December 2, 2022
  • December 2, 2022

FERC support for transport development

By on June 28, 2021 0


At the open meeting on June 17, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a policy statement and ordinance reflecting its continued support for the development of transportation projects and investments in transportation for meet federal and state renewable resource policy goals.

I. FERC Policy Statement on Voluntary Agreements

the FERC policy statement seeks to remove potential obstacles to voluntary agreements providing for the construction of transport facilities, including voluntary agreements involving one or more States (“Voluntary Agreement”) (“Policy Statement”).[1] The policy statement also identifies voluntary agreements between two or more transport owners as being “in scope”, although it focuses largely on investment in transport to support state initiatives. . The policy statement emphasized that “voluntary agreements are not categorically prohibited” by the Federal Power Act (“FPA”) or the FPA Commission implementation.[2] Recognizing that FERC Ordinance 1000 has not yet accelerated transport development as many had anticipated, the Commission explained that voluntary agreements can provide states “a means to prioritize, plan and pay for transport facilities which, for whatever reason, are not being developed in accordance with the regional transport planning processes required by Order No. 1000. “[3] In the policy statement, the Commission also invited parties who consider that FERC’s existing tariffs constitute obstacles to voluntary arrangements to apply to FERC to remove or otherwise deal with such tariff provisions.

The policy statement builds on the precedent of FERC which supports voluntary agreements related to the construction and cost allocation of transportation facilities. For example, the policy statement noted that Ordinance 1000 allows “market players, including states, to negotiate voluntary alternative cost-sharing agreements” other than the regional cost-sharing methods put into place. implemented to comply with Ordinance No. 1000.[4] The Commission also noted PJM Interconnection, LLC’s (“PJM”) State Agreement approach to transportation planning, which provides a mechanism for States to require PJM to take action to develop solutions. to help the state meet its public policy objectives and meet the costs of such solutions.[5] FERC noted that it had recently agreed to a study agreement between PJM and the New Jersey Board of Public Utilities that initiated a competitive bidding process to solicit proposals for transmission facilities to interconnect and provide 7,500 MW of offshore wind generation in New Jersey by 2035.[6] The study process aims to identify more efficient or profitable transmission investments to meet the government’s offshore wind objectives.[7]

Commissioners James P. Danly and Mark C. Christie drafted separate approvals of the policy statement. Commissioner Christie sought to clarify that voluntary agreements need not necessarily be limited to states within a regional transport organization (“RTO”) or an independent grid operator (“ISO”).[8] He noted that states that “wish to cooperate with other states that share similar public policy objectives – whether environmental, reliable or economic – have options to achieve regional benefits outside the context of RTO participation. / ISO “.[9]

Commissioner Danly reminded “everyone” that “each voluntary agreement must always pass individually the gathering under our statute [FPA] and regulations.[10] In other words, although the policy statement aims to remove perceived barriers to the use of voluntary agreements to encourage transport development, Commissioner Danly’s view appears to be that a state’s decision Arranging for an agreement to plan and pay for the costs of the transmission facilities would not replace the FERC review of transmission tariffs and the allocation of costs arising therefrom.

The application of FPA and FERC requirements to a transport project resulting from a voluntary arrangement should not be overlooked. For example, if a state entered into an agreement that appeared to set tariffs for transmission service at the facility in question, the agreement may be opposed by third parties on the grounds that the agreement represented an attempt to State to exercise control over transmission tariffs which is preempted by the exclusive jurisdiction of the FERC under the FPA. While recent court decisions dealing with the intersection of state and federal jurisdiction have given states significant flexibility to implement policies and programs in pursuit of state goals even when they affect rates within the competence of the FERC,[11] any voluntary agreement will need to be adapted to take into account the relative jurisdiction of States and FERC.

II. Joint Federal-State Electric Transportation Task Force

At the same meeting, FERC also voted a order issued in accordance with the rarely used FPA section 209 (b),[12] the creation of a joint federal-state working group on electricity transmission, the first of its kind (“joint federal-state working group”).[13] The Federal-State Joint Task Force – a group made up of all FERC Commissioners and 10 State Civil Service Commissioners appointed by the National Association of Regulatory Utility Commissioners (“NARUC”) and confirmed by FERC – is responsible for identifying ways to increase federal-state coordination to improve the process of development of electric transport. The 10 State Commissioners will sit in an advisory capacity. FERC considers transportation development “ripe for greater federal-state coordination and cooperation,” as federal and state regulators each exercise their authority over transportation-related matters.[14] Over the next three years, after which the Joint Federal-State Working Group will expire unless its mandate is extended under an agreement between FERC and NARUC, the Joint Federal-State Working Group will convene several meetings. formal public meetings, as well as possible regional meetings, to consider issues “related to efficient and equitable planning and payment of transmission”.[15]

FERC has defined six specific topics that can be considered by the Working Group, all related to “efficient and equitable transport planning and payment”:

  • Identify the obstacles that hinder the planning and development of the optimal transmission necessary to achieve federal and state policy goals, as well as potential solutions to these obstacles;

  • Explore the potential basis for one or more states to use the FERC jurisdictional transmission planning processes to advance their policy goals, including multi-state goals;

  • Explore opportunities for states to coordinate voluntarily in order to identify, plan and develop regional transmission solutions;

  • Examine the FERC rules and regulations regarding the planning and cost allocation of transport projects and possibly identify recommendations for reforms;

  • Examine obstacles to the efficient and rapid interconnection of new resources through FERC-jurisdictional interconnection processes, as well as potential solutions to these obstacles; and

  • Discuss mechanisms to ensure that transport investments are cost effective, including approaches to improve transparency and improve oversight of transport investments, including, potentially, through enhanced federal-state coordination.[16]

The agenda for the first public meeting of the working group will be released at least two weeks before the meeting, a date not yet announced. Although only 10 state commissioners will participate as members of the joint federal-state working group, FERC has invited all state commissions to suggest agenda topics and submit comments before and after. the meetings.[17] In addition, FERC anticipates that staff from FERC, NARUC and representatives of state commissions will support the work of the joint federal-state working group. The press release accompanying the order includes quotes from FERC President Rich Glick thanking NARUC and this year’s NARUC President Paul Kjellander (Chairman of the Idaho Public Utilities Commission).

Interestingly, other federal administrative agencies have relied successfully on joint federal-state commissions. The Communications Act of 1934, enacted the year before the FPA, includes a parallel position to section 209 (b) of the FPA found at 47 USC § 410. The Federal Communications Commission has successfully relied on joint commissions federal-state bodies such as the Joint Commission for Universal Service, which has existed and has been promoting universal service since 1996, in part by evaluating the impact of various universal service support mechanisms and the modalities of their funding.

Ivan Wohner, Summer Associate contributed to this article.

[1] State voluntary agreements to plan and pay for transport facilities, 175 FERC ¶ 61 225, at P 3 (2021).

[2] Identifier.

[3] Identifier. at P 2 (footnote omitted).

[4] Identifier. to P3.

[5] Identifier.

[6] Identifier. to P 5.

[7] Identifier.

[8] Identifier. to P 2 (Christie, Comm’r, concordant).

[9] Identifier. at P 5 (Christie, Comm’r agree).

[10] Identifier. at P 3 (Danly, Comm’r, okay).

[11] FERC v. Electric Power Supply Assn., 136 S. Ct. 760 (2016); Coal. for the Elec competition. vs. Zibelman, 906 F.3d 41 (2d. Cir. 2018); Elect. Food Ass’n v. Star, 904 F.3d 518 (7e Cir. 2018).

[12] 16 USC § 824h (b).

[13] Joint Federal-State Electric Transportation Task Force, 175 FERC § 61 224 (2021).

[14] Identifier. to P2.

[15] Username. to P3.

[16] Identifier. to P 6.

[17] Identifier. to P3.