FERC Order 1000 is working slowly, but it is working
Discussing the technical conference that FERC held last summer on Order 1000, Dan Belin, director – electric transmission, Ecology & Environment Inc., said on Nov. 15 that the majority consensus is that the process is working, and while it is moving slowly, the order is doing what it is supposed to do.
“[W]hat FERC Order 1000 has meant is really an extra layer of legislation on top of the planning process and on top of the permitting process,” Belin said during a panel on Order 1000 at TransForum East, which was held in Washington, D.C., and presented by PennWell’s TransmissionHub.
Belin said that what the order “has translated into has been some disjointed actions and policies, particularly between the ISO and the [state Public Service Commission, or] PSC. There have been some growing pains, they’re getting a little better, but that’s been the big challenge.”
For project developers, that means there is a lot more uncertainty, and from a schedule standpoint, what it means is a longer process, he said.
While “large, interregional, long-haul projects” tend to take 10 to 15 years or so to develop, now, “intrastate [projects] with the single ISO that are less than 100 miles” long are also on the 10-year development range, he said.
Further discussing projects that his company is working on in New York, he noted that in New York, the PSC first identifies the need, then the New York ISO (NYISO) confirms it; and after that, the PSC issues a solicitation and receives proposals. Following that, the ISO verifies the viability and sufficiency of those proposals, the PSC then confirms that, and the ISO makes its selection(s), he said.
As noted in his presentation, the process for the “New York Energy Highway – AC proceeding (sponsorship model)” began in October 2013; the PSC identified the need in December 2015; proposals were received in April 2015; and the NYISO made its evaluation last month.
“[W]e’re three years into that process, and there’s been no selection,” he said, adding that once a selection is made, that is when the permitting process begins.
An in-service date on any of the projects selected under that process would be 2023, which is “a pretty significant amount of time,” he said.
As noted in his presentation, the “Western NY Public Policy” proceeding is also ongoing. The NYISO initiated the proceeding in October 2014, and the PSC identified the need in July 2015. Proposals were received in December 2015, the NYISO issued its sufficiency viability determination in June, and the PSC confirmed that determination last month, Belin said.
According to his presentation, the NYISO is beginning its selection process and a likely in-service date for project(s) in that proceeding is 2021.
A major challenge for independent developers in terms of permitting is that while best practices call for developers to engage early and often with affected stakeholders, in the “Order 1000 space, you can’t really do that until you’re selected and so that’s really delaying all that upfront work.”
He continued, “[W]ho wants to risk the capital and the expenditures if you don’t know that you’re going to be selected?”
Noting that there have been lessons learned between the NYISO and PSC, including on communication between the two entities, Belin said that from a big picture standpoint, the process under Order 1000 is working.
“The entire point of the process was to spur competition,” he said, adding that “by the number of entrants, it’s certainly done that.”
He continued, “I think one of the fears prior to FERC Order 1000 was that there wouldn’t be enough qualified entrants, and I think that fear has been proven wrong.”
Panelist David DesLauriers, director, Black & Veatch Management Consulting LLC, noted that all of the regions now have their regional plans approved by FERC, and as stated in his presentation, the interregional plans are nearing full compliance.
Discussing where Order 1000 stands today, he said, “There are some very successful, early competitive solicitations in [California ISO, or] Cal-ISO. I would say Cal-ISO is probably the most prolific in terms of the ISOs that have executed actual bids and chosen results based upon competition.”
While PJM Interconnection was an early front-runner with the Artificial Island competitive bid, that project was ultimately canceled in August, he said.
As reported in August, with costs rising, the PJM board decided to suspend “all elements” of the Artificial Island project in New Jersey and directed PJM to perform a comprehensive analysis to support a future course of action.
Similarly, the Southwest Power Pool (SPP) had a competitive solicitation with the Walkemeyer Project, but that project was also canceled, DesLauriers said.
As TransmissionHub reported, SPP in April said that its board selected Mid-Kansas Electric Company (Mid-Kansas) to build the North Liberal to Walkemeyer 115-kV transmission line in western Kansas, the first transmission project in SPP to go through a competitive bidding process.
Cindy Hertel with Sunflower Electric Power Corporation told TransmissionHub on Nov. 15 that the SPP Board approved the withdrawal of the Walkemeyer Phase II Project (a 22.6-mile, 115-kV line) due to decreasing load projections.
“Prior to winning the competitive bid for the project, Mid-Kansas asked SPP staff to restudy the need for the project,” Hertel said.
During the second week in July, the SPP Board voted in favor of SPP’s staff’s recommendations to withdraw Phase II of the project but keep Phase I, Hertel said, adding that the Walkemeyer project’s noncompetitive first phase, a new 345/115-kV substation and transformer and a one-mile line to the Walkemeyer 115-kV station, will still be built.
As noted on Mid-Kansas Electric’s website, Mid-Kansas members own and manage Sunflower Electric Power, a generation and transmission service provider headquartered in Hays, Kansas.
As noted in DesLauriers’ presentation, the Midcontinent ISO (MISO) and NYISO bids are in process, and there have been no interregional bids solicited to date.
The presentation further noted that possible influences to the pace and market rollout of Order 1000 include:
· Cost containment and risk balance
· Divergent models (sponsorship versus competitive)
· Transparency of process
· Seams issues – interregional projects and planning
· Right of first refusal (ROFR) impacts – some states have retained ROFR through state law; federal ROFR is impeding competitive opportunities
DesLauriers noted, for instance, that cost containment is a goal for policymakers, yet, if too much emphasis is placed on cost, it could be a question of, “are we sacrificing something in the way of creativity, or other kinds of projects that may in the long run be more beneficial?”
On transparency, DesLauriers noted that ISOs and RTOs reveal information about bids, for instance, and that information is distributed in different ways across the ISOs and RTOs, which has been a troubling issue for some transmission developers.