APPA Emphasizes Need For Affordable Transmission Rates And Touts Joint Ownership

by Paul Ciampoli
APPA News Director
November 2, 2021

The Federal Energy Regulatory Commission (FERC) should not lose sight of the need to keep transmission rates affordable for consumers and its efforts to supervise the development of new transmission must prioritize effective planning to reliably meet the needs of load-serving entities (LSEs), the American Public Power Association (APPA) said in recent comments filed at the Commission.

At the same time, APPA also urged the Commission to promote joint transmission ownership through the transmission planning process by, for example, specifying that joint ownership of transmission facilities is a positive factor in evaluating transmission solutions in regional transmission planning processes.

APPA’s comments came in response to an advance notice of proposed rulemaking (ANOPR) issued by FERC in July 2021 to reform its transmission planning, cost allocation, and generator interconnection rules (Docket No. RM21-17).

“APPA agrees that as new electric generation resources, especially renewable resources, are developed, new transmission facilities may be required, and the uses of the electric transmission grid will evolve with the change in resource mix,” the trade group said in its initial comments in the ANOPR proceeding.

Public power utilities and public power joint action agencies “engage in planning to meet the resource needs of their customers or of their members in a manner that is safe, reliable, affordable, and consistent with the policy preferences of their community-owners,” APPA noted.

Public power utilities are LSEs and, as such, have a critical concern that the Commission’s efforts provide for integration of new resources through transmission planning and generator interconnection that will maintain reliable and affordable service to customers, APPA told FERC.

The Commission’s efforts to supervise the development of new transmission must prioritize effective planning to reliably meet the needs of LSEs, consistent with Federal Power Act (FPA) section 217(b)(4).

At the same time, APPA said that rising transmission costs are a major concern for many of its members. “Increased transmission investment in recent years has resulted in substantial increases in transmission rates in some regions, and this trend is expected to continue,” it said.

The Energy Information Administration’s 2020 Annual Energy Outlook projects, for example, that rising transmission and distribution costs will offset much of the projected decrease in generation costs through 2050. These transmission cost increases “impose a significant burden on public power utilities and the customers they serve.”

While additional transmission infrastructure may be needed to accommodate new resources, replace aging infrastructure, and promote reliability and resilience, the Commission, in considering proposed changes to its transmission planning and cost allocation rules, “must remain cognizant of the need to avoid placing unreasonable cost burdens on transmission customers.”

Of particular concern to public power utilities would be revised Commission rules that assign to them costs of transmission facilities from which they derive little or no reliability or economic benefit, APPA said.

“Protecting consumers from unreasonable costs is not only a statutory obligation under the FPA, it is a practical imperative if the Commission’s planning and cost allocation rules are to effectively promote transmission development.”

APPA said it is encouraged that the ANOPR recognizes the need to consider the impacts of reform on costs to consumers, and APPA urged the Commission to keep such cost impacts at the center of any analysis of potential reforms.

While transmission investment has been robust in recent years, APPA said it shares the Commission’s concern that the current regional and interregional transmission planning and generator interconnection processes may not consistently result in the most efficient transmission projects. 

“Inefficient transmission planning and generator interconnection processes can result in LSEs having the worst of both worlds: rising transmission costs without efficient and effective transmission solutions. Accordingly, APPA agrees that there is merit in the Commission’s effort to assess whether changes to its current rules and policies are warranted.”

As a general matter, however, APPA noted that concerns with the transmission planning and generator interconnection processes are likely to be highly regional in nature, which argues against a “one-size-fits all” approach to implementing any reforms in this proceeding.

At the same time, APPA pointed out that one important issue that is not raised in the ANOPR is the benefit of promoting joint transmission ownership opportunities for non-public utilities. “The Commission has consistently recognized the benefits of joint ownership, and APPA urges the Commission to act to promote joint ownership opportunities through any reforms to the transmission planning process.”

While the Commission’s incentive policies have been the primary mechanism through which the Commission has encouraged joint ownership, that approach has had relatively limited success in promoting joint ownership opportunities, APPA said.

“As part of any reforms adopted in this proceeding, APPA urges the Commission also to promote joint ownership through the transmission planning process by for, example, specifying that joint ownership of transmission facilities is a positive factor in evaluating transmission solutions in regional transmission planning processes.”

APPA highlighted positions on some of the ANOPR’s inquiries including, among other things:

• The Commission should promote regional transmission planning that includes a greater emphasis on anticipated future generation and more robust scenario planning, including analyses of multiple futures;
• Any reforms adopted as a result of the ANOPR should allow for regional flexibility that permits existing regional planning and differences to be taken into account;
• The transmission planning process must avoid endorsing projects based on speculative resource projections;
• Planning reforms must ensure a level playing field for all types of resources;
• In order to reasonably account for anticipated generation, transmission planning should focus on generation that is likely to be added to the transmission system based on the resource plans of LSEs, consistent with the requirements of FPA section 217(b)(4);
• The definition of Public Policy Requirements adopted in Order No. 1000 remains a reasonable guideline for what the Commission should require transmission providers to consider in their transmission planning processes when considering matters other than reliability and economic drivers;
• It may be appropriate for transmission planners to conduct transmission planning and cost allocation on a more holistic basis, taking into account reliability, economic, and Public Policy drivers; and
• The Commission should consider whether reforms are necessary to ensure that local transmission planning processes are adequately identifying optimal transmission solutions.