FERC Order 1000 Complements Key Aspects of Colorado’s Electric Transmission Facility Planning Rules

Construction of electric transmission facilities is the key to economic and renewable energy development in Colorado.  Important to this development, key elements of new Federal Energy Regulatory Commission Order 1000 (the “FERC Order”) addressing regional transmission planning processes complement Colorado’s Electric Transmission Facility Planning Rules (the “Colorado Rules”) recently issued under the leadership of Commissioner Tarpey of the Colorado Public Utilities Commission (the “Commission”).  These complementary policies may help increase the likelihood of Colorado developing a robust infrastructure designed to support a vibrant economy.

Colorado has been focused on the challenges to transmission development for years. In 2006, the Colorado Transmission Task Force on Reliable Electricity Infrastructure (the “Task Force”) recognized that “Colorado’s ability to ensure continued affordable, reliable electricity and to build a vibrant economy depends on sufficient transmission capability.”  In addition, the Task Force recognized that “[t]oday the system is strained and, if current trends continue, there will not be adequate transmission to meet the needs.”  A robust grid provides consumers access to cheaper electricity and is the facilitator to development of Colorado’s vast renewable resources.  Subsequent to the Task Force report, then Governor Ritter issued a series of reports that identified policy barriers to development and these reports led to legislative and policy changes in the state.

These legislative and policy changes however, impacted transmission development in the state by requiring more complex decision making at the Public Utilities Commission (the “Commission”).  In an effort to address these changes, the Commission issued the Colorado Rules under Decision No. R11-0077 defining the Commission’s role in electric transmission facilities planning as well as new requirements for the state’s public utilities relating to planning.   In this Decision, Commissioner Tarpey acknowledges that the “Commission has an obligation to ensure that proper transmission planning is taking place in Colorado and that the transmission system is sufficient to satisfy the needs of the Colorado citizens.”

Similarly, the FERC Order acknowledges that coordinated transmission planning can protect the consumer because coordinated planning may be more efficient and cost effective.  Specifically, the FERC Order requires, “public utility transmission providers to participate in a regional transmission planning process that evaluates transmission alternatives at the regional level that may resolve the transmission planning region’s needs more efficiently and cost-effectively than alternatives identified by individual public utility transmission provider in their local transmission planning processes.” FERC Order 1000, ¶ 6. 

Colorado and the FERC emphasize coordinated planning and stakeholder input.  Under the Colorado Rules, the three jurisdictional utilities in the state are required to file biennial ten-year transmission plans reflecting their own needs and reflecting how the utility coordinated with all transmission providers in Colorado. The FERC Order goes one step further by requiring regional planning processes to produce a regional plan.  The Commission is careful, however, not to impede existing processes with the new requirements.  Indeed, the Commission clarifies that “the obligation to participate in a regional transmission planning process that produces a regional transmission plan that meets the seven transmission planning principles, is not intended to appropriate, supplant, or impede any local transmission planning processes, that public utility transmission providers undertake.” FERC Order 1000, ¶ 161.  The objective is to require planning processes to meet the planning principles outlined in FERC Order 890 while producing a regional transmission plan.  

In another example of synergies, both Colorado and the FERC provided some leeway to the jurisdictional utilities as to how to meet the requirements for coordinated transmission planning.  Specifically, the FERC Order provided flexibility for regions to enhance or define processes and procedures for planning.  The FERC explains, “[p]ublic utility transmission providers have flexibility in developing the necessary enhancements to existing regional transmission planning processes to comply with this Final Rule, based upon the needs and characteristics of their transmission planning region.” FERC Order ¶158.

Colorado and the FERC also both recognize the importance of considering public policy in transmission planning.  The FERC Order requires “each public utility provider to establish procedures for identifying those transmission needs driven by Public Policy Requirements for which potential transmission solutions will be evaluated in the local or regional transmission planning processes.”  The FERC further encourages states to actively participate in identification of transmission needs driven by Public Policy Requirements.  “Public utility transmission providers, for example, could rely on committees of state regulators or with appropriate approval from Congress, compacts between interested states to identify transmission needs driven by Public Policy Requirements for the public utility transmission providers to evaluate in the transmission planning process.” FERC Order 1000, FN 189.

While Colorado declined to address cost allocation under the new Colorado Rules, the FERC emphasized the close link between planning and cost allocation and believes that the planning is the appropriate forum to address cost allocation.  “By linking transmission planning and cost allocation through the transmission planning process, we seek to increase the likelihood that transmission facilities in regional transmission plans are actually constructed.” FERC Order 1000 ¶ 501.  Thus, the FERC Order requires each public utility transmission provider to file a method or set of methods for allocating the costs of new transmission facilities selected in the regional transmission plan.  Importantly, while the FERC Order provides principles for regional and interregional cost allocation, the Order leaves sufficient flexibility within these principles so that regions can design methods according to regional needs.

The key areas of overlap between the Colorado Rules and FERC Order 1000 emphasize the need for coordinated planning, the need to consider Public Policy Requirements in this planning, and the need for public utilities to incorporate stakeholder input.  These requirements are also in-line with the Clean Energy Vision (“CEV”) defined in the Western Grid 2050 report.  “A CEV trajectory requires much greater regional coordination and cooperation to build the infrastructure that access and efficiently utilize the best renewable resources in the West.”  According to the DOE, however, significant expansion of the transmission grid will be required under any future electric industry scenario and so if the FERC Order is any indication, it looks like Colorado is and has been taking the right steps towards development of a robust infrastructure.