DC Court upholds FERC Order 1000

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The D.C. Court of Appeals, in a decision issued Aug. 15, upheld FERC Order 1000 and denied petitions for review of the final rule.

There were 45 petitioners and 16 interveners, including state regulatory agencies, electric transmission providers, RTOs and electric industry trade associations, that challenged FERC’s authority to enforce the mandates of Order 1000, according to TransmissionHub.

“Petitioners challenge the final rule on the grounds that the commission lacked statutory authority, made factual findings that were unsupported by substantial evidence, and acted in a manner that was arbitrary or capricious or contrary to law,” the court said in the decision.

The appellate court held that the commission had authority under Section 206 of the Federal Power Act (FPA) to: require transmission providers to participate in a regional planning process; require the removal of right of first refusal (ROFR) language from federal tariffs; and require the ex ante allocation of the costs of new transmission facilities among beneficiaries, and that its decision regarding scope was not arbitrary or capricious.

The court also held that the Mobile-Sierra objection to the ROFR removal was “not ripe;” concluded that there was substantial evidence of a theoretical threat to support adoption of the reforms in Order 1000; held that FERC reasonably determined that regional planning must include consideration of needs driven by public policy requirements; and, finally, held that FERC reasonably relied on the reciprocity condition to encourage nonpublic utility transmission providers to participate in a regional planning process.

The decision overruled arguments that FERC lacked authority to mandate transmission planning under the FPA, and that engaging in regional planning was tantamount to a “new” practice, not an “existing” practice which is allowable under the FPA.

“Commission-mandated transmission planning is not new,” the court said in the decision. “The final rule builds on Order No. 890’s requirements in light of changed circumstances and is simply the next step in a series of related reforms that began no later than Order No. 888. … [W]e conclude, consistent with the deferential standard in step two of the Chevron analysis … that the commission reasonably interpreted Section 206 to authorize the final rule’s planning mandate.”

The court also overruled arguments that FERC’s transmission planning requirement infringed on states’ regulation of transmission planning.

“Even assuming arguendo that siting and construction are matters ‘subject to regulation by the states’ within the meaning of Section 201(a), petitioners’ contention simply cannot be squared with the language of the orders, which expressly and repeatedly disclaim authority over those matters,” the court said.

Order 1000 requires each transmission owning and operating public utility to participate in regional transmission planning processes that satisfy specific planning principles designed to prevent undue discrimination and preference in transmission service and that produces a regional transmission plan, the court said in the decision.

The local and regional transmission planning processes must consider transmission needs that are driven by public policy requirements. Transmission providers in neighboring planning regions must collectively determine if there are more efficient or cost-effective solutions to their mutual transmission needs.

Order 1000 also requires each planning process to have a method for allocating ex ante among beneficiaries the costs of new transmission facilities in the regional transmission plan, and the method must satisfy six regional cost allocation principles.

Neighboring transmission planning regions also must have a common interregional cost allocation method for new interregional transmission facilities that satisfies six similar allocation principles. Additionally transmission providers are required to remove from their jurisdictional tariffs and agreements any provisions that establish a federal right of first refusal to develop transmission facilities in a regional transmission plan, subject to individualized compliance review.

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