On May 13, 2024, the Federal Energy Regulatory Commission (“FERC”) issued a seminal order, Order No. 1920, regarding transmission planning and cost allocation requirements. Order No. 1920 builds upon Order Nos. 888, 890, and 1000, in which FERC incrementally developed the requirements that govern regional transmission planning and cost allocation processes. The Order provides for transmission planning processes and does not require any substantive outcomes.
Order No. 1920 requires public utility transmission providers in each transmission planning region to participate in Long-Term Regional Transmission Planning, which entails:
- planning on a time horizon that covers, at a minimum, 20 years,
- development of at least three long-term scenarios, using best available data inputs and seven FERC-specified categories of factors, to help identify long-term transmission needs and transmission facilities that meet such needs,
- evaluation of at least seven FERC-identified benefits of potential long-term transmission facilities,
- consideration of certain transmission needs associated with interconnection-related network upgrades that are repeatedly identified in the generator interconnection process but have not been developed,
- consideration of dynamic line ratings, advanced power flow control devices, advance conductors, and transmission switching for each identified transmission need,
- evaluating long-term facilities for potential selection for cost allocation though establishment of one or more ex ante cost allocation methods that apply to selected long-term transmission facilities (FERC permits inclusion of a State Agreement Process, whereby relevant state entities may voluntarily agree to a cost allocation method for long-term regional transmission facilities), and
- consulting with and seeking support from relevant state entities regarding the evaluation process of long-term transmission facilities.
Further, FERC does not allow for conditional federal rights of first refusal for selected transmission facilities, whereby the incumbent public utility transmission provider wishing to use the federal right of first refusal would be required to establish joint ownership of transmission facilities (for example, with load-serving entities and non-public utility transmission providers). FERC also did not adopt new rules with regard to Construction Work in Progress (“CWIP”) incentives for long-term transmission facilities.
Order No. 1920 also requires public utility transmission providers to adopt enhanced transparency requirements for local transmission planning processes and improve coordination between regional and local transmission planning with the aim of identifying potential opportunities to “right-size” replacement transmission facilities. Order No. 1920 allows a right of first refusal for right-sized replacement transmission facilities that are selected to meet long-term transmission needs.
In addition, Order No. 1920 requires transmission providers to revise their interregional transmission coordination processes to reflect the Long-Term Regional Transmission Planning reforms adopted in this final rule.
This final rule requires that each public utility transmission provider submit a compliance filing within ten months after Order No. 1920 is published in the Federal Register with regard to local and regional transmission planning reforms and twelve months after Order No. 1920 is published in the Federal Register with regard to interregional transmission planning reforms.
Order No. 1920 is available here.
Please contact Lisa S. Gast, Sean M. Neal, Michael Postar, Bhaveeta K. Mody, or Sylwia Dakowicz for further information.
