2012 No. 4
[N E E D T O K N O W ]
FERC Order 1000 Shakes Up Electric Transmission Industry
Transmission stakeholders can monitor developments at
www.burnsmcd.com/order1000.
New OrderWelcome to the New Order
The ground didn’t tremble when the Federal Energy Regulatory
Commission (FERC) issued Order 1000 in July 2011. It probably only
seemed that way to the electric transmission industry.
Local and regional compliance filings were due to FERC in
October 2012, and plans for interregional compliance are due on
April 11, 2013. The challenges can differ by region, but the
reality is that the game is changing and industry members are
evaluating their options.
expanding Horizons Some utilities are focusing on protecting
business in their territory. Others are forming joint ventures and
planning to develop wherever they can in the newly opened
competitive landscape.
It is more important than ever to identify the most promising
transmission projects and put together competitive bids. Burns
& McDonnell can provide the preliminary engineering and cost
estimates that will support competitive proposals.
“We can help existing clients protect their territory with good
defense,” Underwood says. “And we can help them play offense if
they’re looking outside their traditional service territory.”
For more information, contact Chris Underwood, 816-822-4313.
The commission mandated developing a cost allocation process for
large-scale, interregional transmission projects and required all
transmission providers to participate in regional planning
processes and coordinate between regions on multiregional projects.
And FERC really shook things up by removing the federal right of
first refusal (ROFR) on projects subject to those processes.
“It’s a big deal, a landmark order,” says Chris Underwood,
manager of transmission development at Burns & McDonnell. “To
date, utilities have essentially had a monopoly when it comes to
building transmission projects within their service territory. With
the federal right of first refusal removed, that’s gone for many
projects.”
FERC affirmed the order in May 2012 with Order 1000-A.
Generating Changes The first tremors were felt 16 years ago with
the introduction of FERC Orders 888 and 889, which aimed to
increase competition in electric generation by opening access to
transmission lines.
“Independent generators wanted to build new generation
facilities, but contended that some utilities made it difficult to
connect to the transmission system,” Underwood says. “The new rules
moved to open that access.”
One side effect from those earlier orders was the organizing of
regionwide planning areas. These regions created a framework for
utilities to provide equal access to the power grid.
With Order 1000, FERC will expand competition into the electric
transmission industry and fundamentally alter how large-scale
transmission projects — especially those that extend through
multiple regions — are developed, built and operated.
“Non-incumbent developers thought they were getting pushed
aside. FERC wants more competition to build and own transmission
and ultimately lower prices to consumers,” Underwood says.
Many transmission projects that traditionally had been assigned
based on geography and service territory are now open to
competition. Incumbent utilities no longer have the right of first
refusal to build, own and operate large-scale transmission projects
within their service territory.
“FERC wants more competition to build and own transmission and
ultimately lower prices to consumers.”
B U R N S & M c D O N N E L L
