On November 19, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing to reform its regulations and pro forma OATT to improve the accuracy and transparency of transmission line ratings. According to FERC, more accurate line ratings will reduce congestion costs and result in substantial cost savings for consumers, whereas inaccurate line ratings may result in unjust and unreasonable rates.

Consistent with FERC’s open-access policies, public utilities must calculate and post available transfer capability (“ATC”) as a way to give potential third-party transmission customers information on transmission service availability, but FERC has yet to prescribe a formal methodology to calculate ATC. Following the impending retirement of certain NERC guidance relating to ATC calculations in 2020, FERC issued a separate NOPR on July 16, 2020 proposing to amend its regulations to establish general criteria for calculating ATC, which raised certain issues regarding transmission line ratings. After the issuance of a FERC Staff Paper (“Managing Transmission Line Ratings”) and a technical conference, FERC preliminarily determined that the establishment of transmission line rating rules would directly affect the cost of wholesale energy, capacity and ancillary services, as well as the cost of delivering wholesale energy to transmission customers. Thus, the Commission concluded, inaccurate transmission line ratings may result in Commission-jurisdictional rates that are unjust and unreasonable.

To remedy any potentially unjust and unreasonable rates caused by inaccurate ratings, FERC proposes rules that require:

• Transmission Providers to implement ambient-adjusted ratings on the transmission lines over which they provide transmission service;
• Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to establish and implement the systems and procedures necessary to allow Transmission Owners to electronically update transmission line ratings at least hourly; and
• Transmission Owners to share transmission line ratings and transmission line rating methodologies with their respective Transmission Provider(s) and, in RTOs/ISOs, with their respective market monitor(s).

The reforms are intended to improve the accuracy of transmission line ratings used during normal (pre-contingency) operations. In addition to comments on the proposed changes, FERC is also seeking comment on whether to require Transmission Providers to implement unique emergency ratings that would be used during post-contingency operations. Finally, FERC seeks comment with respect to whether 60 days is sufficient time for Transmission Providers to develop new tariff language to comply with a potential final rule.

Comments on the NOPR are due 60 days from the date of publication in the Federal Register.

A copy of the NOPR is available here.