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FERC Order 1000 Summary & Shout Out

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					         FERC Order No. 1000:
     22 Question Summary & Bonus
           Shout Out Report
                                            by
         Carolyn Elefant, Law Offices of Carolyn Elefant, Washington D.C.
                             www.carolynelefant.com

1.    What is Order No. 1000?

       Issued by the Federal Energy Regulatory Commission on July 21,
2011, Order No. 1000 adopts a Final Rule that amends the transmission
planning and cost allocation requirements previously established in Order
No. 890. Most significantly, the Final Rule requires all transmission owners
within a planning region to coordinate planning efforts with neighboring
regions and to have in place a method for allocating the costs of regional
and interregional facilities in a manner consistent with cost causation. By
aligning transmission planning and cost recovery, it is expected that the
Final Rule will minimize after-the-fact disputes and litigation over who pays
for new transmission facilities and give transmission developers and
investors more certainty regarding cost recovery.

2.    What was the impetus for Order No. 1000?

      Simply put, the Commission determined that deficiencies in the Order
No. 890 planning process -- specifically, the lack of consideration given to
public policy requirements that drive transmission, absence of interregional
coordination and cost allocation and failure to address incumbent abuse of
rights of first refusal to discourage non-incumbent transmission investment
–- impedes cost effective transmission development, thus resulting in
transmission rates that are unjust and unreasonable. [NOPR, ¶1-4]

3.    What is the Commission’s legal authority for adopting Order
      No. 1000?

       Once the Commission determines, as it did here, that certain practices
give rise to rates that are unjust, unreasonable, unduly discriminatory or
preferential, Section 206 of the Federal Power Act empowers the
Commission to take remedial action.

      Interestingly, although Order No. 1000 requires transmission planning

                                        1
and will improve grid reliability, the Commission did not cite either Federal
Power Act (FPA) Section 215 (governing reliability) or Section 217
(governing planning) of the FPA as authority for the Final Rule.


4.    What are the key features of Order No. 1000?

     First, Order No. 1000 requires transmission owners to participate in an
open and transparent transmission planning process that produces a
transmission plan. As part of the plan, transmission providers must develop
procedures to take into account public policy requirements that drive
transmission, identify the availability of lower cost regional solutions to local
needs and coordinate with neighboring planning regions.

      Second, Order No. 1000 requires the transmission planning process to
include a methodology for regional and interregional cost allocation. The
cost allocation methodology must allocate costs in a manner that is roughly
commensurate with benefits, does not assign costs to those who receive no
benefits and does not assign costs outside of the region unless the other
region voluntarily agrees to assume them. The cost allocation methodology
may employ different methods for different types of transmission. If the
parties do not agree on a cost allocation method, the Commission will
develop one.

       Third, Order No. 1000 curtails incumbent rights of first refusal. Under
most existing tariffs, the incumbent transmission provider (defined as a
transmission owner obligated to provide service within a retail service
territory) has priority rights to own and operate transmission within its
territory. Under Order No. 1000, In the Final Rule, the Commission directs
public utility transmission providers to remove from their Open Access
Transmission Tariffs ("OATTs") or other Commission-jurisdictional tariffs and
agreements any provisions that grant a federal right of first refusal to
transmission facilities that are selected in a regional transmission planning
process for purposes of cost allocation. The elimination of federal ROFRs
does not apply to (1) local projects where the incumbent does not seek to
share the cost (2)upgrades to existing facilities and (3) projects in the
incumbent’s existing right of way.

5.    How will the Commission implement the Rule?

      Order No. 1000 takes effect within 60 days from publication in the
Federal Register. Within twelve months after the date of publication, each
public utility transmission provider has twelve months to file an updated
OATT which includes a regional transmission planning procedure and cost

                                        2
allocation methodology that complies with the requirements of Order No.
1000. Compliance filings for interregional transmission coordination and
interregional cost allocations are required within eighteen months.


6.    Do utilities that are part of an RTO or ISO need to submit a
      compliance plan?

     No. Public utilities that are part of an ISO or RTO are not required to
may demonstrate compliance through the RTO’s or ISO’s compliance filing
and are not required to make a separate submission. [Final Rule ¶ 797].

7.   What about public power and other non public utility
     transmission owners?

       Non-public utility transmission providers must ensure that the
provisions of their tariff substantially conform to, or are superior to the pro
forma OATT requirements as revised by Order No. 1000 in order to maintain
a safe harbor tariff and satisfy the reciprocity requirements of Order No.
888. FERC declined to invoke its authority under FPA section 211A which
allows FERC to require non-public utility transmission providers to offer
service on a comparable and not unduly discriminatory basis. However,
FERC cautioned that it would not hesitate to use its Section 211A authority
on a case-by-base basis for non-public utility providers which are not
participating in the transmission planning and cost allocation process
required by the Final Rule.

8.    Is participant funding allowed under the Final Rule?

      Participant funding (i.e., where the entity that necessitates the cost
pays) is allowed on a case by case basis but cannot serve as a regional or
interregional cost allocation methodology.

9.    Does Order No. 1000 create a presumption in favor of new
      transmission construction?

      No. Under Order No. 1000, (as well as Order No. 890) cost effective,
non-transmission alternatives must be considered and given equal weight to
transmission options, during the planning process.




                                       3
10.   Can non-transmission alternatives qualify for cost recovery?

      No. Although non-transmission alternatives must be considered in
planning, the Commission concluded that issues related to cost recovery for
non-transmission alternatives fall outside the scope of the rule. [Order No.
1000, ¶778]. However, the Commission leaves open the possibility that
certain alternative technologies such as storage, which serve a transmission
function, may be eligible for treatment as transmission for ratemaking.

11.   How will Order No. 1000 affect renewables?

      The Final Rule is expected to spur renewable growth by facilitating
development of transmission to access renewables currently in transmission-
constrained or remote locations. In addition, the Final Rule will allow
development of new transmission not just for economic or reliability
purposes but to carry out public policy requirements such as state renewable
portfolio standards.

12.   What public policies must be considered under the Final Rule?

      The Commission declined to specify, and instead leaves identification
of public policies to be determined by stakeholders as part of regional
planning efforts. However, the Commission did clarify that only those
federal and state policies adopted by legislation or regulation are required to
be considered in the transmission planning process.

13.   What kinds of benefits can be considered in the cost allocation
      process?

      The Final Rule provides that costs of transmission must be allocated in
a way that is roughly commensurate to benefits. Thus, costs could be
allocated entities or groups that receive economic and reliability benefits
from new transmission. Likewise, transmission that facilitates compliance
with state public policy is also considered a benefit, for which costs can be
allocated. The Commission affords stakeholders flexibility to define benefits,
and only prohibits cost allocation where an entity receives no benefits, or
where costs are allocated outside the region which does not voluntarily
agree to pay.

14.   Does Order No. 1000 address transmission siting?

      In addition to factors such as uncertain cost recovery, transmission

                                       4
development in the United States is also hobbled by frequently protracted
and contentious state siting processes. Order No. 1000 does not cure this
problem – a deficiency noted by Commissioner Moeller in his dissent.

15.   How much will Order No. 1000 cost to implement?

      For each of the 132 entities required to make a compliance filing under
Order No. 1000, Commission estimates Year 1 costs as $34,200 (300 hours
multiplied by $114 hourly staff rate) and $13,680 (120 hours at $114/hour).
A few commenters criticized these estimates as overly optimistic.

16.   Does Order No. 1000 provide funding to facilitate or support
      stakeholder participation?

       No. Although the Commission requires utility transmission providers
to include cost recovery for state regulators in their cost recovery
mechanism, it declined to expand that directive to include funding for other
stakeholder interests. [Final Rule ¶162].

17.   What topics in Order No. 1000 attracted the most discussion?

      The chart below highlights some of the most frequently discussed
topics in the comments on the Final Rule. In particular, participants
commented extensively on interregional planning issues, public policy in
planning and elimination of the right of first refusal.




                                      5
18.   What was the reaction of commenters?

      The majority of commenters generally supported the rule, though
many criticized specific provisions. However, a minority of commenters
objected overall to the Final Rule, characterizing it as an inappropriate or
unlawful effort to nationalize transmission planning which has traditionally
been driven by local needs. Others argued that the record developed by the
Commission does not contain substantial evidence to show that existing
transmission policy has resulted in unjust and unreasonable rates.

19.   What are the points of contention in the Final Rule?

       As shown above, topics such as consideration of public policy within
transmission planning and elimination of the right of first refusal drew
significant attention were two controversial topics.

      On the public policy issue, opponents argued that the Commission
lacks jurisdiction to compel transmission providers to consider ancillary
issues such as public policy unrelated to reliability and cost in the
transmission planning process. Others contended that inclusion of public
policy considerations is unfair or irrelevant in jurisdictions that do not have
an RPS requirement.

                                        6
       On the elimination of the right of first refusal, opponents claim that the
Commission failed to show a relationship between retention of rights of first
refusal and higher transmission costs, and thus, lacks Section 206 authority
to eliminate incumbent rights of first refusal. In addition, these commenters
suggest that elimination of incumbent rights of first refusal encroaches on
state authority over utility service territories and could increase costs and
impair reliability since non-incumbents are not subject to an obligations to
serve. Finally, some opponents asserted that the non-discrimination
provisions of the FPA apply to differential treatment of classes of consumers
and not to different types of transmission providers (incumbent v. non-
incumbent).

20.   Did all of the Commissioners support the Final Rule?

        Chairman Wellinghoff and the four Commissioners all voted in favor of
the bill, although Commissioner Moeller dissented in part. First,
Commissioner Moeller expressed disappointment that the Final Rule would
not remediate problems in the transmission siting process. Second,
Commissioner Moeller proposed a different approach to elimination of
incumbent rights of first refusal. Commissioner Moeller’s preferred approach
would have allowed an incumbent utility the right of first refusal where a
facility is located in its service franchise and identified as needed for NERC
reliability compliance. At the same time, Commissioner Moeller would have
gone farther than the Commission and imposed a deadline for a utility to
establish a time frame – either 90 days or another period determined by the
region – to make a decision on its right of first refusal for existing projects
(which are currently exempt from the elimination of right of first refusal).

21.   Where is the Final Rule vulnerable?

       Though the overall planning and cost allocation provisions of the Final
Rule will likely remain intact, discrete provisions are vulnerable on both the
legislative and judicial front. The inclusion of “public policy” considerations
in transmission planning and cost allocation would be overridden if pending
legislation, S.400 sponsored by Senator Corker is adopted. Under S.400,
the Commission may only approve transmission rates based on an allocation
for costs proportionate to measurable economic or reliability benefits. Thus,
a rate that allocates costs for public policy benefits would not be permitted
under S.400.

      It is premature to predict the Final Rule’s chances of surviving judicial
review – if only because the Rule must go through several iterations of
review before reaching the court. It is possible that a court might agree

                                        7
with opponents that the Commission exceeded its statutory authority in
requiring consideration of public policy requirements. A court might also
remand the Rule on the rights of first refusal issue, at least to obtain
additional explanation between Commissioner Moeller’s proposed approach
and that of the Commission. 1

22.   What comes next?

      Even though the Final Rule does not take effect for sixty days, parties
that wish to ask the Commission for rehearing must file a petition within 30
days or by August 20, 2011 as required by Section 313 of the Federal Power
Act and Commission Rule 713. A rehearing petition is a necessary step to
challenging a Commission rule in court; failure to seek rehearing waives a
party’s ability to seek judicial review.

      It is likely that many parties will file rehearing even if they do not
intend to later challenge the rule in court. Most of the Commission’s major
rules (e.g., Order No. 890 on transmission planning; Order No. 2003 on
interconnection) frequently go through several iterations of rehearing or
reconsideration. Even many parties that generally support a Final Rule often
seek rehearing to ask the Commission to clarify or modify a few provisions.

Bonus:

       Ever wonder which commenters get the most “shout-outs” in a
massive Commission rulemaking like this one? Now, you can put your
curiosity to rest. Attached, you’ll find the full Order No. 1000 Shout Out
Report, prepared by the Law Offices of Carolyn Elefant, which lists, in
priority order, the commenters that attracted the most attention from the
Commission. The Order No. 1000 Top 20 are shown below.

       Bear in mind that the list isn’t necessarily indicative of the quality of
the comments filed. Due to cost constraints, commenters frequently limit
their input to discrete aspects of the NOPR, and consequently, will not
generate as much mention. The list also measures the number of times a
commenter is mentioned, and not the extent of discussion; it is possible that
a commenter filed fewer comments than a Top 20 participant, but that these
comments were more influential on a particular subject.

      The top comments reflect some diversity in industry sectors:

      1
         Am. Gas Ass'n v. FERC, 593 F.3d 14 (D.C. Cir. 2010)(remanding FERC order on
gas pipeline regulation for want of reasoned decision-making where Commission fails
to address alternatives raised by dissenting Commissioner).
                                         8
RTO/ISO, public utilities (both those that are RTO members and those such
as the Southern Utilities, which are not), coops, public power and AWEA as
sole renewable. Notably missing from the top 20 are the voice of smaller
public power groups, state commissions and consumer representatives.




                                     9
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                          Order 1000
 Rank                 ENTITY              Mentions
                  1   PJM                              84
                      MISO
                      Transmission
                  2   Owners                           83
                      Ad Hoc Coal SE
                  4   Utilities                        66
                  4   Next Era                         66
                  5   MISO                             65
                  6   SPP                              61
                  7   Edison Electric                  60
                      Public Power
                  8   Council                          57
                 10   East TX Coops                    54
                      Southern
                 10   Companies                        54
                 11   California ISO                   52
                      Transmission
                      Dependent Utilities
                 12   Systems                          52
                 13   PSEG Companies                   51
                      Large Public
                 15   Power Council                    48
                 15   LS Power                         48
                 16   Indianapolis P&L                 46
                 18   Exelon                           45
                      Transmission
                      Access Policy
                 18   Study Group                      45
                 20   AWEA                             44
                 20   MidAmerican                      44
                 21   Dominion                         43
                 22   Xcel                             42
                 25   AEP                              38
                 25   National Grid                    38
                      Nebraska Public
                 25   Power DIstrict                   38
                 26   ITC Companies                    37
                 27   New York ISO                     36
                      Sacramento
                      Municipal Utility
                 28   District                         35
                 29   ISO New England                  34
                 33   Bonneville Power                 33
                      California
                 33   Commissions                      33
                      New England
                      States Committee
                 33   Electricty                       33
                      Transmission
                      Agency of
                 33   Northern California              33
                      National Rural
                 35   Electric Coops                   32
                 35   Pennsylvania PUC                 32
                 37   APPA                             31
                 37   Northeast Utilities              31
                 38   American Tmission                30
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                         Order 1000
 Rank                 ENTITY             Mentions
                      Indicated PJM
                      Transmission
                 40   Owners                          27
                      Northern Tier
                      Transmission
                 40   Group                           27
                      Anbaric and
                 42   PowerBridge                     26
                      Connecticut&RI
                 42   Commissions                     26
                 43   PPL Companies                   25
                      26 Public Interest
                 49   Orgs                            24
                      Multiparty
                 49   Commenters                      24
                 49   Old Dominion                    24
                      Pattern
                 49   Transmission                    24
                      Sand Diego Gas &
                 49   Electric                        24
                 49   WIRES                           24
                      Iberdrola
                 52   Renewables                      23
                 52   Salt River Project              23
                      Southern
                 52   California Edison               23
                 53   Integrys                        22
                 54   NEPOOL                          22
                      Western
                      Independent
 <50                  Tmission Group                  22
                      Arizona Pub
 <50                  Service Co                      21
                      Organization of
 <50                  MISO States                     21
                      Oklahoma
 <50                  Gas&Electric                    20
 <50                  Duke                            19
                      Energy Future
 <50                  Coalition Group                 19
                      Massachusetts
 <50                  Depts                           19
                      Pacific Gas &
 <50                  Electric                        19
                      Sunflower &
 <50                  MidKansas                       18
 <50                  E.ON                            17
 <50                  First Wind                      17
                      New England
 <50                  Tmission Owners                 17
                      Western Grid
 <50                  Group                           17
                      Coalition for Fair
 <50                  Transmission                    16
                      Ohio Consumers
                      Counsel & WV
                      Consumer
 <50                  Advocate                        16
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                       Order 1000
 Rank               ENTITY             Mentions
                    Omaha Public
 <50                Power District                    16
                    Western Area
 <50                Power Admin                       16
 <50                Clean Line                        15
 <50                Primary Power                     15
 <50                Wind Coalition                    15
 <50                Atlantic Grid                     14
                    Federal Trade
 <50                Commission                        14
                    Illinois Commerce
 <50                Commission                        14
                    North Carolina
 <50                Agencies                          14
 <50                Powerex                           14
                    WestConnect
 <50                Planning                          14
 <50                New York PSC                      13
                    Solar Energy
                    Industries & Large
 <50                Scale Solar                       13
 <50                Westar                            13
 <50                Alliant Energy                    12
                    Arizona Corp
 <50                Comm                              12
                    California Munic
 <50                Utilities                         12
                    Consolidated
 <50                Edison, O&R                       12
                    Energy Consulting
 <50                Group                             12
 <50                Florida PSC                       12
                    Georgia Tmission
 <50                Corpo                             12
 <50                New Jersey Board                  12
                    New York
 <50                Transmission                      12
                    Allegeheny Energy
 <50                Companies                         11
                    Baltimore
 <50                Gas&Elect                         11
                    Colorado
                    Independent
 <50                Energy Associ                     11
                    Green Energy &
 <50                21st Century                      11
 <50                ISO/RTO Council                   11
 <50                Minnesota PUC                     11
 <50                PUC of Nevada                     11
                    Avista & Pugest
 <50                Sound                             10
 <50                CapX2020Utilities                 10
                    Conservation Law
 <50                Foundation                        10
 <50                NARUC                             10
 <50                Tucson Electric                   10
 <50                WECC                              10
 <50                Alabama PSC                        9
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                        Order 1000
 Rank               ENTITY              Mentions
                    American
 <50                Forest&Paper                       9
 <50                DC Energy                          9
                    Environmental
 <50                Defense Fund                       9
                    Imperial Irrigation
 <50                Dist                               9
 <50                Kansas City P&L                    9
                    Northern California
 <50                Power Agency                       9
                    WIlderness
                    Society&Western
 <50                Resource                           9
 <50                Four G&T Coops                     8
                    Long Island Power
 <50                Authority                          8
 <50                National Audubon                   8
                    Pioneer
 <50                Transmission                       8
                    Washington
                    Utilities and
                    Transportation
 <50                Comm                               8
                    California Tmission
 <50                Planning                           7
                    Dayton
 <50                Power&Light                        7
                    Mass Municipal &
 <50                NH Electric                        7
 <50                PHI Companies                      7
 <50                Six Cities                         7
                    Southwest Area
 <50                Transmission                       7
 <50                Vermont Electric                   7
 <50                AmAntitrustInst                    6
                    Boundless Energy
 <50                & Sea Breeze                       6
 <50                Brattle Group                      6
 <50                Delaware PSC                       6
                    Duquesne Light
 <50                Co                                 6
                    Eastern MA
                    Consumer Owned
 <50                Systems                            6
 <50                EIF Management                     6
                    Electricity
                    Consumers
                    Resource Council
 <50                et. al.                            6
 <50                Joint Commenters                   6
                    New Jersey
                    Division of Rate
 <50                Counsel                            6
                    Northwest &
                    Intermountain
                    Power Producers
 <50                Coalition                          6
                    CityCounty
 <50                SanFrancisco                       5
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                        Order 1000
 Rank               ENTITY              Mentions
                    First Energy
 <50                Service Co.                        5
 <50                Grasslands                         5
 <50                Maine PUC                          5
                    Michigan Citizens
 <50                Ag. Rate Excess                    5
                    Natural Resources
 <50                Defense Council                    5
                    Northwestern
 <50                Corporation                        5
                    Bay Area Munic
                    Transmission
 <50                Group                              4
                    Clean Energy
 <50                Group                              4
                    Gaelectric North
 <50                America                            4
 <50                Invenergy                          4
                    Kansas
 <50                Corporation Comm                   4
 <50                Sonaran Institute                  4
                    Subregional
 <50                Planning Group                     4
                    Senators Dorgan &
 <50                Reid                               4
                    California State
 <50                Water Project                      3
 <50                Champlain Hudson                   3
 <50                Direct Energy                      3
 <50                Enbridge                           3
                    E.ON Climate &
 <50                Renewables N.A.                    3
                    Horizon Wind
 <50                Energy                             3
                    Ignacio Perez-
 <50                Arriaga                            3
                    Modesto Irrigation
 <50                Dist                               3
 <50                NV Energy                          3
 <50                PSC of Wisconsin                   3
 <50                PUC of Ohio                        3
                    South Carolina
 <50                Electric & Gas                     3
                    Virginia State Corp
 <50                Commission                         3
                    Consumers
 <50                Energy Company                     2
                    Governors of
                    Delaware &
 <50                Maryland                           2
                    Independent
                    Energy Producers
 <50                Association                        2
                    Integrated
                    Transmission
                    Benefits Model
 <50                Proponents                         2
                    Land Trust
 <50                Alliance                           2
OrderNo1000ShoutOuts prepared by Carolyn Elefant, Esq. www.carolynelefant.com


                                     Order 1000
 Rank               ENTITY           Mentions
                    Oklahoma
 <50                Corporation Comm                   2
 <50                Starwood                           2
 <50                ALLETE                             1
 <50                Columbia Grid                      1
 <50                Earth Justice                      1
                    Environmental
 <50                NGOs                               1
 <50                Grid Solar                         1
 <50                Maine Utilities                    1
 <50                Nevada Hydro                       1
 <50                NRG Companies                      1

				
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