FERC Order 1000, issued in 2011, requires transmission providers to participate in regional transmission planning processes, consider public policy requirements, remove rights of first refusal for transmission development, improve coordination between transmission planning regions, establish requirements for merchant transmission developers, and implement new cost allocation methods within 12-18 months. The order aimed to promote more efficient transmission planning, development and cost allocation to address the growing need for transmission infrastructure to integrate renewable energy and address reliability concerns.

1. FERC 1000
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2. FERC - History
Established in 1935 as Federal Power Commission
(FPC)
Regulate hydropower & interstate sale of electricity
1938 Natural Gas Act
Regulate interstate natural gas pipelines &
wholesale sales
1954 Supreme Court decision expanded FPC
authority over all wellhead natural gas prices
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3. FERC - History
1977 energy crisis, Congress created Dept. of
Energy (DOE)
Consolidated all energy-related agencies into
DOE
FPC renamed Federal Energy Regulatory
Commission
1978 Public Utilities Regulatory Policy Act
Foster cogeneration & small power production
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4. FERC - History
1983 – Congress ended regulation of wellhead
natural gas prices
2005 Energy Policy Act
Expanded FERC authority to mandate reliability
standards on bulk transmission system
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5. What does FERC do today?
Regulates transmission & sale of natural gas for
resale in interstate commerce
Regulates transmission of oil in interstate commerce
Regulates transmission of electricity & wholesale
sales of electricity in interstate commerce
Licenses & inspects all hydroelectric projects
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6. What does FERC do today?
Siting, permitting & abandonment of interstate natural
gas facilities
Ensures reliability of interstate electric transmission
system
Administers accounting & financial reporting/conduct
of regulated companies
Levy civil penalties on companies & individuals who
violate FERC rules in energy markets
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7. FERC Orders
888 in 1996
Requires open access to electric transmission to
bring low cost & efficient power to consumers
890 in 2007
Requires open, coordinated & transparent regional
transmission planning process along with cost
allocation and dispute resolution process
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8. FERC Order 1000
Issued on July 21, 2011
Requires public utility transmission provider (PUTP)
to participate in regional planning process
Consider public policy requirements for transmission
planning process
Public policy requirements are statutes and
regulations promulgated within a state or at the
federal level
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9. FERC Order 1000
Removes federal first right of refusal for certain
transmission facilities
Improve coordination between regional transmission
entities
Merchant transmission developer requirements
Cost allocation requirements
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10. Why the need?
NERC predicts 39,000 circuit miles of projected high
voltage transmission over next 10 years
50 % for reliability
27% to integrate renewable generation
NERC anticipates 131,000 MW of new generation
over next 10 years:
Natural gas-fired and wind
Seek to address free ridership inherent in
transmission services
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11. Why the need?
Existing & potential environmental regulations along
with renewable portfolio standards are changing the
generation mix
Retirement of coal-fired generation
Increasing reliance on natural gas
Large scale integration of renewable generation
Improve transmission planning process
No requirement to allow customers, competitors
and state commissions in the planning process
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12. Transmission Planning
Per Order 890, public transmission provider must
participate in a regional transmission planning
process
Transmission needs driven by Public Policy
Requirements must be considered in local & regional
planning process
Does not prescribe any geographical scope for
transmission planning region
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13. Transmission Planning
Individual transmission owners cannot by itself satisfy
the requirements of a planning region
Regional transmission process must meet the
principles of coordination, openness, transparency,
information exchange, comparability, dispute
resolution & economic planning studies
No requirement to meet any public policy
requirements
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14. Transmission Planning
Eliminates first right of refusal for incumbent PUTP
for new construction and not for upgrades to its own
facilities
Each region must develop qualification criteria for
merchant transmission developer
No restriction on incumbent PUTP to develop local
transmission solutions to meet reliability & service
obligations in its distribution service territory
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15. Transmission Planning
PUTP must maintain a website or e-mail list to
communicate interregional transmission coordination
procedures
Encourage participation of state regulators
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16. Interregional Planning
Obligates PUTP to identify & jointly evaluate
interregional transmission facilities (ITF)
Evaluation to determine if ITF is more efficient and
cost effective than regional transmission facilities
Annual exchange of planning data & information
Does not have a retail distribution service territory
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17. Merchant Transmission Developer
PUTP that proposes a project outside its retail
distribution service territory
Must provide data & information to public utility
transmission providers for regional planning & to
assess reliability & operational impact
Must demonstrate financial ability & technical
expertise to develop, construct, own, operate &
maintain transmission facilities
Must register with NERC for performance of
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applicable reliability functions

18. Cost Allocation
Rates, terms and conditions are just & reasonable
and not unduly discriminatory or preferential
Methods for allocation of cost must be identified in
the OATT (Open Access Transmission Tariff) of the
PUTP
Must be approved by FERC
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19. Cost Allocation
Entities and regions that do not receive any benefit
from the proposed transmission facilities cannot
involuntarily be assigned the costs
Does not recommend a uniform cost allocation
methodology
Meet six interregional cost allocation principles
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20. Cost Allocation Principles
Cost of transmission facilities must be allocated to
those within the region that benefit from those
facilities
Those that receive no benefit from transmission
facilities, either at present or in the future, must no be
involuntarily allocated the cost of those facilities
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21. Cost Allocation Principles
The benefit to cost threshold must not exceed 1.25
unless it was approved by FERC
The allocation method must allocate costs solely
within the transmission planning region unless
another entity or another transmission planning
region voluntarily agrees to assume a portion of
those costs
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22. Cost Allocation Principles
The methodology & data requirements must be
transparent with adequate documentation to
determine benefits & beneficiaries
A transmission planning region may choose different
cost allocation method for different types of
transmission facilities (for reliability, congestion relief,
public policy requirements etc.) but must be clearly
defined in the compliance filing
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23. Compliance
Each PUTP shall submit compliance document within
12 months of the effective date of the Final Rule
Compliance filing for interregional coordination and
cost allocation shall be filed within 18 months of the
effective date of the Final Rule
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