On April 21, the Federal Energy Regulatory Commission (FERC or Commission) released its Notice of Proposed Rulemaking (NOPR) to reform its policies regarding Regional Transmission Planning and Cost Allocation. The NOPR follows from an Advanced Notice of Proposed Rulemaking (ANOPR) on these reforms, which FERC issued in July 2021. Representing FERC’s most significant action on transmission planning and cost allocation in more than a decade, the NOPR outlines six major proposals:

• Regional Transmission Planning: The NOPR proposes to require transmission planning processes to engage in long-term planning and evaluate transmission needs-driven changing resources and demands.

• Dynamic Line Ratings and Advanced Power Flows Devices: The NOPR proposes to require that regional transmission planning processes consider dynamic line ratings and advanced power flows.

• Transmission Cost Allocation and State Participation/Agreement: The NOPR proposes to require transmission providers to seek agreement regarding cost allocation from relevant state entities within the applicable transmission planning region and include in their Open Access Transmission Tariffs (OATTs): (1) an ex ante regional cost allocation method; (2) a ex post process for achieving state agreement for a particular planned facility; or (3) some combination thereof. The NOPR also proposes to require transmission providers to seek state agreement on which of these three options to use. The NOPR also proposes to have transmission providers file state-agreed cost allocations for specific projects with FERC under Section 205.

• Construction Work in Progress (CWIP) Incentive: The NOPR proposes to prohibit the CWIP incentive for transmission facilities selected in regional plans for purposes of cost allocation.

• Federal Right of First Refusal (ROFR): The NOPR proposes to permit incumbent transmission providers the use of a federal ROFR in regional plans for purposes of cost allocation on the condition that the facilities be jointly owned.

• Transparency and Coordination: The NOPR proposes enhanced transparency and coordination requirements within, and between, regional and local transmission planning processes so as to “right-size” replacement transmission facilities.

A link to the full summary of the NOPR can be found here. A copy of the order can be found here. Comments on the proposed reforms, which are discussed further below, are due within 75 days of the date that the NOPR is published in the Federal Register.