Coalition of utilities asks court to reconsider far-reaching transmission rule

Source: Hannah Northey, E&E reporter • Posted: Thursday, October 2, 2014

A group of nonprofit utilities this week petitioned a federal appeals court to reconsider its August decision to uphold Order 1000, the Federal Energy Regulatory Commission’s landmark ruling that overhauls the process for upgrading the country’s aging electric grid.

The Large Public Power Council, a group of locally owned and controlled not-for-profit power systems, askedthe U.S. Court of Appeals for the District of Columbia Circuit to reconsider its ruling on Order 1000, one of the most complex and controversial rules ever issued by the commission.The council asked the court to rehear the case en banc, meaning before all of the D.C. Circuit’s 11 judges.The group argued that the court’s opinion essentially endorses FERC’s “unprecedented determination” that the agency has the authority to provide transmission developers with a mechanism to secure funding for their projects from entities with whom they have no business relationship — and without defining benefits.

If allowed to stand, LPPC said, the court’s decision could require customers of its members to pay for new transmission projects that they do not benefit from, a move that will likely raise power prices for millions of Americans.

LPPC argued that the court failed to recognize that FERC, under current laws, is only allowed to change existing rates or business practices. “The Opinion fails on this point as well, as the funding mechanism and commercial relationships that FERC seeks to create do not now exist,” the group said.

The three-judge panel this summer handed FERC a sweeping win, rejecting the arguments from more than 40 state regulators, utilities, regional transmission organizations and industry groups that challenged the commission’s Order 1000. Just about every aspect of the rule was challenged at the D.C. Circuit.

The order, to reform how transmission infrastructure projects are planned and paid for across the country, requires regional planning instead of the current state- and utility-centric model.

FERC claims the existing methods lead to a lack of coordination and unnecessary costs that will eventually translate into unjust and unreasonable electricity rates for consumers.

In addition to regional planning, Order 1000 removes an incumbent utility’s “right of first refusal” to construct a new project because, FERC says, that policy discourages new entrants from proposing markets.

FERC also required grid planning to take state policies, such as renewable energy requirements, into account. The package was widely supported by former FERC Chairman Jon Wellinghoff as well as environmentalists.

The commission is facing other challengers — including the South Carolina Public Service Authority and Coalition for Fair Transmission Policy, a group of utilities from across the country — that argued Congress intended coordination to be voluntary, not mandatory.

Environmental groups such as the Natural Resources Defense Council, however, are backing the order and have said it eases the integration of clean electricity sources into the grid.