of en it would be responsible for the costs associated with a nning process determines that it is a beneficiary of certain n the regional transmission plan. Final Rule at P 629.

• n Principle 2—no involuntary allocation of costs to non
• wing Cost Allocation Principle 2 for both regional and

ation Principle 2: Those that receive no benefit from trans resent or in a likely future scenario, must not be involunta the costs of those transmission facilities. llocation Principle 2: A transmission planning region that nterregional transmission facility that is located in that reg in a likely future scenario, must not be involuntarily allocat ransmission facility. Final Rule at 637. is a central tenet of cost causation and is thus essential to p 37. tablish a threshold voltage level to define which benefits w he Final Rule. However, the Commission notes that this p

• n and application to avoid free rider problems. Final Rule a

ciple 1’s requirement that costs be allocated in a way that benefits received precludes an allocation where the bene the costs to be borne. Furthermore, any beneficiaries tha the cost allocation method or methods would assign to them y make a section 205 or 206 filing with the Commission. F methods must provide for allocation of the entire prudent roject to prevent stranded costs. Under Principle 2, part roved cost allocation for a specific transmission project i

• benefits from it, because such a policy would not minim

al Rule at P 640. ly the allocation of costs to all new transmission facilities n for purposes of cost allocation, including RTO and ISO r that the public utility transmission providers in a transmiss cost allocation method (or methods) that considers the bene smission facilities or they may apply the principle on a pr f the entire regional transmission plan. Final Rule at P 64 cilities ion that st of a y not be the cost of that eaching an t of the h any in non- ansmission ntarily at receives region, cated any l to proper s would be s principle Rule at P hat is nefits that em costs

• n. Final

udently 2, parties may ct if they inimize the es selected O regions. ission the benefits project-by- 641.

4. Cost Allocation P § The Commission adopts the follow interregional cost allocation: § Regional Cost Allocati determine which trans regional transmission that transmission facili

• allocation. A public utili

choose to use such a th benefits and costs. If a costs that exceeds 1.2 transmission provider § Interregional Cost Allo determine whether an qualify for interregiona transmission facility wi public utility transmissi regions may choose to calculation of benefits a

• f benefits to costs that

Commission approves § Cost Allocation Principle 3 does not if a transmission planning region cho that a benefit to cost ratio of 1.25 to development and construction of v transmission planning region also m higher threshold if they justify it and utility transmission providers to obt exceeds 1.25 to 1 ensures that the positive net benefits are not exclud 649. § The Commission declines to addre an interregional transmission facilit allocation in this final rule. Instead, based on specific facts presented. 5. Cost Allocation P planning region(s § The Commission adopts the follow interregional cost allocation: § Regional Cost Allocati transmission facility se solely within that trans region or another trans

• f those costs. Howev

must identify conseque upgrades that may be bear costs associated w

• n Principle 3—benefit to cost threshold ratio

wing Cost Allocation Principle 3 for both regional and ation Principle 3: If a benefit to cost threshold is used to nsmission facilities have sufficient net benefits to be sele plan for the purpose of cost allocation, it must not be so cilities with significant positive net benefits are excluded f utility transmission provider in a transmission planning reg a threshold to account for uncertainty in the calculation o . If adopted, such a threshold may not include a ratio of be 1.25 unless the transmission planning region or public uti der justifies and the Commission approves a higher ratio. llocation Principle 3: If a benefit-cost threshold ratio is us an interregional transmission facility has sufficient net bene nal cost allocation, this ratio must not be so large as to e with significant positive net benefits from cost allocation. ission providers located in the neighboring transmission p e to use such a threshold to account for uncertainty in the its and costs. If adopted, such a threshold may not include hat exceeds 1.25 unless the pair of regions justifies and es a higher ratio. Final Rule at P 646. not require the use of a benefit to cost ratio threshold. Ho

• n chooses to have such a threshold, then the Commission

1.25 to one is a reasonable ratio that will not act as a barrier f valuable new transmission projects. Public utility provide

• may use a lower ratio without a separate showing and

and the Commission approves a greater ratio. Requiring to obtain Commission approval for any benefit to cost ratio t the ratio is not so high that transmission facilities with sign luded from the regional transmission plan. Final Rule at P dress the issue of whether any benefit to cost ratio thresh ility may supersede the ratio for a regional transmission tead, the Commission will address this issue in compliance

• ented. Final Rule at P 650.
• n Principle 4—allocation to be solely within transmissi
• n(s) unless those outside voluntarily assume costs

wing Cost Allocation Principle 4 for both regional and ation Principle 4: The allocation method for the cost of a selected in a regional transmission plan must allocate co ansmission planning region unless another entity outside t ansmission planning region voluntarily agrees to assume a po wever, the transmission planning process in the original re quences for other transmission planning regions, such as be required in another region and, if the original region ag ed with such upgrades, then the original region’s cost allo lected in a t not be so high ded from cost g region may

• n of

benefits to utility

• .

used to enefits to to exclude a

• n. The
• n planning

the lude a ratio nd the

• d. However,

ion finds ier to the iders in a nd use a ng public

• that

ignificant at PP 647- shold for

• n cost

ce filings ission a te costs e the e a portion region h as n agrees to llocation

method or methods mu among the beneficiarie § Interregional Cost Allo transmission facility m the transmission facility rule to a transmission p

• located. However, inte

transmission planning transmission planning which the transmission upgrades, then the inte allocating the costs of planning regions in wh § For a transmission facility that is lo intended to export electric energy t transmission providers in the expo importing region before adopting a

• f the transmission facility to benef

§ For an interregional transmission fa planning regions and that is intend the public utility transmission provid method or methods for sharing the Cost Principle 4 does not allow suc transmission facility to beneficiaries beneficiaries in the third region vol which the facility is located. Final R § Public utility transmission providers allocate costs to beneficiaries in ano Commission acknowledges that th facilities to escape cost responsibili § The Midwest ISO and PJM are not in response to Cost Allocation Prin § A non-public utility transmission pro the provisions of that tariff substan been revised by this Final Rule. Ho decide whether it wants to maintain and cost allocation requirements o 6. Cost Allocation P and identifying b § The Commission adopts the follow interregional cost allocation: § Regional Cost Allocation P for determining benefits an transparent with adequate were applied to a proposed § Interregional Cost Allocatio requirements for determini must include provisions for allocating the costs of the upg ries in the original region. llocation Principle 4: Costs allocated for an interregional must be assigned only to transmission planning regions ility is located. Costs cannot be assigned involuntarily unde

• n planning region in which that transmission facility is not

terregional coordination must identify consequences for o ng regions, such as upgrades that may be required in a th ng region and, if the transmission providers in the regions ion facility is located agree to bear costs associated with interregional cost allocation method must include provisio

• f such upgrades among the beneficiaries in the transmiss

which the transmission facility is located. Final Rule at P located entirely within one transmission planning region y to another transmission planning region, public utility porting region must first negotiate an agreement with the g a regional cost allocation method that assigns any of the neficiaries in the importing region. Final Rule at 658.

• n facility that is located in two or more neighboring transm

ended to export electric energy from one such region to the viders in each region must have an interregional cost all he cost of such transmission facilities. However, Interreg such a cost allocation method to assign the cost of the ries in a third transmission planning region unless the

• luntarily reach an agreement with the two original regio

al Rule at 659. ders in one transmission planning region may not unilatera another transmission planning region even though the that this approach may lead to some beneficiaries of transmis

• sibility. Final Rule at P 660.

e not required to revise their existing cross-border allocation rinciple 4. Final Rule at P 662.

• n provider seeking to maintain a safe harbor tariff must ens

tantially conform, or are superior to, the pro forma OATT a . However, each non-public utility transmission provider m ntain its safe harbor status by meeting the transmission pla s of this rule. Final Rule at P 663.

• n Principle 5—transparent method for determining be

beneficiaries wing Cost Allocation Principle 5 for both regional and

• n Principle 5: The cost allocation method and data require

and identifying beneficiaries for a transmission facility mu te documentation to allow a stakeholder to determine ho sed transmission facility. ation Principle 5: The cost allocation method and data ining benefits and identifying beneficiaries for an interreg upgrades al s in which under this not

• r other

a third

• ns in

ith such isions for mission P 657.

• n and is

he the costs smission n to the other, t allocation egional gions in erally mission ation method t ensure that T as it has may

• n planning

benefits uirements must be ne how they egional

transmission facility must b stakeholder to determine ho

• facility. Final Rule at P 668.

§ The Commission finds that requiring requirements for determining bene such methods are just and reasona Commission further finds that grea aid in the development and constru

• r prolonged debate among stakeho

§ Cost Allocation Principle 5 requires allow for greater stakeholder partic suggestions for methodology of co process provides enough transpare matters in compliance filings. Final 7. Cost Allocation P facilities § The Commission adopts the follow interregional cost allocation: § Regional Cost Allocation P different cost allocation me transmission plan, such as

• r to achieve public policy r

clearly and explained in de § Interregional Cost Allocatio in neighboring transmissio allocation method for differ transmission facilities need

• requirements. Each cost a

in the compliance filing for § The Commission determined that t

• pportunity to develop a different c
• projects. Therefore the Commission pe

transmission planning region to de a different cost allocation method f method for each type and such method § The Commission strongly encoura processes, specifically in the identi

• requirements. Final Rule at P 688.

§ The Commission leaves it up to ea to distinguish between types of tran type of regional transmission facilit requirements for identified benefici P 689. § A transmission facility proposed to selection in a regional transmission designated as a type of transmission determined only on a project-speci st be transparent with adequate documentation to allow a ne how they were applied to a proposed interregional trans 68. iring cost allocation methods and their corresponding data nefits and beneficiaries to be open and transparent ensu

• nable and not unduly discriminatory or preferential. The

eater stakeholder access to cost allocation information w struction of new transmission, and may avoid contentious

• keholders. Final Rule at 669.

res that the method or methods be known and transparent

• rticipation. The Commission declines to address specific

cost allocation or to rule on whether any current RTO and I parency to satisfy Cost Allocation Principle 5, but will revie nal Rule at PP 670-672.

• n Principle 6—different methods for different types of

wing Cost Allocation Principle 6 for both regional and

• n Principle 6: A transmission planning region may choose

method for different types of transmission facilities in the h as transmission facilities needed for reliability, congestion cy requirements. Each cost allocation method must be se detail in the compliance filing for this rule. ation Principle 6: The public utility transmission providers ssion planning regions may choose to use a different cost fferent types of interregional transmission facilities, such a eded for reliability, congestion relief, or to achieve public t allocation method must be set out clearly and explained for this rule. t transmission planning regions should be afforded the ent cost allocation method for different types of transmission ssion permits, but does not require, public utilities in a designate different types of transmission facilities and to d for each type, as long as there is only one cost allocation methods are applied consistently. Final Rule at PP 686-6 rages states to participate actively in the transmission pla entification of transmission needs driven by public policy 88. each transmission planning region to propose whether a transmission facilities. A regional cost allocation method ility or for all regional transmission facilities may include ficiaries to vote on proposed transmission facilities. Final R ed to address a public policy requirement must be eligible fo ion plan for purposes of cost allocation and must not be ssion facility for which the cost allocation method must be pecific basis. The regional cost allocation method for such a a ansmission ata sures that he will help

• us litigation

rent to ific and ISO view such es of se to use a he regional tion relief, t be set out rs located st h as lic policy ned in detail sion to develop ation 687.

• n planning

r and how d for one ude voting al Rule at e for e t be ch a

transmission facility may take into a requirement, who is responsible fo transmission facility. If a regional tr several functions, the regional cost into account in allocating costs roug 8. Whether To Estab § The Commission declines to adopt to avoid limiting the flexibility for pu cost allocation method for their reg containment is important, the Com principle addressing it because it wo should be allocated among benefici propose in a compliance filing cost they deem necessary to meet the s the principles in this rule. Final Rul F. Application of the Cost A 1. Whether To Have B Facilities § The Commission declines to adopt facilities (345 kV and above) shou to adopt a pro forma cost allocation method the Commission rejects in § However, public utility transmission p region may decide to allocate wid would result in a distribution of co

• received. Such a cost allocation m

Commission in a compliance filing. 2. Whether To Limi § The Commission will not allow part interregional transmission projects

• allocation. If participant funding is p

the Commission states that it will n principles adopted in the rule. How transmission developer, a group of to voluntarily assume the costs of a n § Nothing in this rule applies to exist transmission projects currently unde § The Commission clarifies that the c existing pro forma OATT transmiss requests or requests for interconne 3. Whether Regiona § The Commission finds that the method o transmission planning regions may them for regional cost allocation. Al nto account the transmission needs driven by a public polic for complying with that requirement, and who benefits fro l transmission plan determines that a transmission facility

• st allocation method must take the benefits of these fun
• ughly commensurate with benefits. Final Rule at P 690.

tablish Other Cost Allocation Principles

• pt all of the other additional principles proposed by comm

public utility transmission providers to propose the appro

• egion. The Commission also notes that although cost

mmission declines to establish a corresponding cost allo it would only address the amount of costs, not how those

• ficiaries. However, each transmission planning region m
• st allocation methods that satisfy additional requirement

he specific needs of that region, provided they are consisten Rule at PP 704-705. t Allocation Principles ve Broad Regional Cost Allocation for Extra-High Vo

• pt a rebuttable presumption that the costs of extra-high

hould be allocated widely across a transmission planning tion method, likening such rules to a default cost allocati s in the rule. Final Rule at P 713. sion providers and their stakeholders in a transmission p idely the costs of such high voltage facilities, if such an a costs that is at least roughly commensurate with the bene n method must be supported with evidence and submitted to

• iling. Final Rule at P 500.

mit the Use of Participant Funding participant funding to be the cost allocation method for reg ts selected in a regional transmission plan for purposes o is proposed as a regional or interregional cost allocation ll not comply with the regional or interregional cost alloca

• wever, these principles do not foreclose the opportunity
• up of developers, or one or more individual transmission cu
• f a new transmission facility. Final Rule at PP 723-726.

isting transmission facilities with existing cost allocations o nder development. Final Rule at P 728. he cost allocation reforms in this rule are not intended to m ission service mechanisms for individual transmission se

• nnection service. Final Rule at P 729.
• nal and Interregional Cost Allocation Methods May Di

ethod or methods for interregional cost allocation used b ay be different from the method or methods used by eithe

• n. Also, the method or methods for allocating a region’s sha

policy from the ility serves unctions 0. mmenters appropriate llocation se costs n may ents that istent with Voltage gh voltage ng region or ation planning h an allocation enefits itted to the regional or s of cost n method, cation ity for a

• n customers

ns or to modify

• n service

Differ ed by two ither of share of

the cost of an interregional transmi allocating the cost of a regional fac § Although the public utility transmiss allocate their share of the costs of an allocation method or methods, the 734. § The Commission does not require t planning region to accept the regio transmission planning region with w

• coordination. Each transmission p

a new interregional transmission fa 4. Recommendation Application of the § The Commission declines to provid acceptable cost allocation method o Commission wants to afford public planning regions the flexibility nece However, the Commission requires the 6 cost allocation principles. Fina § The Commission is not requiring p allocation method for public policy Commission permits different regio types of transmission projects. Fin § The Commission declines to find in acceptable cost allocation method. I the Commission will determine whe § The Commission states that it is not the 6 principles serve as guidelines allocation methods that are consisten § The Commission believes that the be adequate to address in the first allocation of transmission costs. T resolution procedures in response t Rule at P 750. G. Cost Allocation Matters R Non-Transmission Altern 1. Whether To Refo § The Commission determines that i interconnection cost recovery are out declines to address those issues. 2. Pancaked Rates § The Commission declines to make ne beyond the scope of this rulemaking. pancaked rate provisions for an RT mission facility may differ from the method or methods fo facility within that region. Final Rule at P 733. ission providers in a transmission planning region may c

• f an interregional transmission facility using their regiona

, the Commission does not require them to do so. Final Rul re the public utility transmission providers in a transmission gional transmission planning method or methods of anoth th which it participates regarding interregional transmission

• n planning region will decide for itself how to allocate the
• n facility. Final Rule at P 735.

ions for Additional Commission Guidance on the the Transmission Cost Allocation Principles vide additional guidance regarding the development of a ethod or methods to comply with the 6 cost allocation princip lic utility transmission providers in individual transmission cessary to accommodate unique regional characteristics ires that any variations between regions must be consiste inal Rule at PP 745-746. g public utility transmission providers to use the same cos cy and other types of transmission facilities. Instead, the gional and interregional cost allocation methods for differ Final Rule at P 747. in advance that a “postage stamp” cost allocation may n

• ethod. If such an allocation is submitted in a compliance filing

whether it meets the requirements of this rule. Final Rule at not attempting to supersede the cost causation principle. nes for public utility transmission providers to use to create sistent with the cost causation principle. Final Rule at P 7 he dispute resolution processes in place under Order No. rst instance, any disagreements that may arise regarding t . The Commission will review any changes to those dispute se to compliance filings submitted in response to this rule. s Related to Other Commission Rules, Joint Ownersh ernatives form Cost Allocation for Generator Interconnections that issues related to the generator interconnection process e outside the scope of this rulemaking, and the Commiss

• s. Final Rule at P 760.

ke new findings with respect to pancaked rates because

• king. The Commission does not make any modifications to

an RTO under Order No. 2000. If rate pancaking is an issue for y choose to

• nal cost

Rule at P ssion another sion he costs of f an

• ciples. The

ion tics. stent with

• st

e fferent y not be an iling, then le at P 748.

• le. Rather,

eate cost 749.

• No. 890 will

ing the spute

• ule. Final

rship, and

• ns

ss and to ission se it is ns to its ue in a

particular transmission planning re consultations leading to the compli the Commission under section 205 3. Transmission Ra § The Commission declines to revisit beyond the scope of this rulemaking. 4. Relationship of T Resources § To the extent that utilities consider such as those addressed in the Va so by making a separate section 205

• proceeding. Final Rule at P 774.

5. Joint Ownership § The Commission determines that s beyond the scope of this proceeding 6. Cost Recovery fo § Consistent with the approach taken demand resources, and transmissi

• process. However, while the consid

facilities may affect whether certain t Commission finds that the issue of scope of this proceeding. V. COMPLIANCE AND RECIPROCIT A. Compliance

• As detailed below, public utility tran

twelve months of the effective date under the Commission’s jurisdiction

• Rule. In non-RTO/ISO regions, pu

compliance filings, so long as each PP 792, 798.

• Each public utility transmission pro
• f the effective date of the Final Ru

Commission’s jurisdiction to demon transmission coordination procedu Final Rule at P 792.

• The Commission clarifies that an R

make a compliance filing which de all) are in compliance with the Fina contrary views on compliance. The Co

• r ISO is already in compliance wit
• Public utility transmission owners w

demonstrate compliance through the R

• filing. This includes compliance wi

Final Rule at P 797. g region, stakeholders may raise their concerns in the pliance proceedings for this rule or make a separate filing 205 or 206 of the FPA. Final Rule at P 764. Rate Incentives isit or modify its policy under Order No. 679 in this rule, a

• king. Final Rule at P 771.
• f This Proceeding to the Proceeding on Variable Ener

er it necessary or appropriate to consider operational iss Variable Energy Resources proceeding, in this rule, they 205 filing rather than raise issues on compliance in this ip that specific financing techniques such as joint ownership a

• ding. Final Rule at P 776.

y for Non-Transmission Alternatives ken in Order No. 890, the Commission requires that gene ssion be treated comparably in the regional transmission sideration of non-transmission alternatives to transmission tain transmission facilities are in a regional transmission p ue of cost recovery for non-transmission alternatives is beyo CITY REQUIREMENTS ransmission providers must submit a compliance filing wi date of the Final Rule revising their OATT or other document tion as necessary to meet requirements set forth in the Fi , public utility transmission providers can make combined ch OATT includes the reforms in the Final Rule. Final R rovider must submit a compliance filing within eighteen m Rule revising its OATT or other documents subject to the

• nstrate it meets requirements with respect to interregion

edures and an interregional cost allocation method or method n RTO or ISO and its public utility transmission provider m demonstrates that its existing transmission processes (so inal Rule, and the Commission will consider it, along with The Commission declines to rule generically on whether an R with the Final Rule. Final Rule at P 795. rs which are part of a Commission-jurisdictional RTO or IS

• ugh the RTO or ISO’s filing, without making a separate com

with the interregional transmission coordinating requirem iling with e, as it is ergy issues, ey may do is p are neration,

• n planning

ssion

• n plan, the

eyond the within ments Final ned l Rule at n months t to the egional ethods. r may (some or ith any er an RTO r ISO can

• mpliance

ements.

• The Commission encourages RTO

regional transmission planning. Non regional transmission planning pro B. Reciprocity

• The Commission does not believe

211A, and require non-public utility comparable and not unduly discrim public utility providers are not parti process under the Final Rule, it ma P 815.

• Each non-public utility transmission p

wants to maintain that safe harbor requirements of the Final Rule. The Co pro forma OATT. Final Rule at P 8

• The Commission expects that all p

participate in the transmission plan Final Rule at P 818. VI. DISSENT OF COMMISSIONER M

• The owner of a transmission netwo

the reliability of its own network. S transmission owners to maintain th franchised service territory in order NERC reliability standards. Instea in the event that a competitor fails to placing itself in a difficult position if Commission is unable to assess a pen

• Additionally, local projects that hav

right of first refusal. This will discou allocation for their local projects and encouraging more local transmissi

• The Commission also should have

refusal can initially exercise its right t incumbent developer should be giv considering most projects will be a Moeller dissent at 3.

• Finally, the Commission should ha
• refusal. While adopting a time fram

did not need to have been mandated, t adopt a time frame that best reflec at 1, 3-4. VII. SPECIFIC COMPLIANCE REQUIR A. Within 12 months of the

• Each public utility transmission pro

for consideration of transmission n regional transmission planning pro TO and ISO members and non-members to work togethe Non-members are not required to be admitted to an RTO rocess, nor are they prohibited from joining. Final Rule at ve that it is necessary to invoke its authority under FPA s ility transmission providers to provide transmission servic scriminatory or preferential basis. If the Commission finds tha rticipating in the transmission planning and cost allocation may exercise its authority on a case-by-case basis. Fina ion provider which has a safe harbor tariff can decide whe bor status by fulfilling the transmission planning and cost a The Commission is not modifying the reciprocity provision P 816. ll public utility and non-public utility transmission providers lanning and cost allocation processes set forth in the Fina R MOELLER twork should have been provided with greater flexibility to . Specifically, the Final Rule should have allowed incumbent n their existing rights of first refusal for projects within its der to maintain the reliability of its existing network and sa tead, the Commission had to create a blanket waiver of pen ils to fix a reliability issue. As such, the Commission coul n if a blackout results in widespread loss of power, and the a penalty. Moeller dissent at 1-2. ave their costs assigned regionally generally cannot maint scourage transmission owners from seeking regional cost and could ultimately discourage regional cooperation by ssion projects. Moeller dissent at 2-3. ve clarified that while an incumbent utility with a right of f ight to develop a project, if it decides not to construct, a n given the opportunity to construct. This is especially impo e allowed to retain their right of first refusal under the Fina d have clarified that the right of first refusal is not a right of rame – such as the 90-day time frame suggested in the re andated, the Commission should have encouraged every re lects the needs and circumstances of that region. Moelle UIREMENTS BY DATE e Effective Date of the Final Rule rovider must amend its OATT to detail procedures which

• n needs driven by public policy requirements in the local a
• rocess. Final Rule at P 203.

ther with TO/ISO’s le at P 797. section vice on a s that non- ation inal Rule at whether it st allocation sion of the ders inal Rule. to ensure bent and satisfy f penalties

• uld be

and the aintain a st by f first t, a non- portant inal Rule.

• f “forever”

e record – region to ller dissent ich provide l and

• Public utility transmission providers

believe are necessary to implement address alternating inclusion and e transmission plan over successive

• Public utility transmission providers

must eliminate provisions in Comm federal right of first refusal for an in facilities selected in a regional tran 313.

• Each public utility transmission pro

transmission planning process in w criteria for determining an entity’s e regional transmission plan for purpo transmission provider or a non-incu

• Each public utility transmission pro

must be submitted by a prospectiv proposes in the regional transmiss information must be submitted to b Rule at P 325.

• Each public utility transmission pro

unduly discriminatory process for e the regional transmission plan for pu

• A public utility transmission provide

allocating the costs of new transmi purposes of cost allocation. If the p cost allocation method(s) must be transmission planning region, each in its OATT the same language rega planning region. The Commission d transmission facility should be alloc facilities of the type in question. Fin

• Each public utility transmission pro

for regional cost allocation is just and demonstrating that each method sat way that is roughly commensurate beneficiaries; (3) benefit to cost thr planning region(s) unless those out determining benefits and identifyin

• facilities. Final Rule at PP 603, 622,

B. Within 18 months of the

• Public utility transmission providers

evaluate interregional transmission regions must include a description o determine if interregional transmiss regional facilities. Final Rule at P 3

• Each public utility transmission pro

procedures by which differences in used to study a proposed transmiss jointly evaluating the proposed inte planning regions may use discretion Final Rule at P 437. ders may include in their compliance filings tariff revisions t ent flexible transmission planning criteria, such as procedu d exclusion of a single transmission project in a regional ive planning cycles. Final Rule at P 224 (emphasis added ders, subject to the framework in section II.B.3(d) of the Fi mission-jurisdictional tariffs and agreements that establi incumbent transmission provider with respect to transm ansmission plan for purposes of cost allocation. Final Ru rovider must revise its OATT to demonstrate that the reg n which it participates has established appropriate qualific ’s eligibility to propose a transmission project for selection rposes of cost allocation, whether that entity is an incum ncumbent transmission developer. Final Rule at P 323. rovider must revise its OATT to identify: (a) the informati tive transmission developer in support of a transmission p ission planning process; and (b) the date by which such

• be considered in a given transmission planning cycle. F

rovider must amend its OATT to describe a transparent r evaluating whether to select a proposed transmission fa r purposes of cost allocation. Final Rule at P 329. ider must have in place a method, or set of methods, for mission facilities selected in the regional transmission pla the public utility transmission provider is an RTO or ISO, th t be set forth in the RTO or ISO OATT. In a non-RTO/ISO ch public utility transmission provider in the region must regarding the cost allocation method(s) used in its transm

• n does not specify how costs of an individual regional

llocated, but such methods should apply to all transmissi Final Rule at PP 558, 560. rovider must show on compliance that its cost allocation t and reasonable and not unduly discriminatory or preferent d satisfies the six cost allocation principles: (1) costs alloc ate with benefits; (2) no involuntary allocation of costs to n t threshold ratio; (4) allocation to be solely within transmiss

• utside voluntarily assume costs; (5) transparent method

ying beneficiaries; and (6) different methods for different t 22, 637, 646, 657, 668, 685. e Effective Date of the Final Rule ders must describe the methods by which they will identify ion facilities, and transmission providers in neighboring p

• n of the type of transmission studies they will conduct to

ission facilities would be more efficient or cost-effective t P 398. rovider, through its transmission planning region, must de in the data, models, assumptions, planning horizons, an ission project can be identified and resolved for purpose nterregional transmission facility. Neighboring transmissi etion in the way this requirement is designed and implemented.

• ns they

cedures to nal added). the Final Rule, blish a mission Rule at P regional lification tion in the umbent ation that n project it

• e. Final

ent and not

• n facility in
• r
• n plan for

, then the O st set forth smission ssion

• n method

erential by llocated in a to non- ission ethod for ent types of ntify and planning t to e than develop , and criteria ses of ssion mented.

• Each public utility transmission pro

procedures that provide for the exc which will ensure that neighboring t transmission plans and the assumpt 454.

• The Commission requires public ut

transmission planning region, to m related to interregional transmission transmission coordination may be website or a regional transmission

• The Commission requires that pub

transmission planning regions deve transmission provider’s OATT that de procedures for that particular pair o choose, these procedures may be agreement filed on compliance for app

• The Commission requires a public

to have, together with the public ut region and a neighboring transmiss allocating the costs of a new interreg transmission facility in the two neig transmission facility is located. Fin

• Each public utility transmission pro

for interregional cost allocation is ju preferential by demonstrating that costs allocated in a way that is rou

• f costs to non-beneficiaries; (3) bene

transmission planning region(s) un method for determining benefits and different types of facilities. Final R

• Note: the method or methods for inte

regions may be different from the m

• allocation. Also, the method or method

interregional transmission facility m a regional facility within that region. rovider must adopt interregional transmission coordination xchange of planning data and information at least annua g transmission planning regions are aware of each others mptions and analysis that support such plans. Final Rule a utility transmission providers, either individually or throug n, to maintain a website or e-mail list to communicate informat ssion coordination procedures. Information related to interr be maintained on an existing public utility transmission pro

• n planning website. Final Rule at P 458.

ublic utility transmission providers in each pair of neighbo evelop the same language to be included in each public that describes the interregional transmission coordination ir of regions. If the public utility transmission providers so be reflected in an interregional transmission coordination for approval by the Commission. Final Rule at P 475. lic utility transmission provider in a transmission planning utility transmission providers in its own transmission plan ission planning region, a common method or methods fo erregional transmission facility among the beneficiaries of eighboring transmission planning regions in which the Final Rule at P 578. rovider must show on compliance that its cost allocation s just and reasonable and not unduly discriminatory or at each method satisfies the six cost allocation principles

• ughly commensurate with benefits; (2) no involuntary al

benefit to cost threshold ratio; (4) allocation to be solely unless those outside voluntarily assume costs; (5) transpa and identifying beneficiaries; and (6) different methods fo l Rule at PP 603, 622, 637, 646, 657, 668, 685. r interregional cost allocation used by two transmission p the method or methods used by either of them for regional ethods for allocating a region’s share of the cost of an y may differ from the method or methods for allocating the

• ion. Final Rule at P 733.

ation ually, hers’ Rule at P

• ugh their

mation nterregional

• n provider’s

boring lic utility

• n

so

• n

ing region lanning for

• f that
• n method

es: (1) allocation ly within sparent s for

• n planning

nal cost the cost of