In a nod to new FERC rules, regional grid operator paves the way for more renewables

Source: Nathanael Massey, E&E reporter • Posted: Thursday, November 1, 2012

This month, utilities and regional transmission planners are issuing compliance filings on Order 1000, the Federal Energy Regulatory Commission’s broadly scripted mandate to limber up America’s electric grid (ClimateWire, Oct. 18).

While hailed by regulators and watchdog groups as a necessary first step in the journey to a smarter, more dynamic system of power distribution, the order is short on specifics, opening the door to a lengthy dialogue between planners and regulators as recommendations are issued and amended.

Last week’s filing by PJM Interconnection LLC, a regional transmission organization (RTO) and the world’s largest wholesale energy market, provides a first look at how transmission planners are interpreting the new rules laid out in Order 1000.

Eighty-three pages in length, the document provides specifics on PJM’s plans to increase transparency, improve communication between regional stakeholders and open the process to greater private-sector involvement.

Among other details, PJM’s compliance filing outlines a process to open the door to state involvement, including state renewable portfolio standards. It reiterates changes made under a separate filing, approved by FERC earlier this year, to accommodate new technologies — such as battery storage and smart meters — and changing patterns of consumer behavior.

Larger focus on renewable targets

By forming an independent committee made up of interested state agencies within its own region, PJM will draw states into planning processes, Mike Kormos, senior vice president of operations at PJM, said during a recent conference call. This goes above and beyond Order 1000’s requirement for public stakeholder input, he added.

“We wanted to go further, in that if there are specific transaction alternatives that the states want, we will accommodate,” he said.

Previously, FERC rules held that transmission planners could only model and implement new transmission capacity based on public reliability requirements, such as relieving congestion or preparing for new development. Order 1000 allows planners to take public policies, including renewable energy targets, into account.

That’s good news for renewable energy developers in general and for one large-scale transmission project in particular: a proposed transmission “backbone” known as the Atlantic Wind Connection (AWC). A 320-kilovolt cable running beneath the waters of the mid-Atlantic, the AWC would carry power from northern New Jersey to southern Virginia, greatly facilitating the development of offshore wind farms in the process.

Having cleared most of its regulatory hurdles, the project is now awaiting PJM’s decision on whether to purchase power from the transmission line.

Planned construction on the line has already been delayed two years because FERC took longer than expected to issue Order 1000 and granted a wider time frame for RTOs to make their compliance filings.

Bringing in ‘business discipline’

Order 1000 includes provisions that RTOs open up their planning process to non-incumbent developers — usually private-sector firms — to bid on new project contracts. In a statement upon the release of the compliance filings, PJM CEO and President Terry Boston said his organization welcomed the new competition.

“We believe our approach provides additional opportunities for competitive solutions to transmission needs balanced with meeting our primary obligation of maintaining reliability,” he said.

The new filing states that PJM will solicit competitive bids from non-incumbent developers for all new projects, whether short-term, long-term or immediate. However, because any competitive solicitation processes take time, the bidding process may be bypassed in situations where immediate action is needed, the filing points out

The new provisions have won some accolades from the private sector. “It’s noteworthy that RTOs are engaging non-incumbent transmission developers,” said Steve Conant, senior vice president for project development with the company Anbaric Transmission.

“I’m not going to say it’s a game changer, but it does move the dial forward,” he added. “We believe merchant developers like us can build transmission infrastructure on time and on budget as well or better than [incumbent developers]. We bring business discipline.”