FERC Announces Revisions to Transmission Gravy Train Incentives

Back in May 2012, FERC issued a notice of inquiry soliciting suggestions for how to revise its current regulations on financial incentives for high voltage transmission projects.  The PATH fiasco had just revealed how disastrous FERC policies were, and the Commissioners were scrambling to save themselves from even more embarrassment.

On Thursday, FERC issued its new revisions that grew out of that inquiry process.  Keryn does a much better job of following developments at FERC, and her account is very thorough and thoughtful.  Here is a link.  It appears likely that some of the new revisions might go a long way toward preventing another PATH gravy train.

Here is a link to the comments filed by the Coalition for Reliable Power in the Notice of Inquiry case.

Here’s Keryn’s take of one of these key points:

6.   “The Commission expects applicants for an incentive ROE based on a project’s risks and challenges to demonstrate that alternatives to the project have been, or will be, considered in either a relevant transmission planning process or another appropriate
forum. Such a showing should help identify the  demonstrable consumer benefits of the proposed project and its role in promoting a more efficient, reliable and cost-effective transmission system.”

What this means:  No more PATHetic projects!  An applicant must demonstrate to the Commission how its project was compared to alternatives and found to be the most cost-effective solution.  Of course, a showing could be that an RTO/ISO has made this determination.  And since RTO/ISOs are nothing but industry cartels that will choose the projects of their favored incumbents and then make up a justification to support their choice afterward, this really doesn’t solve the problem.  However, the transmission owner now has to convince the Commission that it was done properly.

Gosh, what do you know.  FERC really thinks that RTOs like PJM should study all possible alternative before they approve a transmission project.  Who knew?

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