June 30, 2022

Volume XII, Number 181

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FERC Proposes New Transmission Planning and Cost Allocation Reform and PJM Announces Interconnection Revamp

On April 21, 2022, the Federal Energy Regulatory Commission (“FERC”) approved a draft proposed rule (the “Proposed Rule”) regarding transmission planning and transmission cost allocation. According to a FERC news release issued that day, “[t]he proposed rule addresses the need for our nation’s energy infrastructure to be more resilient and reliable while also achieving cost savings for consumers.” The Proposed Rule is a component of a larger advanced notice of proposed rulemaking announced in July of 2021 (the “Advanced Notice”).

The transmission planning aspect of the Proposed Rule includes timeframe, identification of needs, evaluation of facility benefits, and increased transparency. Transmission providers would be required to identify transmission needs based on changes in resource mix and demand via long-term scenarios that meet the requirements set forth in the Proposed Rule. They would further be required to assess the benefits of regional transmission facilities to meet the identified needs over a minimum timeframe of 20 years from the in-service date of the given facilities. The Proposed Rule would also mandate the establishment of transparent and not unduly discriminatory criteria to select transmission facilities and further coordination between regional and local transmission planning to identify “right-size” replacement transmission facilities. Certain technologies such as dynamic line ratings and advanced power flow control devices would also need to be considered.

The regional transmission cost allocation part of the Proposed Rule emphasizes state involvement. Specifically, public utility transmission providers would be required to seek the agreement of the relevant state entities within the given transmission planning region with respect to the cost allocation methods that would apply to transmission facilities selected in the regional transmission plan. These providers would then revise their open access transmission tariffs to include those methods. Initial comments on the Proposed Rule are due 75 days after its publication in the Federal Register.

The Advanced Notice had also included a request for comments on interconnection queue reform (among other topics), but the Proposed Rule did not address this topic directly. Instead, FERC indicated that it would continue to evaluate the record and would address other possible inadequacies in subsequent proceedings. The need for changes to the interconnection queue process has recently been a major topic of discussion, including PJM’s proposal announced April 28, 2022 (“Interconnection Proposal”), to have a two year transition period to work through backlogged projects submitted before 2021. The Interconnection Proposal also includes plans to address projects on a first-ready, first served basis instead of first come, first served. PJM would further simplify its cost responsibility analysis of individual projects by combining projects within the same cycle. Projects that would not increase network upgrade needs or would not need facilities studies would also be expedited. PJM plans to file the Interconnection Proposal with FERC in May.

© 2022 Foley & Lardner LLPNational Law Review, Volume XII, Number 122
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About this Author

Associate

Rikaela Greane is an associate and business lawyer with Foley & Lardner LLP, where she is a member of the firm’s Finance & Financial Institutions Practice and Energy Industry Team. Rikaela advises energy market participants on project finance, development and acquisitions, including for multiple utility-scale projects. She also assists clients with a range of energy project documents, including power purchase agreements, REC agreements and construction contracts.

Rikaela also has significant experience with state and federal energy...

608-258-4268
R. Lynn Parins Energy Lawyer Foley
Senior Counsel

Lynn Parins is a senior counsel and business lawyer with Foley & Lardner LLP, where he is a member of the firm’s Finance & Financial Institutions Practice and Energy Industry Team. His practice focuses on the intersection of finance, real estate and renewable energy development, as he assists sponsors, developers and investors to navigate the project financing of predominantly solar, wind and other sustainability improvements to real property. Lynn has extensive experience leading clients through complex credit and project development structures for large...

608.258.4339
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