Thread by @TabakGabe

For all of the #transmission advocates on twitter dot com, I just wanted to flag a recent DC Circuit case that sheds more light on the ever-contentious issue of how to allocate costs for high-voltage transmission. 1/13

The case is Long Island Power Authority v. FERC, decided last week:
cadc.uscourts.gov/internet/opini… 2/13

I think the most helpful part of the discussion begins at p10.

Some context: the 7th Circuit has twice remanded "postage-stamp" cost allocation, where all participants in a regional grid pay equally (or pro rata).

These are the Illinois Commerce Commission cases. 3/13

And the DC Circuit has rejected a cost allocation approach for the opposite reason - that it assigned ALL of the costs to a single transmission zone, even though high-voltage projects have big regional benefits.

This is Old Dominion. 4/13

Short version - Illinois Commerce Commission says postage stamp doesn't account enough for LOCAL benefits of transmission.

Old Dominion says purely local cost allocation doesn't account enough for REGIONAL benefits.

As the court puts it - 5/13

So, faced with this Goldilocks dilemma, advocates are left to wonder - what does a "just right" cost allocation, that balances local and regional benefits, look like? 6/13

The DC Circuit says that the 50-50 allocation among local and regional benefits is just right - or close enough.

At p14: 7/13

Of course, advocates want to avoid a time-consuming and expensive process in which EVERY SINGLE transmission project or upgrade goes through an individualized cost allocation process. For an approach to be workable, there need to be presumptions about who benefits. 8/13

Fortunately, the Court addresses that argument as well (p14): 9/13

So, now we have a Court-approved example of a cost allocation approach that balances local and regional benefits! 10/13

Now, not every approach needs to look like the 50/50 split that FERC approved here. The decision is clear that if FERC had a reasonable basis, 60/40 would probably pass muster. (p12) 11/13

Honestly, this couldn't come at a better time - FERC is working to transform its ANOPR into one or more proposed rules, that could reshape cost allocation for transmission. I'd expect LIPA v. FERC to be much-cited later this year! 12/13

Look forward to other thoughts on the case and how it might be put to good use. 13/13/fin