Facing serious protests from state utility regulators and consumer interests, the Federal Energy Regulatory Commission last Thursday (Nov. 21) approved a major rollback to its groundbreaking May order on regional electric transmission planning, financing, and construction. That order was given the title of Order No. 1920 to commemorate the 1920 founding of FERC’s predecessor, the Federal Power Commission.
The new, significantly altered rule, is Order No. 1920-A, (Docket No. RM21-17-001) with “A” standing for “altered,” not “abandoned.” The pushback on 1920 was led by FERC Commissioner Mark Christie, the commission’s only Republican member at the time and a 17-year Virginia utility regulator before joining FERC in 2021. When the commission approved 1920 in May, Christie issued a blistering dissent.
The rulemaking process leading to Order 1920 began with a 2021 advanced “notice of proposed rulemaking” (NOPR in FERC-ese), and a 2022 NOPR. It morphed into the most massive rulemaking procedure in the agency’s history. According to the commission’s general counsel, the NOPR led to 26,985 pages of initial comments and over 3,000 pages of reply comments. The final 1920 rule was a stunning 1,300 pages (with a 77-page written dissent from Christie).
In his May dissent, Christie wrote, “The final rule is a pretext for enacting a sweeping policy agenda never passed by Congress, denies the states the authority promised by the NOPR, and fails the commission’s consumer protection duty under the Federal Power Act.”
He added that “the final rule replaces the NOPR’s principle of requiring state agreement to selection criteria, benefits, and cost allocation with a charade of suggesting to transmission providers that they ‘consult with and seek support’ from the states—while paradoxically ‘clarifying’ that transmission providers do not actually need to obtain state consent—and the final rule uses other empty phrases such as allowing states to ‘inform’ or ‘provide input on’ the evaluation process and cost allocation. But the final rule’s real attitude towards the states and state regulators is embodied in this airily regal but perhaps unintentionally straightforward pronouncement: ‘[W]e do not agree that the views of state regulators regarding the appropriate cost allocation approach are dispositive.’”
Oops! The states pushed back hard, both individually and through their Washington lobbying group, the National Association of Regulatory Utility Commissioners. The commission got 49 requests for rehearing or clarification of the order. Christie noted at Thursday’s meeting that the complaints targeted “nearly all of the reforms adopted in Order 1920.”
NARUC immediately took issue with Order 1920, saying the day after FERC approved the order that “we are generally disappointed by the significantly diminished state role envisioned by the FERC order with respect to transmission planning and cost allocation. In light of our recent joint task force with FERC on electric transmission and the newly proposed collaboration, we hope there will be future opportunities to ensure that state voices are heard.”
They were heard loud and clear. The commission staff and commissioners have been working in the six months since to make more sense out of their desire to set a new course for the way new interstate electric transmission lines, whether by individual states and companies or in FERC-authorized regional transmission organizations, are structured.
In his written concurrence, Christie said, “The changes made today in Order No. 1920-A to the replacement rate set by Order No. 1920 go a long way towards restoring the state role to what the NOPR promised, and I am pleased to support these changes.”
The thrust of the changes Christie cited scale back authorities the original rule gave to transmission providers. It gives more authority to state regulators to contest the providers. He wrote, “As I have said repeatedly, state utility regulators are the first line of defense for their consumers and must have the authority to protect their consumers from unwarranted or excessive transmission costs, which are the fastest rising part of most consumers’ monthly power bills and are reaching ever more burdensome levels.”
Christie cited seven basic changes in the new order:
- “In contrast to Order No. 1920, Order No. 1920-A requires that, if the states in a region agree to a cost allocation proposal, the transmission provider must include that agreement in its compliance filing. Furthermore, the Commission can choose the state agreement over the transmission provider’s proposal.”
- “In addition, states must be consulted before the transmission provider considers any future changes to the cost allocation method or state agreement processes or if the states seek to amend the cost allocation method or state agreement processes.”
- “In contrast to Order No. 1920, Order No. 1920-A requires that, if the states in a region agree to a cost allocation proposal, the transmission provider must include that agreement in its compliance filing. Furthermore, the Commission can choose the state agreement over the transmission provider’s proposal.”
- “In addition, states must be consulted before the transmission provider considers any future changes to the cost allocation method or state agreement processes or if the states seek to amend the cost allocation method or state agreement processes.”
- “The requirement in Order No. 1920 that large corporate power-purchasing preferences must be a factor in planning long-term scenarios is explicitly removed….That was one of the most unconscionable, special-interest driven features of Order No. 1920, directing transmission providers to plan hundreds of billions of dollars of transmission projects to subsidize the power-purchasing preferences of huge multinational corporations and shifting the costs to residential and small-business consumers already struggling to pay their monthly power bills.”
- “Order No. 1920-A also emphasizes transparency and clarifies that the purported benefits of one or more states’ public policies are clearly identified and quantified. This will enable states to determine whether they are being charged for other states’ public policies, which benefits they are paying for, and how much.”
- “Order No. 1920-A also emphasizes transparency and clarifies that the purported benefits of one or more states’ public policies are clearly identified and quantified. This will enable states to determine whether they are being charged for other states’ public policies, which benefits they are paying for, and how much.”
Christie said, “Collectively, these changes give the states a much bigger toolbox containing far more effective tools they can use to protect their consumers and the interests of their states. I urge state regulators to use them aggressively.”
The commission vote was 4-0 for the new rule, with new Republican Commissioner Lindsay See not voting.
–Kennedy Maize
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