January 13, 2010

Brattle Consultants Submit Filing to the FERC on Transmission Planning and Cost Allocation

Brattle principals Peter Fox-Penner and Johannes Pfeifenberger, and associate Delphine Hou, submitted comments on December 18, 2009 in the Federal Energy Regulatory Commission’s (FERC’s) Docket AD09-8 on transmission planning and cost allocation. Their filing notes the successful increase in transmission investment levels over the last several years and approved transmission plans that will keep investment levels substantially above those of the last two decades. However, in their comments, Brattle also stresses that significant barriers remain to investment in regional (i.e., multi-state and/or multi-utility) transmission projects, including regional transmission investments needed to integrate renewable generation projects. While many such regional transmission projects are being proposed, cost allocation has become the most significant barrier to such investments.

Brattle’s filing presents policy recommendations for a regional planning and cost allocation framework that the authors believe FERC could implement through a rulemaking. Under the proposal, subregional transmission planning groups (geographically covering RTOs/ISOs, portions thereof, or other multi-state regions) would be required to produce triennial grid plans that meet all applicable reliability standards as well as federal and state energy policy goals, use a fully integrated economic planning process, and include binding cost allocation proposals for all significant additions. These voluntary “subregional planning entities”, many of which would likely be based on existing RTO or subregional planning groups, would include state-level representation able to commit to the grid plans and cost allocation proposals that the group files at FERC. The Commission would accept these plans and cost allocations as presumptively yielding just and reasonable rates unless stakeholders can prove otherwise. FERC would also develop a backstop cost allocation framework that would be applied if the subregional planning groups were unable to resolve cost allocation.

A presentation attached to the filing and previously given to FERC staff documents investment trends and transmission needs, explains how cost allocation and related RTO cost-benefit frameworks have created barriers to regional transmission investments, summarizes existing and promising new (tariff- and non-tariff-based) cost allocation approaches, presents case studies of several such approaches, and summarizes transmission-related benefits often omitted in RTOs’ cost-benefit assessments. The document is available for download by following the link below.

Associated Experts
Pfeifenberger 034 edited
Mr. Pfeifenberger is an economist with a background in electrical engineering and over twenty-five years of experience in the areas of regulatory economics and finance. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Fox penner 131
Academic Advisor
Dr. Fox-Penner specializes in economic, regulatory, and strategic issues in network industries. His practice centers on energy and environmental policies and electric regulation, planning, and competition issues. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4