Thread by @LizaBevin

And we're back!

#FercNarucTF2 afternoon

Discussion of Cost Allocation Principles, Methodologies, and Decision Processes for the Purposes of Transmission Planning and Cost Allocation

Are the CA methodologies fulfilling allocation Commensurate with benefits? If not how do we improve this?

DS of MI: RTOs address with projects with multi drivers and hard to quantify aspects: post stamp or peanut butter those costs to the load.

Drawbacks: these portfolio approaches have only happened once per region. Postage stamp basically demands portfolio approach but may also inhibit projects because they can't benefit broader area

Sometimes the total benefit is positive but may drive include projects just to gain that result across the region. Not necessarily best plan for the region just deemed most fair, driven by postage stamp rate.

Postage stamp is easy, but maybe we should try harder.

KD in NC: recalls DS's turning transmission up to 11 panel earlier this week. Yes, check it out! W/ @RobGramlichDC @allienkelly @CTC_ACCC and @PatHoffmanOE

For NC region, the iterative process works. Rulemaking must recognize the regional diversity, including the different history of how each region was built.

Best in class in RTO question: PJM's state agreements approach. States with PP goals pick up costs.

For NC: FERC should consider subscription model for projects driven by customer preferences. industrial or commercial customers can band together into subscriptions for lines

TT of AR: still one MVP project incomplete. If it gets done, is it paid for under 10+ yr old cost allocation? Need to think about how to be flexible and rigorous.

Human event to negotiations, too. Not just cold math.

@RichGlickFERC concur with human element. "Roughly" commensurate is legal rule, hard to do project by project instead of in portfolio approach.

Provides collaborative mechanism. Should be an option on the table at all times.

State voluntary agreements have happened to pay for projects, but if/when that doesn't exist or states want other benefits recognized this fails. Cannot rely on voluntary only, this will stunt transmission growth. Be open to look at projects/portfolio that fulfill multiple goals.

AF from KS: best in class allocation in SPP (broad Postage stamp) is a big success story. Broad based economic benefits to whole region.

May not work for all projects in the future. Economic drivers are primary reasons, generator interconnection. May need to reassess for customer fairness.

More than 1 way to allocate costs. E.g., change how you bill. Capture environmental benefits that flow with electrons, have generators pay a service charge. Lots of things to consider. Ways to granularly divide costs and benefits that's not just ratios

RA of VT: concur with AF. ISONE is load ratio share. Works well right now but will not withstand pressures of more complexity and expansion.

Subscription model and other billing determinants are important dimensions. CA may need to depend on each portfolio

MN of MA: governance and order of rules must be clear. When is it a ferc/portfolio vs state billing. Flexibility is key but needs FERc methodology for framing conversations

Next question:

If there's a state driven PP project that has significant econ or rel benefits, under what circumstances are states willing to share in those costs?

If the costs aren't allocated broadly is that consistent with commensurate expectations?

TL of UT: good framing on "ammenability". He regs utils not in RTOs.

Look to OR Commission ANOPR comments on Light vs heavy touch. Flexible/safe harbor vs mandates.

West stakeholders need time and space and flexibility to continue momentum on existing coordination issues

Agrees with MC's point about building on existing IRPs, not replacing them.

Before we ask if a benefit can be quantified first ask if it's relevant to that state/consumer.

Need to think about cost causation and the way state policies drive changes to resource mixes and how that impacts everyone's transmission needa

Example: one multi state util operates under differsyate policies, building clean pwr under all of them for different reasons.

Who bears the cost for upgrades reqd for a purpa project if it's not in the IRP? Different solutions in different regions.

JS of MD: how do we ensure the right projects are getting built?

In $1B VA vs IN project example from MC, there should be a mechanism in which IN only pays an incremental amount.

FERC needs to be clear on rules of CA and how they apply

PJM released Oct study of OSW. Looked at PP and RPS. Good example of proactive approach to complex issue and facilitating dialog.

Haven't taken full advantage of multi value driver approach.

.@ClementsFERC there's a lot of emphasis on O1000 six principles. This is a starting point. These examples don't seem to fit the rules--an expensive line that doesn't serve a far away state wouldn't fall under CA principles.

Let's focus on framework needs that allows for consistency in benefits and methodologies, lean into things that are harder to quantify. Build upon O1000 principles in that way.

TT: timing question. When does a state find out that they will pay for a line they don't think benefits them? Do they have a voice/rebuttal opportunity?

Human element: under portfolio approach there might be reasons IN might pay for hypothetical VA project.

.@ChristieFERC NARUC comments agree--state regulators need to be more engaged in RTO process.

What would state regulators think about having a consent role in RTO cost allocation?

Is there sufficient opportunity for state collaboration to engage, increase buy in, etc.
Raab says this is an example. MC says this is broader question.

AF: SPP offers broad set of rights to state regulators in resource planning and cost allocation. Primary authority for setting regional cost allocation. Tends to defer to state regulators on costs

Should there be a rigid consent of states? This is tough. SPP fairly homogenous. Grid is changing and consensus may get harder. Exercise caution in consensus approach.

As silos come down benefits spread we'll need more forums in how to address this. Benefits to load and to generation, across regions, etc.

Single framework preferred!

KD: SE region is bottom up approach. Completely different.

Concern for states having no control over their costs. Equity and energy burden issues. Taking on public policy goals of other states is a hard to swallow.

Consent role MC proposes should be looked at.

States are not just stakeholders. They have a higher role.

MN: agree that states are more than a stakeholder.

Consent role depends on definition. Eg reliability projects shouldn't be veto-able by states. That's a key role of RTO.

In ISONE states can propose alternative CA methods. States should have seat at table for project selection, option evaluation.

JS: can there be a process to consider states earlier? Depends on RTO right now. Maybe should change

RA: state role should be strengthened.

TT human element of consent based allocation is concern for manipulation. Needs nuance.

CR of CA: agrees with early consultation but not consensus

Question to FERC: is there something they can do to establish states as a special stakeholder?

.@RichGlickFERC
Consent approach probably wouldn't satisfy commensurate benefit.

Need sufficient mechanism to ensure sufficient participation

idea: as part of regional planning, should RTO provide was for states to offer alternative CA like in ISONE?

.@ClementsFERC is there a way to allow states to boost lines to get more benefit?

What does it mean in practice for states to have a bigger role when the process doesn't start with clear line locations?

Also need transparency in local process and how that feeds in

GBD of PA: regions are looking at what looks best for them. We don't have clear consenses on what broad benefits are. NY looks at social benefit. Others look at environmental.

Need more clarity on what is FERC's vs states' jurisdiction for determining benefits.

Siting authority important on local level, so state regulators need to be able to defend why a project is going forward

.@ChristieFERC local projects are majority of transmission spending.

Are these really not being vetted as some are claiming? Don't state commissioners eval cpcn for these?

What is the genesis of this complaint and what is needed to address it?

TL answering pvs question first: when we think about state role, commissions act on dockets, not a vote on a committee. States acquiescence to something via an external committee vote isn't role of regulators. Concern of the how

Back to MC ?

AF: bigger projects at RTO level are far more transparent, delivered and explained to states.

Local project prudence reviewed after the fact in rate cases.

Vetting at RTO level is v different than state siting. Far superior bc lots of perspectives

TT: the hole is the cost data for a FERC cost related project.

Question from Raab:

Circling back to 6 principles from O1000. Are changes needed?

.@ClementsFERC cornerstone of principles still relevant. Room for improvement very possible. But strong base to build on.

.@ChristieFERC principles are sound

RA: room for improvement. Departure from NARUC Comments.

Principles focused on equity and benefits received. But cost causation and benefits received arent always well aligned. Look hard at 1st principle and consider infusing cost causation wrt equity.

As we think towards de-siloing in planning should also consider siloes in benefits and re-Dimensioning cost recovery frame. Reliability projects can have other improvements and should impact billing appropriately if benefits pooled.

This process sends implicit price signals for future. Could change who the players are in the future and how they engage. Factor these implications into the frameworks.

Missing principle is cost effectiveness. Not in project selection but in design of cost recovery framework. Designing billing determinants carefully.

DS: states have participated in MVP and LRTP processes for cost allocation. Having seat at table and priority for states is good.

8 principles for CA in LRTP. 5 unanimous among states.

Allocated roughly Commensurate

Granular and accurate as possible

Quantifiable metrics

No cost if no benefits

Load and Gen can benefit

CA fixed at time of approval

(I only heard 6?)

Dust off inter regional planning principles. Push from FERC needed

MN: equity and EJ not heard enough at this level, just at local siting. Should be considered

TT: inter regional planning is RTO to RTO to some, but not the same in the west. Need to reinvigorate interegional planning

AF: SPP CA certainty has built transmission. Interregional planning doesn't have CA method. Should that be required?

CR: interregional planning is needed. Process is needed, guidance is needed from FERC

KD: interregional cost allocation already happens in SE. VA and NC working on OSW. FERC should take light hand

JS on themes:

State consultation earlier in CA discussion

Resilience could be 4th CA category, needs metrics and regional flexibility

Unqualifiable benefits have value, but difficult to consider right now.

.@RichGlickFERC final thoughts adds:

Figure out way to expand list of benefits for granularity and quantification/assessment.