FERC Releases New Transmission Rules

Source: Cozen O’Connor’s Energy, Environmental and Utilities Group “News Concerning Recent Developments in Energy and Environmental Law” Newsletter, August 16, 2011

The Federal Energy Regulatory Commission (FERC) released its Final Rule on Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities on July 21, 2011. The new rule is meant to address inadequacies in the existing transmission system that make it difficult to achieve a free market in power transmission, where generators are able to compete across vast distances to supply consumers. Without new transmission rules, congestion is only expected to grow more acute, especially due to the fact that 60 percent of new generation is being achieved through wind and solar resources that are oftentimes located far from the large population centers they supply energy to.

The rule requires transmission providers to participate in regional planning and cost-allocation so that decisions are made and paid for, collaboratively, by the affected regions. The rule also calls for transmission providers to consider state and federal goals of expanding the use of renewable energy in their decisions relating to transmission growth. However, the FERC ruling did not address the cumbersome permitting process, which is often cited as the largest obstacle to installing new transmission capacity.  The rule has received widespread support from renewable energy companies and transmission developers.

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