* We have updated this alert to correct errors in our original post in its description of the subject matter at issue in Federal Energy Regulatory Commission Docket No. ER24-340.
On Thursday, April 18, 2024, in a departure from normal procedure, the Federal Energy Regulatory Commission ("FERC" or the "Commission") issued two Sunshine Act Meeting Notices, publishing agendas for both the April 25, 2024 Open Meeting (the "April Meeting Notice" and the "April 25 Meeting") and the May 13, 2024 Open Meeting (the "May Meeting Notice" and the "May 13 Meeting").
The April Meeting Notice indicates that FERC intends to take action to address arguments made on rehearing challenging the adoption by Midcontinent Independent System Operator, Inc. ("MISO") of automatic penalties for interconnection customers that withdraw from the MISO generator interconnection queue; the California Independent System Operator Corporation's ("CAISO") request to increase its capacity procurement mechanism soft cap; and a solar developer's request for waiver of an ISO New England Inc. tariff provision that currently prohibits it from receiving a refund of its unspent interconnection security. The May Meeting Notice was likely issued simultaneously in order to quiet speculations regarding when the Commission would take action on two highly-anticipated matters: RM21-17-000, the Commission's ongoing rulemaking concerning regional transmission planning and cost allocation, and RM22-7-000, the rulemaking related to the Commission's backstop electric transmission siting authority.
Interest in the April Meeting Notice agenda items will almost certainly be overshadowed by excitement regarding the major rulemaking proceedings expected to be addressed at the May 13 Meeting. At the May 13 Meeting, the Commission may issue a new Final Rule on regional transmission planning and cost allocation, an issue of central and critical importance not only for transmission providers, project developers, and energy policymakers, but for anyone concerned with or affected by the reliability and resilience of U.S. bulk electric power grid. If issued, the new Final Rule will supplant the Order No. 1000 regime, which has governed transmission planning and cost allocation on most of the country's transmission grid since 2011. With respect to the Commission's transmission siting backstop powers, there has been much chatter in recent months about whether, and how, the Commission might utilize the expanded authority delegated by the Infrastructure Investment and Jobs Act (2021) ("IIJA") to catalyze significant new transmission development, a need widely acknowledged across the industry.
Stay tuned for additional updates from Foley Hoag's FERC team on developments from the April and May Open Meetings.
April 25, 2024 Open Meeting
- Midcontinent Independent System Operator, Inc., Docket No. ER24-340-001
We expect the Commission to address arguments made on rehearing jointly by several clean energy advocates regarding the Commission's acceptance of MISO's filing made in November 2023 that, among other things, adopted automatic penalties for most withdrawals from MISO's generator interconnection queue regardless of whether the withdrawal would pass MISO's previously-applied "harm test." MISO submitted this proposal prior to the effective date of FERC's recent Order No. 2023 interconnection reform rule, and the Commission evaluated the proposal under its preexisting Order No. 2003 interconnection regime. The clean energy advocates have asked FERC to reconsider its acceptance of MISO's automatic withdrawal penalties.
- California Independent System Operator Corporation, Docket No. ER24-1225-000
We expect the Commission to act on CAISO's proposal to increase its capacity procurement mechanism ("CPM") soft offer cap at the April 25 Meeting. The CPM is CAISO's mechanism to procure "backstop capacity" where resource adequacy requirements cannot be met. The CPM soft offer cap is used in CPM solicitations, and the CAISO tariff provides that the soft offer cap level must be reevaluated every four years. CAISO is proposing to increase the soft offer cap from $6.31 per kilowatt month ("kW-month") to $7.34/kW-month. According to CAISO's filing, this increase "will better reflect inflation, labor rates, and higher bilateral capacity prices in recent years."
- Moscow Development Company, LLC, Docket No. ER24-1295-000
In this proceeding, solar developer Moscow Development Company, LLC ("MDC") is seeking a waiver of an ISO-NE tariff provision to allow it to receive a refund of its unspent interconnection deposit. According to MDC's filing, it missed the deadline to withdraw its project from the interconnection queue and receive a refund due to incomplete information regarding how Order No. 2023 would impact the timing of ISO-NE's study processes. ISO-NE supported the waiver request.
May 13, 2024 Open Meeting
- Building for the Future Through Electric Regional Transmission Planning and Cost Allocation, Docket No. RM22-17-000
At the May 13 Meeting, we expect FERC to act on regional transmission planning and cost allocation in what will be a heavily anticipated Commission decision. The Commission commenced this proceeding in June 2021 with an Advance Notice of Proposed Rulemaking ("ANOPR"), followed in April 2022 by a Notice of Proposed Rulemaking ("NOPR"). Both issuances garnered hundreds of public comments and significant attention from Congress, industry, and media.
In the ANOPR and NOPR, the Commission has signaled its belief that in order to maintain just and reasonable rates, transmission-planning entities must proactively and collaboratively plan larger and more frequent investments in medium- and large-scale, high-capacity transmission facilities than they are currently planning. It is likely that, once issued, the Final Rule will require planning entities to (i) change their planning processes to contemplate changes in grid conditions (for example, demand growth and changes in the energy resource mix) more accurately and further into the future; (ii) quantify the benefits of such investments, and; (iii) explicitly consider new transmission investments as an alternative to both building new generation facilities and repairing or replacing existing infrastructure, possibly through the use of scenario-based planning.
Transmission infrastructure is extraordinarily capital-intensive, and the diffuse nature of the reliability and cost benefits it provides can make it difficult to allocate investment costs in a manner commensurate with the benefits of investments, as law and Commission precedent require. We anticipate that the Commission will devote some portion of the Final Rule, when it is issued, to suggesting solutions to questions of transmission investment cost allocation.
While we expect that the Commission's action in this proceeding will answer many questions concerning how the Commission will require transmission providers to change their planning and cost allocation schemes, we do not expect that a Final Rule, if issued, will be the proverbial "end of the road" for transmission planning reform. Requests for rehearing and clarification, and outright legal challenges—from states, trade groups, and transmission planning entities—will likely follow in the wake of the Commission's issuance.
- Rulemaking on Applications for Permits to Site Interstate Electric Transmission Facilities, Docket No. RM22-7-000
In a December 2022 NOPR, the Commission proposed to revise its existing regulations applicable to permit applications for siting transmission facilities under section 216 of the Federal Power Act ("FPA"), following amendments made to that section by the IIJA. According to a Commission explainer on the NOPR, the rulemaking seeks to align Commission rules with FPA amendments that give broader authority to the U.S. Department of Energy to designate National Interest Electric Transmission Corridors, and clarify that the "Commission can issue a permit for a [transmission facility project] in a National Corridor if: (1) a state does not have the authority to approve the siting of the facilities or consider the interstate or interregional benefits; (2) the applicant is a transmitting utility that does not qualify to apply in a state because the applicant does not serve end-use customers in the state; or (3) a state that has authority has not made a determination on an application within a statutory timeframe, has conditioned its approval such that the proposed project will not significantly reduce capacity constraints or is not economically feasible, or has denied an application."
Throughout 2023, many parties filed comments on the NOPR, with various commenters referring to this proposed rule as the Commission's "backstop electric transmission siting authority rule." The Commission may ultimately issue an order regarding the NOPR at its May Open Meeting.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
