United States: FERC Allows SPP To Consider Certain State And Local Laws And Regulations In Transmission Planning Process

On October 16, 2014, the Commission accepted in part Southwest Power Pool's ("SPP") proposed revisions to its Open Access Transmission Tariff ("OATT") in compliance with Order No. 1000, and determined that SPP could consider certain state and local laws and regulations in the early stages of its competitive solicitation process for transmission planning.

SPP's proposed revisions were filed in response to the Commission's July 18, 2013 order in which the Commission accepted, subject to modifications, previous filings submitted by SPP to comply with the local and regional transmission planning and cost allocation requirements of Order No. 1000. In Order No. 1000, the Commission, among other things, required public utility transmission providers to eliminate provisions in Commission-jurisdictional tariffs and agreements that establish a federal right of first refusal for an incumbent transmission provider with respect to transmission facilities selected in a regional transmission plan for purposes of cost allocation.

In its July 18, 2013 order, the Commission directed SPP to remove provisions from its OATT taking state law and rights-of-way into account at two early stages of the transmission planning process. Specifically, the Commission required SPP to remove language indicating that SPP will utilize its competitive Transmission Owner Selection Process: (1) for transmission facilities that are not a rebuild of an existing facility and do not use rights-of-way where facilities exist; and (2) when the use of the Transmission Owner Selection Process does not violate relevant law where the transmission facility will be built. SPP had also proposed a definition of the term "Competitive Upgrades" that included language stating that "[t]ransmission facilities [must be] located where the selection of a Transmission Owner pursuant to [the competitive bidding process] does not violate the relevant law where the transmission facility is to be built." In response, the Commission found that SPP's proposed language went beyond mere reference to state or local laws or regulations. Instead, the Commission held that this language referenced relevant state and local laws and then used that reference to create a federal right of first refusal, in violation of Order No. 1000.

On August 19, 2013, SPP requested rehearing on this determination and others. Among its contentions, SPP argued that the Commission's mandate in its July 18, 2013 Order to remove language regarding rights-of-way where transmission facilities already exist would force SPP to potentially select a transmission developer for a transmission project whose development of that project would infringe on an incumbent transmission owner's existing rights-of-way granted under applicable state law, contradicting the Commission's previous statements in Order No. 1000 itself.

In its October 16, 2014 Order on Rehearing, the Commission reversed its prior determination, and found that SPP's proposed language simply referred to the practical impact that state laws and regulations may have on the siting, permitting, and construction of transmission facilities, and was thus consistent with Order No. 1000. The Commission found that regardless of whether state or local laws or regulations are expressly referenced in the SPP OATT, some such laws or regulations may independently prohibit a non-incumbent transmission developer from developing a particular transmission project in a particular state, even if the non-incumbent transmission developer would otherwise be designated to develop the transmission project under SPP's regional transmission planning process. The Commission reasoned that this is in part because Order No. 1000 did not limit, preempt, or otherwise affect state or local laws or regulations with respect to construction of transmission facilities. The Commission concluded that keeping these threshold provisions would prevent unnecessary delays and inefficiencies in the transmission planning process.

A copy of the Commission's Order may be found here.

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