Interregional planning under FERC Order 1000
Johannes Pfeifenberger and Judy Chang are principals of The Brattle Group. Delphine Hou is a former Brattle associate. This article is based on work undertaken for the Southwest Power Pool’s Regional State Committee and the associated report, Seams Cost Allocation: A Flexible Framework to Support Interregional Transmission Planning, April 2012, available at www.spp.org and www.brattle.com. The authors acknowledge sole responsibility for the content of this article.
Now that the U.S. regional transmission planning groups have explained how they will comply with the region-internal transmission planning and cost allocation provision of the Federal Energy Regulatory Commission’s Order 1000, their focus has shifted to the order’s interregional requirements. This broader focus provides an opportunity to significantly improve transmission planning near and across regional boundaries, which up to now has lagged region-internal efforts. An effective framework for interregional planning and cost allocation will be flexible enough to accommodate the often significant differences across regions and types of transmission projects.
The current lack of clarity on joint planning and cost allocation for interregional projects has created what some have called a “demilitarized zone” or gap of transmission investments near or across market seams. Because there isn’t a single transmission planning entity that considers all benefits or knows how costs would be recovered from multiple regions, it’s important to clarify up-front in the planning process how neighboring regions will evaluate interregional transmission projects, consider all project-related benefits in the respective regions, and use such benefits to determine cost allocation.