FERC Seeks Input On Improvements To Transmission Incentives Policy

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The Federal Energy Regulatory Commission (FERC) is seeking comments on possible improvements to its electric transmission incentives policy.

FERC says the goal is to ensure that the policy appropriately encourages the development of the infrastructure needed to ensure grid reliability and reduce congestion to reduce the cost of power for consumers.

The new notice of intent (NOI) recognizes that nearly 13 years have passed since the issuance of Order No. 679, which established a number of incentive rate treatments, including return on equity (ROE) adders to compensate for the risks and challenges faced by a specific project.

Since then, there have been a number of significant developments in how transmission is planned, developed, operated and maintained. In light of developments in the transmission sector and the experience gained over that time, the commission believes it is prudent to seek comment on whether and how to improve FERC’s current transmission incentives policy.

Specifically, the NOI examines whether incentives should continue to be granted based on a project’s risks and challenges or should be based on the benefits that a project provides. Examples of other topics addressed in the NOI include consideration of incentives based upon measurable criteria for economic efficiency and reliability benefits, providing incentives for improvements to existing transmission facilities, considering the costs and benefits of projects in awarding incentives, and determining whether to review incentive applications on a case-specific or standardized basis.

In addition, the NOI also seeks comment on various ROE incentives, including how they interact with the base ROE and other transmission incentives. Finally, the NOI seeks input about possible metrics for evaluating the effectiveness of incentives.

Initial comments on the NOI are due 90 days after publication in the Federal Register; reply comments are due 30 days after that.

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