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FERC seeks comments on the role of Independent Transmission Monitors

FERC is concerned about increasing transmission costs and wants an oversight authority to address future consumer advocates' concerns.

In the Advanced Notice of Proposed Rulemaking (ANOPR) issued last summer on transmission planning and generator interconnection reform, the Federal Energy Regulatory Commission (FERC) asked for comments on whether there is a role for an Independent Transmission Monitor like the current Independent Market Monitor role at most grid operators.

Independent transmission companies, consumer advocates, industrial customers, and renewable developers favor an independent transmission monitor. But grid operators are not convinced. Predictably some transmission owners are not sold on this FERC proposed rulemaking regarding the establishment of transmission monitors. Since most of the commentators support this concept, FERC could issue a NOPR on establishing this new Transmission Monitor role in RTO and non-RTO regions later this year.

The current role of Market Monitors

When we think about the market monitor, we think about the “State of the Market” reports that show how the market performed last year. The annual reports are helpful to understand wholesale energy, capacity, and ancillary services price trends. At PJM, an internal market monitoring unit was spun off as an independent external monitor in 2008 called Monitoring Analytics.

At other FERC-jurisdictional ISOs like MISO, ISO-NE and NYISO, and ERCOT (Public Utilities Commission of Texas jurisdiction), the Independent Market Monitor (IMM) is Potomac Economics, established possibly in 2000 since Potomac Economics had published its 2000 Annual Report on the New York electricity markets in 2001. Potomac Economics reports directly to the independent Board of Directors at MISO.

At SPP, there is an internal Market Monitoring Unit (MMU). CAISO also has an internal Department of Market Monitoring (DMM), which reports annually and quarterly to the CAISO Board of Governors on “market design flaws, potential market rule violations, and market power abuses.”

FERC is seeking comments on Transmission Monitors

In the ANOPR on transmission planning and generator interconnection reform, FERC asked for stakeholder comments on many topics, including the potential role of an Independent Transmission Monitor (ITM). FERC asked for comments on the oversight of transmission project costs and beneficiaries, whether FERC has the authority to create this monitor role, whether this monitor could focus on planning and costs of transmission before construction starts, whether these monitors could be independent, and what tools would these monitors need to monitor transmission spending.

FERC also asked whether this monitor could guide states, including considering non-wires alternatives. In summary, FERC is concerned about increasing transmission costs and wants an oversight authority to address future consumer advocates’ concerns.

The majority of the commentators support the concept

Renewable developers like EDF Renewables (EDFR) like the ITM concept because there is a gap in transmission monitoring. There is no entity looking over the shoulder of RTOs planning efforts. As EDFR points out in their comments, current market monitors rarely weigh in on generator interconnection tariffs and transmission planning concepts. MISO’s IMM Potomac Economics sees a role for transmission monitoring in ensuring Grid Enhancing Technologies (GETs) are considered properly in transmission planning efforts.

Industrial customers also like the ITM concept because they see this as a way to control transmission costs and don’t believe grid operators can be “independent” in monitoring their planning efforts.

LS Power, an independent transmission company, favors transmission monitors as a sub-division of market monitors so that the “market knowledge is not lost in the comparison of non-transmission and transmission alternatives.” Additionally, LS Power believes a transmission monitor “should ensure that the competitive processes are properly reviewing costs, cost estimates, and cost containment proposals with sufficient rigor.”

The Pennsylvania PUC sees an advisory role for an ITM. PAPUC says, “The role of the Independent Transmission Monitor should be advisory to regional transmission planners and provide state siting regulators with data and analysis in a way that properly respects the authority reserved to the states by the FPA.”

The New England States Committee On Electricity (NESCOE) also supports ITM and wants the transmission monitor to review formula rate reviews for transmission charges.

Alliant Energy, Consumers Energy, and DTE Electric, collectively Certain Transmission Dependent Utilities (Certain TDUs), also support the ITM concept and comment that transmission owner’s local planning criteria should be made transparent by this monitor.

State Attorney Generals and Consumer Advocates from multiple State Agencies have also commented in favor of transmission monitoring and provided a list of roles and responsibilities in their ANOPR comments.

The Office of the People’s Counsel for the District of Columbia (“DCOPC”), Advanced Energy Economy (AEE), the Institute for Policy Integrity at New York University School of Law (Policy Integrity), Sustainable FERC Project, Natural Resources Defense Council, the Sierra Club, Conservation Law Foundation, Acadia Center, Western Resource Advocates, 350 New Orleans, Fresh Energy, Northwest Energy Coalition, Southern Environmental Law Center, and Southface Institute (together “Public Interest Organizations” or “PIOs”), the United States Department of Energy (“DOE” or the “Department”), the Transmission Access Policy Study Group (“TAPS”), R Street Institute (RSI), the Massachusetts Department of Energy Resources (“DOER”), Consumer Organizations, Pine Gate Renewables, LLC (“Pine Gate”) and the Center for Biological Diversity support creation of an independent transmission monitor.

Grid operators and transmission owners don’t see the value

Not everyone is in favor of an independent transmission monitor. Avangrid and National Grid don’t see the value because current stakeholder meetings are sufficient to review transmission investments. MISO also sees little value for ITM in RTO regions. NYISO has a similar opinion in this statement, “The Commission certainly should not establish an ITM in an RTO/ISO without clearly identifying the problem(s) that an ITM would purportedly solve.”

CAISO also came out against the role of ITM in this statement, “There is no need to create an additional layer of monitoring.”

The Indicated PJM Transmission Owners who own over 99% of the transmission assets in PJM don’t believe FERC has the US Congress mandate to delegate FERC’s oversight to an independent market monitor. “The Commission also should consider the limitations on its ability to delegate authority to an independent transmission monitor without express Congressional authorization. In the past, the courts have rejected actions attempting to delegate an agency’s Congressionally-granted oversight authority to a private actor. This has been defined by the Courts as the “Unlawful Delegation Doctrine.””

PPL Electric Utilities Corporation (“PPL Electric”), PJM Interconnection, L.L.C. (“PJM”), and MISO Transmission Owners don’t support this transmission monitor concept.

Some are wary

The National Association of State Utility Consumer Advocates (NASUCA) and Massachusetts Municipal Wholesale Electric Company (MMWEC), New Hampshire Electric Cooperative, Inc. (NHEC), Connecticut Municipal Electric Energy Cooperative (CMEEC), and Vermont Public Power Supply Authority (VPPSA) (collectively, Public Systems) are wary of this transmission monitor role. NASUCA favors cost transparency but says the “devil is always in the details.” The Public Systems in New England are concerned about duplication of supervision and want more details from FERC before commenting on an independent transmission monitor.

The Public Utility Commission of Ohio’s Office of the Federal Energy Advocate (the Ohio FEA), the National Association of Regulatory Utility Commissioners (“NARUC”), the Louisiana Public Service Commission (“Louisiana Commission” or “LPSC”) are also skeptical about the need for an ITM.

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