Home/Federal/Federal Register/2024-27982

Rule2024-27982

Building for the Future Through Electric Regional Transmission Planning and Cost Allocation

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

December 6, 2024

Effective

January 6, 2025

Issuing agencies

Energy DepartmentFederal Energy Regulatory Commission

Abstract

In this order, the Federal Energy Regulatory Commission addresses arguments raised on rehearing, sets aside, in part, and clarifies Order No. 1920, which required transmission providers to conduct Long-Term Regional Transmission Planning to ensure the identification, evaluation, and selection, as well as the allocation of the costs, of more efficient or cost-effective regional transmission solutions to address Long-Term Transmission Needs. Order No. 1920 also directed other reforms to improve coordination of regional transmission planning and generator interconnection processes, require consideration of certain alternative transmission technologies in regional transmission planning processes, and improve transparency of local transmission planning processes and coordination between regional and local transmission planning processes.

Full Text

<html>
<head>
<title>Federal Register, Volume 89 Issue 235 (Friday, December 6, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 235 (Friday, December 6, 2024)]
[Rules and Regulations]
[Pages 97174-97354]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27982]

[[Page 97173]]

Vol. 89

Friday,

No. 235

December 6, 2024

Part II

Department of Energy

-----------------------------------------------------------------------

Federal Energy Regulatory Commission

-----------------------------------------------------------------------

18 CFR Part 35

Building for the Future Through Electric Regional Transmission Planning
and Cost Allocation; Final Rule

Federal Register / Vol. 89, No. 235 / Friday, December 6, 2024 /
Rules and Regulations

[[Page 97174]]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM21-17-001; Order No. 1920-A]

Building for the Future Through Electric Regional Transmission
Planning and Cost Allocation

AGENCY: Federal Energy Regulatory Commission, Department of Energy
(DOE).

ACTION: Order on rehearing and clarification.

-----------------------------------------------------------------------

SUMMARY: In this order, the Federal Energy Regulatory Commission
addresses arguments raised on rehearing, sets aside, in part, and
clarifies Order No. 1920, which required transmission providers to
conduct Long-Term Regional Transmission Planning to ensure the
identification, evaluation, and selection, as well as the allocation of
the costs, of more efficient or cost-effective regional transmission
solutions to address Long-Term Transmission Needs. Order No. 1920 also
directed other reforms to improve coordination of regional transmission
planning and generator interconnection processes, require consideration
of certain alternative transmission technologies in regional
transmission planning processes, and improve transparency of local
transmission planning processes and coordination between regional and
local transmission planning processes.

DATES: The changes to Order No. 1920 made in this order on rehearing
and clarification will be effective on January 6, 2025.

FOR FURTHER INFORMATION CONTACT:
Michael Kellermann (Legal Information), Office of the General
Counsel, 888 First Street NE, Washington, DC 20426, (202) 502-8491,
<a href="/cdn-cgi/l/email-protection#75181c161d1410195b1e101919100718141b1b35131007165b121a03">[email&#160;protected]</a>.
Patrick T. Metz (Legal Information), Office of the General Counsel,
888 First Street NE, Washington, DC 20426, (202) 502-8197,
<a href="/cdn-cgi/l/email-protection#16667762647f757d387b73626c567073647538717960">[email&#160;protected]</a>.
David Tobenkin (Technical Information), Office of Energy Policy and
Innovation, 888 First Street NE, Washington, DC 20426, (202) 502-6445,
<a href="/cdn-cgi/l/email-protection#781c190e111c560c171a1d16131116381e1d0a1b561f170e">[email&#160;protected]</a>.
Noah Lichtenstein (Technical Information), Office of Energy Market
Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-8696,
<a href="/cdn-cgi/l/email-protection#c5abaaa4adeba9aca6adb1a0abb6b1a0acab85a3a0b7a6eba2aab3">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Paragraph
Nos.

I. Executive Summary........................................ 1
II. Introduction and Background............................. 20
III. The Overall Need for Reform............................ 34
A. Order No. 1920....................................... 34
1. The Transmission Investment Landscape Today...... 38
2. Unjust, Unreasonable, and Unduly Discriminatory 46
or Preferential Commission-Jurisdictional
Transmission Planning and Cost Allocation Processes
3. Benefits of Long-Term Regional Transmission 59
Planning and Cost Allocation To Identify and Plan
for Long-Term Transmission Needs...................
B. The Commission Adequately Demonstrated That Existing 61
Rates, or Practices Affecting Rates, Are Unjust and
Unreasonable...........................................
1. The Commission Correctly Characterized Its 62
Statutory Burden...................................
2. The Commission Adequately Supported Its 70
Determination on Step One of Section 206...........
3. The Commission Identified Deficiencies That Exist 87
Beyond Isolated Pockets............................
4. The Commission Has the Authority To Conduct a 98
Generic Rulemaking.................................
C. The Commission Demonstrated That the Replacement Rate 104
is Just and Reasonable.................................
1. Requests for Rehearing........................... 104
2. Commission Determination......................... 107
D. The Commission's Section 206 Findings Were Not 115
Circular...............................................
1. Requests for Rehearing........................... 115
2. Commission Determination......................... 119
IV. Statutory Authority..................................... 125
A. Order No. 1920 Determination......................... 125
B. Federal/State Division of Authority.................. 132
1. Requests for Rehearing........................... 132
2. Commission Determination......................... 135
C. Major Questions Doctrine............................. 166
1. Requests for Rehearing........................... 166
2. Commission Determination......................... 171
D. Other Issues......................................... 186
1. Requests for Rehearing........................... 186
2. Commission Determination......................... 192
V. Long-Term Regional Transmission Planning................. 200
A. Requirement To Participate in Long-Term Regional 200
Transmission Planning..................................
1. Order No. 1920 Requirements...................... 200
2. Requests for Rehearing and Clarification......... 205
3. Commission Determination......................... 210
B. Long-Term Scenarios Requirements..................... 218
1. Requirement for Transmission Providers To Use the 218
Seven Required Benefits To Help To Inform Their
Identification of Long-Term Transmission Needs.....
2. Transmission Planning Horizon.................... 227
3. Frequency of Long-Term Scenario Revisions........ 248
4. Categories of Factors............................ 263
5. Requests for Additional Flexibility Regarding 351
Long-Term Scenarios Requirements...................
C. Evaluation of the Benefits of Regional Transmission 369
Facilities.............................................
1. Requirement for Transmission Providers To Use and 369
Measure a Set of Seven Required Benefits...........
2. Measurement and Use of Other Benefits............ 411

[[Page 97175]]

3. Identification, Measurement, and Evaluation of 417
Benefits...........................................
4. Benefits Horizon................................. 421
5. Evaluation of the Benefits of Portfolios of 428
Transmission Facilities............................
D. Evaluation and Selection of Long-Term Regional 434
Transmission Facilities................................
1. Minimum Requirements............................. 434
2. Role of Relevant State Entities.................. 452
3. Voluntary Funding................................ 461
4. No Selection Requirement......................... 466
5. Reevaluation..................................... 469
E. Implementation of Long-Term Regional Transmission 502
Planning...............................................
1. Order No. 1920 Requirements...................... 502
2. Requests for Rehearing and Clarification......... 505
3. Commission Determination......................... 507
VI. Coordination of Regional Transmission Planning and 511
Generator Interconnection Processes........................
A. Need for Reform and Overall Requirement.............. 511
1. Order No. 1920 Requirements...................... 511
2. Requests for Rehearing........................... 513
3. Commission Determination......................... 516
B. Qualifying Criteria.................................. 525
1. Order No. 1920 Requirements...................... 525
2. Requests for Rehearing and Clarification......... 532
3. Commission Determination......................... 538
C. Cost Allocation...................................... 557
1. Order No. 1920 Requirements...................... 557
2. Requests for Rehearing and Clarification......... 558
3. Commission Determination......................... 562
D. Gaming............................................... 566
1. Order No. 1920 Requirements...................... 566
2. Requests for Rehearing and Clarification......... 567
3. Commission Determination......................... 570
E. Transmission Planning Process Evaluation............. 572
1. Order No. 1920 Requirements...................... 572
2. Requests for Rehearing and Clarification......... 574
3. Commission Determination......................... 582
VII. Consideration of Dynamic Line Ratings and Advanced 594
Power Flow Control Devices.................................
A. Order No. 1920 Requirements.......................... 594
B. Requests for Rehearing and Clarification............. 596
1. General Requests for Rehearing and Clarification. 596
2. Technology Specific Requests for Rehearing and 601
Clarification......................................
VIII. Regional Transmission Cost Allocation................. 610
A. Obligation To File an Ex Ante Long-Term Regional 610
Transmission Cost Allocation Method and Its Use as a
Backstop...............................................
1. Logical Outgrowth................................ 610
2. Substantive Issues............................... 618
B. Requirements Concerning Relevant State Entities...... 635
1. Requested Requirement To Obtain the Agreement of 635
Relevant State Entities............................
2. Requirements Concerning Relevant State Entities' 642
Preferred Cost Allocation Methods..................
C. Design and Operation of the Engagement Period........ 663
1. Logical Outgrowth................................ 663
2. Requests Arguing the Engagement Period is 669
Inferior to a Requirement That Transmission
Providers Seek the Agreement of Relevant State
Entities...........................................
3. Duration of the Engagement Period................ 674
4. Content of the Engagement Period................. 679
5. Consultation With Relevant State Entities After 687
the Engagement Period..............................
D. Design and Operation of State Agreement Processes.... 693
1. Definition of Relevant State Entities............ 693
2. Extensions of Time for Negotiation of Cost 705
Allocation Methods Under State Agreement Processes.
E. Use of Existing Cost Allocation Methods in Long-Term 709
Regional Transmission Planning or Existing Regional
Processes..............................................
1. Order No. 1920 Requirements...................... 709
2. Requests for Rehearing and Clarification......... 710
3. Commission Determination......................... 712
F. Regional Cost Allocation Principles for Long-Term 718
Regional Transmission Facilities.......................
1. Logical Outgrowth................................ 718
2. Omission of Regional Cost Allocation Principle 728
No. 6 and Ability To Allocate Costs by Type of
Project............................................
3. Concerns Regarding Cost Causation................ 753
G. General Benefits Requirements Related to Cost 769
Allocation.............................................
1. Logical Outgrowth................................ 769
2. Substantive Issues............................... 775
H. Additional Cost Allocation Issues.................... 781
1. Order No. 1920 Requirements...................... 781
2. Requests for Rehearing and Clarification......... 784
3. Commission Determination......................... 789
IX. Construction Work in Progress Incentive................. 794
A. CWIP................................................. 794

[[Page 97176]]

1. Order No. 1920................................... 794
2. Requests for Rehearing and Clarification......... 795
3. Commission Determination......................... 799
X. Exercise of a Federal Right of First Refusal in 801
Commission-Jurisdictional Tariffs and Agreements...........
A. Order No. 1920 Requirements.......................... 801
B. Request for Rehearing................................ 802
C. Commission Determination............................. 803
XI. Local Transmission Planning Inputs in the Regional 804
Transmission Planning Process..............................
A. Need for Reform...................................... 804
1. Order No. 1920................................... 804
2. Analysis Under FPA Section 206................... 813
3. Departure From Commission Precedent.............. 824
4. Commission Authority Under the FPA............... 828
5. Policy Against Anticompetitive Practices......... 840
6. Other Arguments.................................. 843
B. Enhanced Transparency of Local Transmission Planning 847
Inputs in the Regional Transmission Planning Process...
1. Order No. 1920................................... 847
2. Requests for Additional Reforms.................. 851
3. Stakeholder Meeting Clarifications............... 859
C. Identifying Potential Opportunities to Right-Size 863
Replacement Transmission Facilities....................
1. Eligibility...................................... 863
2. Right of First Refusal for Right-Sized 882
Replacement Transmission Facilities Selected To
Meet Long-Term Transmission Needs..................
3. Confidentiality of In-Kind Replacement Estimates. 895
XII. Interregional Transmission Coordination................ 899
A. Order No. 1920....................................... 899
B. Comments............................................. 901
C. Commission Determination............................. 902
XIII. Compliance Procedures................................. 903
A. Order No. 1920....................................... 903
B. Requests for Rehearing and Clarification............. 907
C. Commission Determination............................. 914
XIV. Overarching Logical Outgrowth Challenges............... 927
A. Requests for Rehearing............................... 927
B. Commission Determination............................. 930
XV. Information Collection Statement........................ 932
XVI. Environmental Analysis................................. 950
XVII. Regulatory Flexibility Act............................ 951
XVIII. Document Availability................................ 953
XIX. Effective Date......................................... 956
Appendix A: Abbreviated Names of Parties.................... ..........
Appendix B: Pro Forma Open Access Transmission Tariff ..........
Attachment K...............................................

I. Executive Summary

1. In Order No. 1920,\1\ the Federal Energy Regulatory Commission
(Commission) revised the pro forma Open Access Transmission Tariff
(OATT) to adopt reforms to its existing electric transmission planning
and cost allocation requirements pursuant to section 206 of the Federal
Power Act (FPA).\2\ The Commission found that existing regional
transmission planning and cost allocation processes are unjust,
unreasonable, and unduly discriminatory or preferential because, inter
alia, the Commission's existing transmission planning and cost
allocation requirements do not require transmission providers to: (1)
perform a sufficiently long-term assessment of transmission needs that
identifies Long-Term Transmission Needs; \3\ (2) adequately account on
a forward-looking basis for known determinants of Long-Term
Transmission Needs; and (3) consider a set of benefits of regional
transmission facilities planned to meet those Long-Term Transmission
Needs.\4\ Order No. 1920 addressed these deficiencies by establishing
requirements to ensure that Commission-jurisdictional rates remain just
and reasonable and not unduly discriminatory or preferential including,
inter alia, requiring transmission providers to conduct Long-Term
Regional Transmission Planning \5\ that will ensure the identification,
evaluation, and selection of more efficient or cost-effective regional
transmission facilities to address Long-Term Transmission Needs, as
well as the just and reasonable allocation of the costs of those
facilities. By expanding the time horizon and scope of Commission-
jurisdictional regional transmission planning processes, Order No. 1920
reflected an evolutionary step in the Commission's ongoing commitment
\6\ to ensure that those

[[Page 97177]]

processes remain just and reasonable and meet the needs of the American
people.
---------------------------------------------------------------------------

\1\ Bldg. for the Future Through Elec. Reg'l Transmission
Planning & Cost Allocation, Order No. 1920, 89 FR 49280 (June 11,
2024), 187 FERC ] 61,068 (2024).
\2\ 16 U.S.C. 824e.
\3\ See infra Introduction and Background section (defining
``Long-Term Transmission Needs'').
\4\ Order No. 1920, 187 FERC ] 61,068 at P 1.
\5\ See infra Introduction and Background section (defining
``Long-Term Regional Transmission Planning).
\6\ See Preventing Undue Discrimination & Preference in
Transmission Serv., Order No. 890, 72 FR 12266 (Mar. 15, 2007), FERC
Stats. & Regs. ] 31,241, 118 FERC ] 61,119 (2007), order on reh'g,
Order No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ]
31,261 (2007) (cross-referenced at 118 FERC ] 61,119), order on
reh'g and clarification, Order No. 890-B, 73 FR 39092 (July 8,
2008), 123 FERC ] 61,299 (2008), order on reh'g, Order No. 890-C, 74
FR 12540 (Mar. 25, 2009), 126 FERC ] 61,228 (2009), order on
clarification, Order No. 890-D, 74 FR 61511 (Nov. 25, 2009), 129
FERC ] 61,126 (2009); Transmission Plan. & Cost Allocation by
Transmission Owning & Operating Pub. Utils., Order No. 1000, 76 FR
49842 (Aug. 11, 2011), 136 FERC ] 61,051 (2011), Order No. 1000-A,
77 FR 32184 (May 31, 2012), 139 FERC ] 61,132 (2012), order on reh'g
& clarification, Order No. 1000-B, 141 FERC ] 61,044 (2012), aff'd
sub nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014)
(per curiam).
---------------------------------------------------------------------------

2. In this order, we refine and improve Long-Term Regional
Transmission Planning by building on the reforms adopted in Order No.
1920, with a particular focus on ensuring that states have a robust
role in Long-Term Regional Transmission Planning and cost allocation
processes established in this rule. We continue to find, as the
Commission did in the final rule, that the key components of Order No.
1920 together ensure that transmission providers will conduct
sufficiently long-term, forward-looking, and comprehensive transmission
planning and cost allocation processes. At least once every five years,
transmission providers are required to conduct Long-Term Regional
Transmission Planning, a process that includes looking ahead over a 20-
year transmission planning horizon. This process further requires
developing at least three plausible and diverse Long-Term Scenarios \7\
that are based upon known drivers of transmission needs and informed by
best available data; analyzing the impacts of events like extreme
weather under each Long-Term Scenario; and evaluating potential Long-
Term Regional Transmission Facilities.\8\ This evaluation includes
assessing whether these facilities would yield reliability and economic
benefits to transmission customers and, if so, identifying those
benefits. Together, these reforms ensure that transmission providers,
state regulators, and stakeholders possess the information necessary
for each transmission planning region to identify, evaluate, and select
(i.e., determine whether to pursue the development of facilities) more
efficient or cost-effective transmission facilities that provide
significant benefits for customers.
---------------------------------------------------------------------------

\7\ See infra Introduction and Background section (defining
``Long-Term Scenario'').
\8\ See infra Introduction and Background section (defining
``Long-Term Regional Transmission Facility'').
---------------------------------------------------------------------------

3. Here, we adopt a number of modifications and clarifications to
address the concerns raised in response to Order No. 1920. Order No.
1920 recognized the important role that states will play in Long-Term
Regional Transmission Planning and established various requirements to
facilitate their participation in those processes, including requiring
transmission providers to engage with states in developing cost
allocation approaches for Long-Term Regional Transmission Facilities.
With this order, we reaffirm and enhance that finding by recognizing
that meaningful engagement with states is critical to the success of
the Long-Term Regional Transmission Planning reforms established in
Order No. 1920. Specifically, in response to rehearing and
clarification requests, we better integrate states' input into regional
transmission planning and cost allocation processes, both in the
transmission providers' development of Order No. 1920 compliance
filings and the ongoing implementation of these reforms in the future.
These modifications and clarifications address many of the concerns
raised in the rehearing requests submitted in response to Order No.
1920, and they will increase the likelihood that Long-Term Regional
Transmission Planning results in efficient and cost-effective
transmission investment.
4. In this order, we also clarify what this rule does, and does
not, require. Because Order No. 1920 mandates only improvements to
transmission planning processes which, in turn, ensures foundational
transparency about potential transmission development, Order No. 1920
does not force or mandate the development of certain transmission
facilities. A requirement to develop a structured process to analyze
whether building certain transmission facilities would yield benefits
greater than their costs, over the long term and based upon various
future scenarios, will help transmission providers and states to assess
the value that those projects could bring. However, such process-based
requirements are not the same as a requirement to build any particular
transmission facilities. More precisely, Order No. 1920 does not
require transmission providers to select any particular transmission
facility; does not automatically authorize transmission developers to
develop or construct any specific facilities; and does not mandate any
specific set of transmission customers to pay for any particular
transmission facilities. Instead, Order No. 1920 and this order
together set out processes that direct transmission planning regions to
systematically consider various drivers of transmission needs and
develop cost allocation approaches that yield the development of cost-
effective transmission projects and thereby yield just and reasonable
rates for customers.
5. As such, Long-Term Regional Transmission Planning as required by
Order No. 1920 is a significant step forward in the Commission's
responsibility to ensure just and reasonable and not unduly
discriminatory or preferential rates. By establishing minimum standards
based on transmission planning best practices observed around the
country for forecasting future scenarios and managing the uncertainty
inherent in forward-looking planning, the Long-Term Regional
Transmission Planning requirements established in this proceeding will
lead transmission providers to re-direct investment toward more
efficient or cost-effective regional transmission facilities, and
ultimately produce greater benefits for transmission customers.
6. Moreover, improving regional transmission planning practices is
an urgent concern in light of the uncontroverted, rapidly changing
circumstances on the grid, including load growth; the increased impacts
of extreme weather; affordability concerns; and changing economics and
policies that shape the resource mix and demand, which are increasing
the need for transmission across the country. To cost-effectively meet
these needs, Order No. 1920 and this order set out systematic processes
that transmission providers will use to identify and analyze
transmission projects that bring benefits to consumers, while
recognizing the need for flexibility to account for regional
differences.
7. Order No. 1920 follows in the footsteps of Order Nos. 890 and
1000 when it comes to the requirements governing the selection of
potential regional transmission facilities identified through Long-Term
Regional Transmission Planning. Consistent with the core theory of
Order Nos. 890 and 1000, even though Order No. 1920 does not require
the buildout of specific transmission facilities, it will reveal the
benefits of designing and developing transmission projects and enable
investment in those that yield great benefits for electricity customers
across the country. Ultimately, we expect Order No. 1920 to lead to the
development of more efficient or cost-effective transmission facilities
through improved analysis and transparency that empower the
transmission planning regions with the information needed to make
prudent investments in beneficial transmission infrastructure for
customers.
8. Order No. 1920's requirements for regional cost allocation
practices are similarly well grounded in Commission and court
precedent. If more efficient or cost-effective Long-Term Regional
Transmission Facilities are identified and determined to be worth
developing as a result of the enhanced regional transmission planning
required by Order No. 1920, customers will pay for these facilities
only to the extent that

[[Page 97178]]

they benefit from them. That is because Order No. 1920 requires,
consistent with well-established law and Orders No. 890 and 1000, that
any cost allocation must comply with cost causation and the
``beneficiary pays'' principle.\9\ Thus, Order No. 1920 will not lead
one group of customers to pay for more than their fair share of the
costs of transmission development because any proposal to charge
customers for costs that are not ``roughly commensurate'' with the
benefits they are expected to receive from Long-Term Regional
Transmission Facilities would contravene the final rule.\10\
---------------------------------------------------------------------------

\9\ See PJM Interconnection, L.L.C., Opinion No. 494, 119 FERC ]
61,063, at P 66 (2007) (requiring PJM to set forth a ``beneficiary
pays'' method in its tariff and consistently apply that approach
each time a new regionally-planned transmission facility is
approved), on reh'g, Opinion No. 494-A, 122 FERC ] 61,082 (2008),
remanded Ill. Com. Comm'n v. FERC, 576 F.3d 470, 474-78 (7th Cir.
2009) (ICC v. FERC I) (remanding Commission order for further
proceedings in light of Commission's failure to provide substantial
evidence supporting Commission's approval of cost allocation method
as complying with ``beneficiary pays'' principle).
\10\ See ICC v. FERC I, 576 F.3d at 477 (holding that, if the
Commission cannot quantify the benefits of particular transmission
facilities to a particular class of transmission customers, it must
have ``an articulable and plausible reason to believe that the
benefits [of those facilities] are at least roughly commensurate
with'' the costs to be paid by those customers).
---------------------------------------------------------------------------

9. Order No. 1920 builds on Order No. 1000's cost allocation
requirements. Order No. 1000 required transmission providers to
incorporate into their tariffs a default (``ex ante'') cost allocation
approach that, if transmission facilities are determined to be worth
investing in based upon the results of the regional transmission
planning process, would provide a mechanism for those transmission
customers that benefit to pay for those projects. Prior to Order No.
1000, transmission providers did not necessarily have the means to
charge transmission customers located within a particular transmission
planning region, but outside their individual service territories, for
the costs of regional transmission facilities that benefit customers
throughout the region. Thus, the requirement to establish an ex ante
cost allocation method in each OATT that would apply if a regional
transmission planning process resulted in the selection of more
efficient or cost-effective transmission facilities was central to
ensuring that those facilities could actually be developed. Like Order
No. 1000, Order No. 1920 requires each transmission provider to
establish at least one ex ante cost allocation method through which the
costs of Long-Term Regional Transmission Facilities will be allocated
in a manner consistent with the ``beneficiary pays'' principle. Just
like in Order No. 1000, the requirement to establish a mechanism by
which the costs of selected transmission facilities may be allocated to
relevant benefitting transmission customers does not mandate any
particular method that transmission providers or planning regions must
adopt.
10. Importantly, Order No. 1920 provides additional flexibility to
transmission providers and states regarding cost allocation. While
transmission providers under Order No. 1000 must adopt a cost
allocation method for each type of transmission facility, Order No.
1920 relaxes this requirement. Furthermore, the modifications and
clarifications granted on rehearing expand states' critical role in
determining the cost allocation approach most suitable for each
transmission planning region. These modifications and clarifications
are necessary because the Commission recognizes that states play a
critical role in the successful planning of, the decision about how to
pay for, and ultimately, the deployment of beneficial regional
transmission facilities.
11. For example, under Order No. 1920 as modified in this order,
Relevant State Entities have an opportunity to negotiate their
preferred ex ante cost allocation method(s) in the first instance,
including being able to secure an extension of time if needed to
continue those negotiations. Upon reaching agreement, Relevant State
Entities can present their preferred approach to the transmission
provider, which then will either propose that approach to the
Commission in its compliance filing for this rule, or if the
transmission provider submits a different proposal, will include in its
compliance filing the states' preferred approach for the Commission to
consider.
12. This order further improves states' ability to negotiate cost
allocation methods. Under Order No. 1920, states, through Relevant
State Entities,\11\ have an opportunity to secure the right to
negotiate alternate cost allocation methods in the future, for either
an individual transmission facility or a group of them, instead of
using the ex ante cost allocation method on file in transmission
providers' OATTs. This State Agreement Process \12\ allows Relevant
State Entities to consider, for example, whether certain Long-Term
Regional Transmission Facilities largely provide a unique set of
benefits such that the costs of those facilities are appropriately paid
for in a different manner than under the ex ante cost allocation
method. And, going forward, we require transmission providers to
consult with Relevant State Entities regarding potential future changes
to ex ante cost allocation methods and State Agreement Processes used
in Long-Term Regional Transmission Planning.
---------------------------------------------------------------------------

\11\ See infra Introduction and Background section (defining
``Relevant State Entity'').
\12\ See infra Introduction and Background section (defining
``State Agreement Process'').
---------------------------------------------------------------------------

13. Order No. 1920 provides greater flexibility than Order No. 1000
to deviate from the ex ante cost allocation method or to establish more
than one ex ante cost allocation method. We also provide new
opportunities for states to influence each of these choices because
better enabling state input into cost allocation choices helps to
ensure that more efficient or cost-effective Long-Term Regional
Transmission Facilities that are likely to be sited and constructed
only with state regulatory approval are ultimately developed
successfully. Given that Order No. 1920 continues to afford
considerable flexibility to transmission providers and Relevant State
Entities to determine the cost allocation methods appropriate for their
transmission planning region and retains the core obligation that any
cost allocation method filed must be consistent with cost causation,
the beneficiary pays principle, and other statutory requirements, we
believe that cost allocation under this rule will result in just and
reasonable rates. Order No. 1920 requires no more than Order No. 1000--
that some mechanism for charging customers for more efficient or cost-
effective transmission facilities be available in case such facilities
are determined, after evaluation through Long-Term Regional
Transmission Planning, to be worth developing. In fact, Order No. 1920
expands the opportunities for transmission providers, state regulators,
and stakeholders to ensure that the costs of Long-Term Regional
Transmission Facilities are allocated only ``roughly commensurate''
with the benefits expected to result from those facilities.
14. As noted above, we agree with certain arguments raised on
rehearing and/or clarification of Order No. 1920. The instances where
we modify the discussion in Order No. 1920 and set aside the result of
Order No. 1920 generally fall into three categories. First, as
discussed above, we further enhance the role of Relevant State Entities
in Long-Term Regional Transmission Planning, especially their role in
shaping the development of Long-Term Scenarios and cost allocation
methods. Second, we clarify that, when Relevant State Entities request,
transmission providers must develop a reasonable

[[Page 97179]]

number of additional scenarios to help inform the development or
application of cost allocation methods. And third, we remove the
requirement that transmission providers include corporate commitments
in Factor Category Seven.
15. In the first category, Order No. 1920 provided an opportunity
for states to influence how transmission is planned and ultimately paid
for. This order goes even farther by agreeing with the rehearing
arguments advanced by several states seeking additional and expanded
opportunities for states to engage. Specifically, we require
transmission providers to incorporate input from states about how Long-
Term Scenarios used in Long-Term Regional Transmission Planning will be
developed, particularly given that these scenarios will necessarily
reflect how the states plan to meet their laws, policies, and
regulations. In addition, we require transmission providers to include
in the transmittal or as an attachment to their Order No. 1920
compliance filings any ex ante cost allocation method and/or State
Agreement Process agreed to by the Relevant State Entities (to the
extent the transmission provider does not adopt such an agreed-to cost
allocation method and/or process as its own proposal), along with any
information related to the Engagement Period \13\ requested by a
Relevant State Entity to be included. We are further persuaded by
arguments on rehearing that Relevant State Entities may, in some cases,
need time beyond the six-month Engagement Period allowed under Order
No. 1920. We therefore clarify that the Commission will grant
extensions of time requested by Relevant State Entities where there is
a showing that additional time is needed to resolve cost allocation
discussions, up to a period of an additional six months. We believe
this clarification ensures states who are engaged in working toward
agreed-upon cost allocation methods and/or a State Agreement Process
will have the time they need to resolve those discussions.
---------------------------------------------------------------------------

\13\ See infra Introduction and Background section (defining
``Engagement Period'').
---------------------------------------------------------------------------

16. Furthermore, to ensure that Relevant State Entities have a role
in cost allocation for Long-Term Regional Transmission Facilities going
forward, we require that transmission providers consult with Relevant
State Entities (1) prior to amending the Long-Term Regional
Transmission Cost Allocation Method(s) and/or State Agreement
Process(es), or (2) if Relevant State Entities seek, consistent with
their chosen method to reach agreement, to amend that method or
process. Finally, we clarify that the flexibility Order No. 1920
affords to transmission providers and Relevant State Entities to
determine cost allocation methods appropriate for their region does not
preclude proposed methods that allocate costs commensurate with
reliability and economic benefits region-wide, while allocating costs
commensurate with additional benefits to a subset of states that agree
to such cost allocation, e.g., based on the incremental costs and
benefits of transmission needed to achieve state laws, policies, and
regulations beyond the cost of transmission needed in the absence of
those laws, policies, and regulations.
17. In the second category, we clarify in response to requests for
rehearing that, while transmission providers are obligated to develop
three Long-Term Scenarios that meet all of the requirements of the
rule, Order No. 1920 permits transmission providers to develop
additional analyses, including other scenarios, to help inform who pays
for those selected facilities. We further modify Order No. 1920 on
rehearing to now require that transmission providers develop a
reasonable number of additional scenarios at Relevant State Entities'
request. The aim of Order No. 1920 is to ensure that transmission
providers engage in the sufficiently long-term, forward-looking, and
comprehensive transmission planning that is essential to have the
information necessary to determine which investments are worth making.
As long as transmission providers engage in that robust planning
process and achieve the transparency required through that process,
transmission providers can develop and consider additional information
beyond that required as part of Long-Term Regional Transmission
Planning.
18. In the third category of changes, on rehearing we modify, in
one respect, the requirement to use seven categories of factors in the
development of the three Long-Term Scenarios that are used to identify
Long-Term Transmission Needs, and potential solutions to those needs.
Several parties raise concerns regarding the inclusion of corporate
commitments in Factor Category Seven, which they argue may elevate the
needs of particular transmission customers above those of others. Upon
further consideration, we eliminate the requirement to incorporate
corporate commitments from Factor Category Seven into each Long-Term
Scenario and thus we eliminate the potential for confusion around the
treatment of particular transmission customers, while enabling
transmission providers to give appropriate weight to corporate
commitments as an indicator of customer preference in a region where
those preferences are known.
19. Taken together, we believe the requirements of Order No. 1920
with the modifications and clarifications we make on rehearing will
remedy the deficiencies of current regional transmission planning
processes, establish sufficiently long-term, forward-looking, and
comprehensive transmission planning, and ensure that transmission
providers and Relevant State Entities in each region have the
flexibility to devise cost allocation methods that reasonably and
fairly assign the costs of Long-Term Regional Transmission Facilities
to those that benefit from such facilities.

II. Introduction and Background

20. In Order No. 1920, the Commission found that existing regional
transmission planning and cost allocation processes are unjust,
unreasonable, and unduly discriminatory or preferential because the
Commission's existing transmission planning and cost allocation
requirements do not require transmission providers to: \14\ (1) perform
a sufficiently long-term assessment of transmission needs that
identifies Long-Term Transmission Needs; \15\ (2)

[[Page 97180]]

adequately account on a forward-looking basis for known determinants of
Long-Term Transmission Needs; and (3) consider the broader set of
benefits of regional transmission facilities planned to meet those
Long-Term Transmission Needs.\16\
---------------------------------------------------------------------------

\14\ Section 201(e) of the FPA, 16 U.S.C. 824(e), defines
``public utility'' to mean ``any person who owns or operates
facilities subject to the jurisdiction of the Commission under this
subchapter.'' As stated in the Order No. 888 pro forma Open Access
Transmission Tariff (OATT), ``transmission provider'' is a ``public
utility (or its Designated Agent) that owns, controls, or operates
facilities used for the transmission of electric energy in
interstate commerce and provides transmission service under the
Tariff.'' Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Servs. by Pub. Utils.; Recovery of
Stranded Costs by Pub. Utils. & Transmitting Utils., Order No. 888,
61 FR 21540 (May 10, 1996), FERC Stats. & Regs. ] 31,036 (1996)
(cross-referenced at 75 FERC ] 61,080), order on reh'g, Order No.
888-A, 62 FR 12274 (Mar. 14, 1997), FERC Stats. & Regs. ] 31,048
(cross-referenced at 78 FERC ] 61,220), order on reh'g, Order No.
888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C, 82
FERC ] 61,046 (1998), aff'd in relevant part sub nom. Transmission
Access Pol'y Study Grp. v. FERC, 225 F.3d 667 (D.C. Cir. 2000)
(TAPS), aff'd sub nom. N.Y. v. FERC, 535 U.S. 1 (2002); Pro forma
OATT section I.1 (Definitions). The term ``transmission provider''
includes a public utility transmission owner when the transmission
owner is separate from the transmission provider, as is the case in
regional transmission organizations (RTO) and independent system
operators (ISO).
\15\ For purposes of Order No. 1920, Long-Term Transmission
Needs are transmission needs identified through Long-Term Regional
Transmission Planning by, among other things and as discussed in
Order No. 1920, running scenarios and considering the enumerated
categories of factors. Order No. 1920, 187 FERC ] 61,068 at P 299.
\16\ Order No. 1920, 187 FERC ] 61,068 at P 1.
---------------------------------------------------------------------------

21. Order No. 1920 therefore established requirements to ensure
that Commission-jurisdictional rates remain just and reasonable and not
unduly discriminatory or preferential. First, Order No. 1920 required
transmission providers in each transmission planning region to
participate in a regional transmission planning process that includes
Long-Term Regional Transmission Planning.\17\ Order No. 1920
established specific requirements regarding how transmission providers
must conduct Long-Term Regional Transmission Planning, including, among
other things, the use of Long-Term Scenarios to identify Long-Term
Transmission Needs and Long-Term Regional Transmission Facilities \18\
to meet those needs.\19\
---------------------------------------------------------------------------

\17\ Id. P 224. Long-Term Regional Transmission Planning means
regional transmission planning on a sufficiently long-term, forward-
looking, and comprehensive basis to identify Long-Term Transmission
Needs, identify transmission facilities that meet such needs,
measure the benefits of those transmission facilities, and evaluate
those transmission facilities for potential selection in the
regional transmission plan for purposes of cost allocation as the
more efficient or cost-effective regional transmission facilities to
meet Long-Term Transmission Needs. Id. For purposes of Order No.
1920, and consistent with Order No. 1000, a transmission planning
region is one in which transmission providers, in consultation with
stakeholders and affected states, have agreed to participate for
purposes of regional transmission planning and development of a
single regional transmission plan. Id. P 2 n.7; see Order No. 1000,
136 FERC ] 61,051 at P 160.
\18\ For purposes of Order No. 1920, a Long-Term Regional
Transmission Facility is a regional transmission facility that is
identified as part of Long-Term Regional Transmission Planning to
address Long-Term Transmission Needs. Order No. 1920, 187 FERC ]
61,068 at P 250. For the purposes of Order No. 1920, and consistent
with Order No. 1000, a regional transmission facility is a
transmission facility located entirely in one transmission planning
region. An interregional transmission facility is a transmission
facility that is located in two or more transmission planning
regions. A local transmission facility is a transmission facility
located solely within a transmission provider's retail distribution
service territory or footprint that is not selected in the regional
transmission plan for purposes of cost allocation. Id. P 41 n.58
(citing Order No. 1000, 136 FERC ] 61,051 at PP 63, 482 n.374).
\19\ Id. P 298. For purposes of Order No. 1920, Long-Term
Scenarios are scenarios that incorporate various assumptions using
best available data inputs about the future electric power system
over a sufficiently long-term, forward-looking transmission planning
horizon to identify Long-Term Transmission Needs and enable the
identification and evaluation of transmission facilities to meet
such transmission needs. Id. P 302.
---------------------------------------------------------------------------

22. Order No. 1920 required transmission providers to measure and
use at least seven specified benefits to evaluate Long-Term Regional
Transmission Facilities as part of Long-Term Regional Transmission
Planning.\20\ Order No. 1920 required transmission providers to
calculate the benefits of Long-Term Regional Transmission Facilities
over a time horizon that covers, at a minimum, 20 years starting from
the estimated in-service date of the transmission facilities and
required that this minimum 20-year benefit horizon be used both for the
evaluation and selection of Long-Term Regional Transmission Facilities
in the regional transmission plan for purposes of cost allocation.\21\
---------------------------------------------------------------------------

\20\ Id. P 719.
\21\ Id. P 859. The Commission recognized that some transmission
planning regions may include Long-Term Regional Transmission
Facilities, or a portfolio of such Facilities, in a regional
transmission plan, but may not necessarily include these Facilities
for purposes of cost allocation. Id. P 3 n.8 (citing Order No. 1000,
136 FERC ] 61,051 at P 63). For purposes of Order No. 1920, unless
otherwise noted, when referencing Long-Term Regional Transmission
Facilities (or a portfolio of such Facilities) that are selected, we
intend that the word ``selected'' mean that those Facilities are
selected in the regional transmission plan for purposes of cost
allocation. Id.
---------------------------------------------------------------------------

23. Order No. 1920 required transmission providers to include in
their OATTs an evaluation process, including selection criteria, that
they will use to identify and evaluate Long-Term Regional Transmission
Facilities for potential selection to address Long-Term Transmission
Needs.\22\ Further, Order No. 1920 required transmission providers to
include in their OATTs a process to provide Relevant State Entities
\23\ and interconnection customers with the opportunity to voluntarily
fund the cost of, or a portion of the cost of, a Long-Term Regional
Transmission Facility that otherwise would not meet transmission
providers' selection criteria.\24\ Order No. 1920 also required
transmission providers to include in their OATTs provisions that
require transmission providers--in certain circumstances--to reevaluate
Long-Term Regional Transmission Facilities that previously were
selected.\25\
---------------------------------------------------------------------------

\22\ Id. P 911.
\23\ For the purposes of Order No. 1920, a Relevant State Entity
is any state entity responsible for electric utility regulation or
siting electric transmission facilities within the state or portion
of a state located in the transmission planning region, including
any state entity as may be designated for that purpose by the law of
such state. Id. P 1355.
\24\ Id. P 1012.
\25\ Id. P 1048.
---------------------------------------------------------------------------

24. Order No. 1920 required transmission providers to file one or
more ex ante Long-Term Regional Transmission Cost Allocation Methods
\26\ to allocate the costs of Long-Term Regional Transmission
Facilities (or a portfolio of such Facilities) that are selected.\27\
Order No. 1920 further allowed, but did not require, transmission
providers to adopt a State Agreement Process for allocating the costs
of all, or a subset of, Long-Term Regional Transmission Facilities.\28\
Where Relevant State Entities agree to such a State Agreement Process,
and transmission providers choose to file such a process, a State
Agreement Process would provide Relevant State Entities up to six
months after selection for its participants to determine, and
transmission providers to file, a cost allocation method for specific
Long-Term Regional Transmission Facilities.\29\ Order No. 1920 also
established a six-month time period (Engagement Period), during which
transmission providers must: (1) provide notice of the starting and end
dates for the six-month time period; (2) post contact information that
Relevant State Entities may use to communicate with transmission
providers about any agreement among Relevant State Entities on a Long-
Term Regional Transmission Cost Allocation Method(s) and/or a State
Agreement Process, as well as a deadline for communicating such
agreement; and (3) provide a forum for negotiation of a Long-Term
Regional Transmission Cost Allocation Method(s) and/or a State
Agreement Process that enables robust participation by Relevant State
Entities.\30\
---------------------------------------------------------------------------

\26\ For purposes of Order No. 1920, a Long-Term Regional
Transmission Cost Allocation Method is an ex ante regional cost
allocation method for one or more Long-Term Regional Transmission
Facilities (or a portfolio of such Facilities) that are selected in
the regional transmission plan for purposes of cost allocation. Id.
P 1291.
\27\ Id.
\28\ Id. P 1402. For purposes of Order No. 1920, a State
Agreement Process is a process by which one or more Relevant State
Entities may voluntarily agree to a cost allocation method for Long-
Term Regional Transmission Facilities (or a portfolio of such
Facilities) before or no later than six months after they are
selected. Id.
\29\ Id.
\30\ Id. P 1354.
---------------------------------------------------------------------------

25. Order No. 1920 required transmission providers to evaluate for
potential selection in their existing Order No. 1000 regional
transmission planning processes regional transmission facilities that
will address certain identified interconnection-related transmission
needs associated with certain interconnection-related network upgrades
originally identified through the generator interconnection
process.\31\
---------------------------------------------------------------------------

\31\ Id. PP 1106-1107.

---------------------------------------------------------------------------

[[Page 97181]]

26. Order No. 1920 required transmission providers to consider more
fully the alternative transmission technologies of dynamic line
ratings, advanced power flow control devices, advanced conductors, and
transmission switching in Long-Term Regional Transmission Planning and
existing Order No. 1000 regional transmission planning and cost
allocation processes.\32\
---------------------------------------------------------------------------

\32\ Id. P 1198.
---------------------------------------------------------------------------

27. Order No. 1920 required transmission providers to adopt
enhanced transparency requirements for local transmission planning
processes and improve coordination between regional and local
transmission planning with the aim of identifying potential
opportunities to ``right-size'' replacement transmission
facilities.\33\
---------------------------------------------------------------------------

\33\ Id. PP 1625, 1677.
---------------------------------------------------------------------------

28. Order No. 1920 required transmission providers to revise their
interregional transmission coordination procedures to reflect the Long-
Term Regional Transmission Planning reforms adopted in Order No.
1920.\34\ Order No. 1920 also required transmission providers to meet
additional information sharing and transparency requirements with
respect to their interregional transmission coordination processes.\35\
---------------------------------------------------------------------------

\34\ Id. P 1751.
\35\ Id.
---------------------------------------------------------------------------

29. The Commission received 49 timely filed requests for rehearing
and/or clarification \36\ and several additional filings.\37\ The
rehearing requests raise issues related to nearly all reforms adopted
in Order No. 1920.
---------------------------------------------------------------------------

\36\ Appendix A provides the short names of the entities that
filed requests for rehearing or clarification. To the extent that
they intend to seek rehearing, the pleadings filed by Grid United,
PJM States, Vermont Commission, and Virginia and North Carolina
Commissions are deficient because they fail to include a separate
section entitled ``Statement of Issues'' listing each issue
presented to the Commission in a separately enumerated paragraph
that includes representative precedent on which the participant is
relying, as required by Rule 713(c)(2) of the Commission's Rules of
Practice and Procedure (18 CFR 385.713(c)(2)). Consistent with Rule
713, we deem these petitioners to have waived the issues for which
they seek rehearing. We consider petitioners' requests for
clarification and, to provide clarity, address their arguments on
rehearing below. EEI, PJM States, and PJM Utilities filed answers to
certain requests for rehearing. Rule 713(d)(1) (18 CFR
385.713(d)(1)) prohibits an answer to a request for rehearing.
Accordingly, we deny EEI's, PJM States', and PJM Utilities' motions
to answer and reject their answers. Although PJM States style their
July 3, 2024 pleading as comments, we treat the pleading as an
answer to PJM's request for rehearing. See, e.g., San Diego Gas &
Elec. Co., 133 FERC ] 61,014, at P 15 (2010) (``[W]e are not
obligated to accept a filing solely on the basis of its party-
bestowed title. Instead, we examine the substance of the
pleading.'').
\37\ Susann Rizzo, Gary Andrews, and Cher Gilmore filed letters
supporting Order No. 1920. They also urged the Commission to require
interregional transmission planning and establish environmental
justice liaisons. In addition, E. Andrews, Illinois Commission, and
Minnesota Commission each submitted late-filed pleadings that are
generally supportive of Order No. 1920. Further, on June 12, 2024,
Missouri Commission filed a letter addressing Order No. 1920. On
September 3, 2024, Chairman Willie Phillips responded to the
Missouri Commission letter. On July 22, 2024, State Regulatory
Commissioners filed a letter expressing views on Order No. 1920. On
October 9, 2024, Chairman Willie Phillips responded to the State
Regulatory Commissioners' letter.
---------------------------------------------------------------------------

30. Pursuant to Allegheny Defense Project v. FERC, \38\ the
rehearing requests filed in this proceeding may be deemed denied by
operation of law. However, as permitted by section 313(a) of the
FPA,\39\ we are modifying the discussion in Order No. 1920, setting
aside the order, in part, and clarifying the order, as discussed
below.\40\
---------------------------------------------------------------------------

\38\ 964 F.3d 1 (D.C. Cir. 2020) (en banc).
\39\ 16 U.S.C. 825l(a) (``Until the record in a proceeding shall
have been filed in a court of appeals, as provided in subsection
(b), the Commission may at any time, upon reasonable notice and in
such manner as it shall deem proper, modify or set aside, in whole
or in part, any finding or order made or issued by it under the
provisions of this chapter.'').
\40\ Allegheny Def. Project, 964 F.3d at 16-17. In Appendix B,
we provide the revisions to the provisions of Attachment K to the
pro forma OATT made in this order on rehearing and clarification.
---------------------------------------------------------------------------

31. Specifically, we set aside the order, in part, to specify that:
(1) transmission providers are not required to use the set of seven
required benefits to help inform their identification of Long-Term
Transmission Needs; \41\ (2) Factor Category Seven no longer includes
corporate commitments; \42\ (3) transmission providers must propose an
effective date for the OATT revisions necessary to comply with Order
No. 1920 that is no later than two years from the date on which they
will commence the first Long-Term Regional Transmission Planning cycle;
\43\ (4) when Relevant State Entities agree on a Long-Term Regional
Transmission Cost Allocation Method or State Agreement Process
resulting from the Engagement Period, transmission providers must
include that method or process in the transmittal or as an attachment
to their compliance filing, even if transmission providers propose a
different Long-Term Regional Transmission Cost Allocation method or do
not propose to adopt a State Agreement Process along with any
information that Relevant State Entities provide to transmission
providers regarding the state negotiations during the Engagement
Period; \44\ and (5) transmission providers shall consult with Relevant
State Entities prior to amending the Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process(es), or if
Relevant State Entities seek, consistent with their chosen method to
reach agreement, for the transmission provider to amend that method or
process.
---------------------------------------------------------------------------

\41\ See Order No. 1920, 187 FERC ] 61,068 at P 301
(``Transmission providers must use [the set of seven required
benefits] to help to inform their identification of Long-Term
Transmission Needs.'').
\42\ See id. P 481 (``We adopt the NOPR proposal, with
modification, to require transmission providers in each transmission
planning region to incorporate Factor Category Seven: utility and
corporate commitments and federal, federally-recognized Tribal,
state, and local policy goals that affect Long-Term Transmission
Needs, in the development of Long-Term Scenarios.'').
\43\ See id. P 1072 (``Thus, we require transmission providers
in each transmission planning region to propose on compliance a
date, no later than one year from the date on which initial filings
to comply with this final rule are due, on which they will commence
the first Long-Term Regional Transmission Planning cycle.'').
\44\ See id. P 1359 (``We note, however, that the ultimate
decision as to whether to file a Long-Term Regional Transmission
Cost Allocation Method(s) and/or State Agreement Process to which
Relevant State Entities have agreed will continue to lie with the
transmission providers.'').
---------------------------------------------------------------------------

32. Additionally, we grant multiple clarifications on most elements
of Order No. 1920, as further discussed below. For example, among other
clarifications, we clarify that transmission providers may develop
additional scenarios, beyond the three Long-Term Scenarios that Order
No. 1920 requires, to provide Relevant State Entities with information
that they can use to inform the application of Long-Term Regional Cost
Allocation Method(s) or the development of cost allocation methods
through the State Agreement Process(es), and that Order No. 1920 does
not prevent transmission providers from recognizing different types of
benefits and using them to allocate costs in proportion to those
benefits.
33. Finally, we specify that the Commission will grant an extension
of the required Engagement Period for up to an additional six months
when Relevant State Entities request an extension and represent to the
Commission that they agree, consistent with their chosen method to
reach agreement, that they need additional time to finish cost
allocation discussions. If the Commission grants such an extension
request, it will also, as appropriate, extend, sua sponte, the relevant
Order No. 1920 compliance deadlines to ensure that any extension of the
Engagement Period would not conflict with the required compliance
deadlines.

III. The Overall Need for Reform

A. Order No. 1920

34. In Order No. 1920, the Commission found substantial evidence to
support the conclusion that the

[[Page 97182]]

Commission's existing regional transmission planning and cost
allocation requirements are unjust, unreasonable, and unduly
discriminatory or preferential. Specifically, the Commission explained
that the absence of sufficiently long-term, forward-looking, and
comprehensive transmission planning requirements causes transmission
providers to fail to adequately anticipate and plan for future system
conditions and to fail to appropriately evaluate the benefits of
transmission infrastructure.\45\ The Commission found that this status
quo results in piecemeal transmission expansion to address relatively
near-term needs and causes transmission providers to make relatively
inefficient investments in transmission infrastructure, the costs of
which are ultimately recovered through Commission-jurisdictional rates.
One result of this dynamic, the Commission explained, is that
transmission customers overpay to meet their transmission needs and
forgo benefits that outweigh their costs, which results in less
efficient or cost-effective transmission investments. Such
deficiencies, the Commission found, render Commission-jurisdictional
regional transmission planning and cost allocation processes unjust,
unreasonable, and unduly discriminatory or preferential.\46\
---------------------------------------------------------------------------

\45\ Order No. 1920, 187 FERC ] 61,068 at P 85.
\46\ Id.
---------------------------------------------------------------------------

35. The Commission explained that it has the authority to issue
Order No. 1920 under FPA section 206, which ``instructs the Commission
to remedy `any . . . practice' that `affect[s]' a rate for interstate
electricity service `demanded' or `charged' by `any public utility' if
such practice `is unjust, unreasonable, unduly discriminatory or
preferential.' '' \47\ The Commission concluded that the D.C. Circuit
has recognized that regional transmission planning and cost allocation
processes are practices affecting rates subject to the Commission's
exclusive jurisdiction \48\ and that transmission providers use those
processes to ``determine which transmission facilities will more
efficiently or cost-effectively meet'' transmission needs, the
development of which directly impacts the rates, terms, and conditions
of Commission-jurisdictional service.\49\ The Commission found that,
because these processes identify, evaluate, and select the regional
transmission facilities whose costs will be recovered through
transmission rates, they directly affect those rates.\50\ The
Commission found that, because such regional transmission facilities
lead to a more robust transmission system, regional transmission
planning and cost allocation processes, as well as ``the rules and
practices that determine how those [processes] operate,'' \51\ directly
affect rates that customers pay for both transmission and sale of
electric energy in interstate commerce.\52\ The Commission noted that
it may act pursuant to FPA section 206 if the Commission first
establishes, through substantial evidence,\53\ that existing practices
are unjust, unreasonable, or unduly discriminatory or preferential and,
second, establishes that the replacement practices are just and
reasonable.\54\
---------------------------------------------------------------------------

\47\ Id. P 86 (citation omitted) (quoting S.C. Pub. Serv. Auth.
v. FERC, 762 F.3d at 55).
\48\ Id. (citing S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 55-
59, 84).
\49\ Id. (quoting S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at
56).
\50\ Id.; see also id. P 86 n.186 (citing Conn. Dep't of Pub.
Util. Control v. FERC, 569 F.3d 477, 485 (D.C. Cir. 2009)).
\51\ Id. P 86 (quoting FERC v. Elec. Power Supply Ass'n, 577
U.S. 260, 279 (2016) (EPSA)).
\52\ Id. (citing 16 U.S.C. 824e(a)).
\53\ Id. (citing S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 54).
The Commission explained that FPA section 206 empowers the
Commission to address the mere threat of unjust and unreasonable
rates and, in this context the Commission need not necessarily
provide empirical evidence for every proposition to satisfy the
substantial evidence standard. Order No. 1920, 187 FERC ] 61,068 at
P 86 n.189 (citing S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 64-65,
85).
\54\ Id. (citing 16 U.S.C. 824e(a); EPSA, 577 U.S. at 277).
---------------------------------------------------------------------------

36. Addressing whether existing rates, or practices affecting
rates, remain just and reasonable--i.e., the first prong under FPA
section 206 \55\--the Commission found that existing Order No. 890 and
Order No. 1000 transmission planning and cost allocation requirements
do not result in regional transmission planning that is conducted on a
sufficiently long-term, forward-looking, and comprehensive basis, and
transmission providers therefore often do not identify, evaluate, or
select more efficient or cost-effective regional transmission solutions
to meet Long-Term Transmission Needs.\56\ The Commission determined
that this results in piecemeal, inefficient, and less cost-effective
transmission planning, which imposes real costs on customers \57\ and
renders the Commission's existing transmission planning and cost
allocation requirements unjust, unreasonable, and unduly discriminatory
or preferential in violation of FPA section 206.\58\
---------------------------------------------------------------------------

\55\ See Pub. Serv. Elec. & Gas Co. v. FERC, 989 F.3d 10, 13
(D.C. Cir. 2021) (explaining that section 206 ``mandates a two-step
procedure'' whereby the Commission, on the first step, must make an
explicit finding that the existing rate is unlawful and then, on the
second step, must set a new rate. (quotation omitted)).
\56\ Order No. 1920, 187 FERC ] 61,068 at P 87.
\57\ Id.
\58\ Id. P 88.
---------------------------------------------------------------------------

37. The Commission also found that existing transmission planning
and cost allocation requirements are insufficient to ensure just and
reasonable and not unduly discriminatory or preferential rates. Thus,
pursuant to FPA section 206, the Commission stated that it is now
requiring transmission providers to engage in and conduct sufficiently
long-term, forward-looking, and comprehensive transmission planning and
cost allocation processes to identify and plan for Long-Term
Transmission Needs. The Commission found that such reforms will
facilitate a process by which transmission providers can better
identify, evaluate, and select more efficient or cost-effective
transmission solutions to meet Long-Term Transmission Needs, which will
ensure that Commission-jurisdictional rates are just and reasonable and
not unduly discriminatory or preferential.\59\
---------------------------------------------------------------------------

\59\ Id. P 89.
---------------------------------------------------------------------------

1. The Transmission Investment Landscape Today
38. The Commission explained that due to continuing changes in the
industry, ongoing investment in transmission facilities is necessary to
ensure the transmission system remains reliable, affordable, and
economically efficient. More comprehensive transmission planning can
enable transmission providers to proactively identify potential
reliability problems and economic constraints and evaluate potential
transmission solutions, which can facilitate the selection of more
efficient or cost-effective transmission facilities to meet Long-Term
Transmission Needs.\60\ Transmission infrastructure can also increase
competition among generators, which results in a host of benefits for
customers, including cost savings from greater access to low-cost
power.\61\
---------------------------------------------------------------------------

\60\ Id. P 90 (citations omitted).
\61\ Id. P 91.
---------------------------------------------------------------------------

39. The Commission cited evidence demonstrating a nationwide
increase in transmission spending since the issuance of Order No. 1000
and explained that, unsurprisingly, transmission costs have become an
increasing share of customers' overall electricity bills in regions
that saw a significant increase in transmission expenditures.\62\
Further, the Commission highlighted several studies in the record
demonstrating that

[[Page 97183]]

transmission investment is likely to increase substantially in coming
years.\63\
---------------------------------------------------------------------------

\62\ Id. P 92 (citations omitted).
\63\ Id. P 93 (citations omitted).
---------------------------------------------------------------------------

40. The Commission found that a number of factors are driving the
growing need for new transmission infrastructure.\64\ First, the
Commission found that longer-term reliability needs are changing and
driving a significant shift in the demands placed on the transmission
system, and transmission system operators are increasingly depending on
regional transmission facilities to ensure operational stability and
system reliability, particularly due to the growing frequency of
extreme weather events and increasing share of variable resources
entering the resource mix.\65\ Second, after many years of flat or
minimal load growth in regions across the country, the Commission found
that both regional and national demand is projected to increase
significantly in the coming decades, which will require an increasingly
robust transmission system to serve this growing load reliably. Third,
the Commission found that supply is changing, driven by federal,
federally-recognized Tribal, state, and local policies, customer
demands, utility commitments, and the shifting economics of resources
that comprise the resource mix.\66\
---------------------------------------------------------------------------

\64\ Id. P 94 (citations omitted).
\65\ Id. (citations omitted).
\66\ Id. PP 96-99 (citations omitted).
---------------------------------------------------------------------------

41. The Commission also found that the record in this proceeding
affirms the Commission's longstanding recognition that regional
transmission planning that identifies more efficient or cost-effective
transmission solutions helps to ensure cost-effective transmission
development for customers and can yield better returns for every dollar
spent than localized or piecemeal transmission solutions, while
inadequate or poorly designed transmission planning processes can cause
customers to foot the bill for piecemeal, inefficient, and less cost-
effective transmission solutions.\67\
---------------------------------------------------------------------------

\67\ Id. P 100 (citations omitted).
---------------------------------------------------------------------------

42. Based on its experience implementing Order No. 1000, the
Commission found that existing regional transmission planning processes
are not of sufficient scope and duration to adequately or consistently
identify transmission needs and associated opportunities to evaluate
and select, on a more comprehensive basis, more efficient or cost-
effective transmission solutions to those needs.\68\ The Commission
explained that, in some regions, investment in regional transmission
facilities has declined as compared to prior to Order No. 1000 and
that, across all non-RTO/ISO regions, not a single transmission
facility has been selected pursuant to the regional planning processes
since implementation of Order No. 1000. The Commission noted that,
within some RTO/ISO regional transmission planning processes, even
where investments through the regional transmission planning process
occur, much of that investment has been in transmission projects that
only address immediate reliability needs.\69\ The Commission also cited
evidence showing that, in the limited instances in which transmission
providers have followed processes that share many of the elements that
Order No. 1920 requires, customers have seen clear and quantifiable
benefits.\70\
---------------------------------------------------------------------------

\68\ Id. P 101.
\69\ Id. (citations omitted).
\70\ Id. P 102.
---------------------------------------------------------------------------

43. Further, the Commission explained that a substantial amount of
new transmission investment is occurring in generator interconnection
processes and local transmission planning processes, which, unlike
regional transmission planning processes, do not comprehensively assess
either broader transmission needs or solutions to those needs. The
Commission concluded that overreliance on those processes can result in
relatively inefficient or less cost-effective transmission development
for customers, which contributes to rates for transmission that are
unjust and unreasonable.\71\
---------------------------------------------------------------------------

\71\ Id. P 103 (citations omitted).
---------------------------------------------------------------------------

44. The Commission cited evidence showing a sharp growth in both
the total cost of interconnection-related network upgrades and in the
cost of such upgrades relative to generation project costs, as well as
evidence showing that increases in interconnection costs are being
driven, in many cases, by an expansion in the scope and complexity of
interconnection-related network upgrades.\72\ The Commission noted
that, unlike regional transmission planning processes, the generator
interconnection process is not designed to consider how to address
transmission needs more efficiently or cost-effectively beyond the
discrete interconnection request (or requests) being studied.\73\ The
Commission found that increasingly relying on interconnection
customers' interconnection-related network upgrades to expand the
capacity of the transmission system is inefficient and leads to less
cost-effective transmission development than would result from long-
term, forward-looking, and more comprehensive regional transmission
planning, to the detriment of customers.\74\
---------------------------------------------------------------------------

\72\ Id. PP 104-105 (citations omitted).
\73\ Id. P 106.
\74\ Id. P 108.
---------------------------------------------------------------------------

45. The Commission also cited evidence that, since the issuance of
Order No. 1000, the majority of investment in transmission facilities
has been in local transmission facilities, a trend that is accelerating
across multiple regions.\75\ The Commission noted evidence that
transmission expansion through local transmission planning and in-kind
replacement processes is incremental and misses the potential to
identify, evaluate, and select more efficient or cost-effective
transmission facilities to solve transmission needs, as well as to
afford system-wide benefits that may not be achieved through piecemeal,
one-off local transmission facilities.\76\ Such transmission planning,
the Commission stated, results in relatively inefficient or less cost-
effective transmission development for customers, which contributes to
rates for transmission that are unjust and unreasonable.\77\
---------------------------------------------------------------------------

\75\ Id. P 109.
\76\ Id. P 110 (citations omitted).
\77\ Id. The Commission acknowledged the important roles played
by generator interconnection processes and local transmission
planning processes and underscored that the Commission's findings
were not intended to call into question the justness and
reasonableness of either process. Id. P 111.
---------------------------------------------------------------------------

2. Unjust, Unreasonable, and Unduly Discriminatory or Preferential
Commission-Jurisdictional Transmission Planning and Cost Allocation
Processes
46. The Commission concluded that there is substantial evidence in
the record to support the determination that sufficiently long-term,
forward-looking, and comprehensive regional transmission planning and
cost allocation to meet Long-Term Transmission Needs is not occurring
on a consistent and sufficient basis.\78\ The Commission found that the
absence of a sufficiently long-term, forward-looking, and comprehensive
regional transmission planning process results in relatively
unfavorable outcomes, including: piecemeal transmission expansion to
address relatively near-term transmission needs, transmission providers
undertaking investments in relatively inefficient or less cost-
effective transmission infrastructure, and transmission customers
paying more than is necessary or appropriate to meet their transmission
needs and/or

[[Page 97184]]

forgoing benefits that outweigh their costs.\79\
---------------------------------------------------------------------------

\78\ Id. P 112.
\79\ Id.
---------------------------------------------------------------------------

47. The Commission determined that there is substantial evidence in
the record to support the conclusion that the Commission's regional
transmission planning and cost allocation requirements are deficient,
thus rendering Commission-jurisdictional regional transmission planning
and cost allocation processes unjust and unreasonable. Specifically,
the Commission found that existing regional transmission planning and
cost allocation requirements fail to require transmission providers to:
(1) perform a sufficiently long-term assessment of transmission needs
that identifies Long-Term Transmission Needs; (2) adequately account on
a forward-looking basis for known determinants of Long-Term
Transmission Needs; and (3) consider the broader set of benefits of
regional transmission facilities planned to meet those Long-Term
Transmission Needs.\80\
---------------------------------------------------------------------------

\80\ Id. P 114.
---------------------------------------------------------------------------

48. As to the first deficiency--the lack of sufficiently long-term
planning--the Commission cited evidence in the record demonstrating
that, under the status quo, most transmission planning regions do not
plan beyond a 10-year transmission planning horizon.\81\ The Commission
stated that the absence of any consistent and sufficient longer-term
assessment of transmission needs prevents transmission providers from
identifying Long-Term Transmission Needs and considering regional
transmission facilities that may be more efficient or cost-effective
solutions to address those needs.\82\ The Commission added that short-
term transmission planning fails to take advantage of the potential for
efficiencies or economies of scale that regional transmission
facilities can provide and fails to create opportunities to ``right
size'' the replacement of aging transmission facilities to address
multiple transmission needs over the longer term. Further, the
Commission stated that the time horizon over which much transmission
planning is often occurring is shorter than the time needed to plan and
construct large (e.g., high voltage or long distance) transmission
facilities \83\ and much too short to capture all of the benefits that
regional transmission facilities can provide.\84\
---------------------------------------------------------------------------

\81\ Id. P 115.
\82\ Id. (citations omitted).
\83\ Id. P 116 (citations omitted).
\84\ Id. (citations omitted).
---------------------------------------------------------------------------

49. The Commission noted that the likelihood that near-term
assessments will fail to identify Long-Term Transmission Needs and more
efficient or cost-effective regional transmission facilities to meet
those needs is higher during periods of rapid change, as the electric
sector is now experiencing, during which the need for transmission
infrastructure is expected to grow considerably.\85\
---------------------------------------------------------------------------

\85\ Id. P 117 (citations omitted).
---------------------------------------------------------------------------

50. The second deficiency the Commission discussed is that the
Commission's existing regional transmission planning and cost
allocation requirements fail to require transmission providers to
account adequately on a forward-looking basis for known determinants of
Long-Term Transmission Needs; moreover, the Commission stated,
transmission providers are not consistently or sufficiently doing
so.\86\ The Commission further stated that the record demonstrates that
there are numerous factors that increasingly shape Long-Term
Transmission Needs, are known and identifiable, and have reasonably
predictable effects, especially in the aggregate, such as reliability
needs driven by the impact of extreme weather; trends in future
generation additions and retirements; load growth; federal, federally-
recognized Tribal, state, and local laws and regulations; and utility
goals.\87\ The Commission determined, however, that existing regional
transmission planning processes frequently undervalue or do not
consider some or all of these factors, and that the Commission's
existing regional transmission planning requirements do not ensure that
such factors will be sufficiently accounted for in that planning.\88\
The Commission noted that the failure to adequately consider such
factors delays planning for the transmission system's changing
operational needs until shortly before those transmission needs
manifest. As a result, the Commission stated, existing regional
transmission planning processes are piecemeal and fail to take
advantage of economies of scale in transmission investment or
opportunities to address multiple transmission needs over multiple time
horizons, which leads to transmission investment that is not more
efficient or cost-effective and renders Commission-jurisdictional
regional transmission planning and cost allocation processes unjust and
unreasonable.\89\
---------------------------------------------------------------------------

\86\ Id. P 118.
\87\ Id. P 119.
\88\ Id. P 120.
\89\ Id. P 121 (citations omitted).
---------------------------------------------------------------------------

51. The third deficiency that the Commission identified is that the
Commission's regional transmission planning and cost allocation
requirements fail to require transmission providers to adequately
consider the broader set of benefits of regional transmission
facilities planned to meet Long-Term Transmission Needs. The Commission
pointed to evidence demonstrating that many regional transmission
planning processes focus too narrowly only on some benefits, while
other regional transmission planning processes fail entirely to
consider cost savings associated with certain transmission
facilities.\90\ The Commission also explained that the cost-benefit
analyses that transmission providers often use provide an inaccurate
portrayal of the comparative benefits of different transmission
facilities, which results in transmission customers forgoing benefits
that may significantly outweigh their costs and in less efficient or
cost-effective transmission investments, and ultimately contributes to
Commission-jurisdictional rates that are unjust and unreasonable.\91\
---------------------------------------------------------------------------

\90\ Id. P 122 & n.312.
\91\ Id. P 123.
---------------------------------------------------------------------------

52. The Commission determined that, given its findings concerning
the deficiencies in existing transmission planning requirements, and
its conclusion that long-term, forward-looking, and more comprehensive
regional transmission planning is needed, existing cost allocation
requirements are also deficient and must be modified to properly
account for Long-Term Regional Transmission Planning.\92\
---------------------------------------------------------------------------

\92\ Id. P 124.
---------------------------------------------------------------------------

53. The Commission determined that its current cost allocation
requirements, which were designed in the context of the Order No. 1000
regional transmission planning process, are insufficient to
appropriately allocate costs associated with regional transmission
facilities selected in accordance with Order No. 1920's Long-Term
Regional Transmission Planning requirements.\93\ The Commission's
existing Order No. 1000 cost allocation requirements contemplate the
application of differing cost allocation methods to different types of
transmission facilities, but Order No. 1920's approach to Long-Term
Regional Transmission Planning accounts for multiple drivers of Long-
Term Transmission Needs and results in Long-Term Regional Transmission
Facilities that produce a broader set of benefits and therefore
warrants a

[[Page 97185]]

different approach to cost allocation.\94\ The Commission also
explained that existing Order No. 1000 regional transmission planning
processes do not mandate the consideration of specific benefits and
that information concerning these benefits may be relevant when
allocating the costs of Long-Term Regional Transmission Facilities in a
manner that is at least roughly commensurate with their benefits.\95\
Further, the Commission noted that under existing cost allocation
requirements, there is no dedicated process to engage states in the
development of regional cost allocation methods. The Commission
explained that engaging states in cost allocation is particularly
relevant to Long-Term Regional Transmission Planning given the long
lead times for construction of transmission projects, which create
uncertainty for Long-Term Regional Transmission Facilities and increase
the importance of ensuring that such facilities will obtain needed
siting approvals from the states and are thus timely and cost-
effectively developed. The Commission therefore concluded that it is
both necessary and appropriate to establish specific cost allocation
requirements tailored to the Long-Term Regional Transmission Planning
reforms.\96\
---------------------------------------------------------------------------

\93\ Id. P 126.
\94\ Id.
\95\ Id. (citing ICC v. FERC I, 576 F.3d at 477; Order No. 1000,
136 FERC ] 61,051 at PP 622, 639).
\96\ Id.
---------------------------------------------------------------------------

54. The Commission found that there is substantial evidence in the
record demonstrating that Long-Term Regional Transmission Planning and
cost allocation to identify and plan for Long-Term Transmission Needs
does not occur on a consistent and sufficient basis.\97\ The Commission
added that this is largely due to the deficiencies it identified
regarding existing regional transmission planning and cost allocation
requirements.\98\ The Commission also found that, under the status quo,
transmission providers are meeting many transmission needs by
identifying transmission solutions and developing transmission
facilities outside of the regional transmission planning and cost
allocation processes or in response to near-term reliability needs.\99\
The Commission stated that this approach may not identify more
efficient or cost-effective transmission solutions and will saddle
consumers with the costs of relatively inefficient or less cost-
effective piecemeal transmission investment and expansion.\100\
---------------------------------------------------------------------------

\97\ Id. P 127 (citations omitted).
\98\ Id.
\99\ Id. (citations omitted).
\100\ Id. P 128 (citations omitted).
---------------------------------------------------------------------------

55. Moreover, the Commission found that transmission needs in most
transmission planning regions are rapidly changing and exacerbating
concerns arising from the absence of sufficiently long-term, forward-
looking, and comprehensive regional transmission planning and cost
allocation processes and the corresponding failure by transmission
providers to identify and evaluate more efficient or cost-effective
transmission solutions to Long-Term Transmission Needs.\101\ The
Commission emphasized that it is reacting to well-documented factors,
which the record demonstrates are driven by exogenous forces beyond the
Commission's jurisdiction or control, including, but not limited to,
the increasing frequency of extreme weather events, customer
preferences, demand growth, economic and technological trends, and
federal, federally-recognized Tribal, state, and local policies.\102\
---------------------------------------------------------------------------

\101\ Id. P 129.
\102\ Id. (citation omitted).
---------------------------------------------------------------------------

56. The Commission stated that Order No. 1920 does not aim to
affect--either facilitate or hinder--any changes or decisions that
occur outside of the Commission's jurisdiction.\103\ Instead, the
Commission explained, Order No. 1920 focuses on ensuring that
Commission-jurisdictional processes associated with regional
transmission planning and cost allocation result in rates that are just
and reasonable and not unduly discriminatory or preferential; Order No.
1920 seeks to ensure that such regional transmission planning processes
are adequately ``accounting for'' changes occurring outside of the
Commission's jurisdiction, including the resource decisions that are
the exclusive jurisdiction of states.\104\
---------------------------------------------------------------------------

\103\ Id. P 130 (emphasis in original).
\104\ Id. (citing PJM Power Providers Grp. v. FERC, 88 F.4th
250, 275 (3d Cir. 2023); Elec. Power Supply Ass'n v. Star, 904 F.3d
518, 524 (7th Cir. 2018)).
---------------------------------------------------------------------------

57. The Commission disagreed with arguments that it could not rely
on general findings, rather than individualized analyses of each,
specific transmission planning region, as the basis for Order No.
1920.\105\ The Commission explained that it was acting pursuant to
relevant precedent, which makes clear that the Commission need not make
findings that are region-specific in every case and is instead
empowered to ``rely on `generic' or `general' findings of a systemic
problem to support imposition of an industry-wide solution,'' \106\
notwithstanding regional variation among regional transmission planning
processes. Moreover, the Commission acknowledged that, while
transmission planning practices vary considerably between transmission
planning regions, the record demonstrates that deficiencies in
transmission planning processes ``reach well beyond `isolated pockets'
'' \107\ and instead pervade large swathes of the country, including
RTO/ISO and non-RTO/ISO planning regions.\108\ Thus, the Commission
added, Order No. 1920 does not present an ``extreme `disproportion of
remedy to ailment.' '' \109\ The Commission also noted that it has
discretion to decide the most efficient approach for resolving
industry-wide problems.\110\ Further, the Commission reasoned,
``region-specific solutions will lead to `siloed and disjunctive
transmission planning policies [that] will not solve the problems
facing the nation's electric grid.' '' \111\
---------------------------------------------------------------------------

\105\ Id. P 132 (citations omitted).
\106\ Id. (quoting S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 67
(quoting Interstate Nat. Gas Ass'n of Am. v. FERC, 285 F.3d 18, 37
(D.C. Cir. 2002))).
\107\ Id. (quoting S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at
67) (alteration omitted).
\108\ Id. (citations omitted).
\109\ Id. (quoting S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at
67) (alteration omitted).
\110\ Id. (citing Order No. 1000, 136 FERC ] 61,051 at P 60).
\111\ Id. (quoting ACEG NOPR Reply Comments at 17).
---------------------------------------------------------------------------

58. The Commission stated that the record shows that significant
changes in transmission needs are well underway nationwide and that
failing to account for Long-Term Transmission Needs threatens just and
reasonable rates across the country.\112\ The Commission also noted
that significant investments in new transmission facilities are
expected to occur and substantially affect Commission-jurisdictional
rates that customers pay, which underscores the importance of
addressing deficiencies in its regional transmission planning and cost
allocation requirements now.\113\
---------------------------------------------------------------------------

\112\ Id. P 133 (citation omitted).
\113\ Id. (citing Order No. 1000, 136 FERC ] 61,051 at PP 46,
50).
---------------------------------------------------------------------------

3. Benefits of Long-Term Regional Transmission Planning and Cost
Allocation To Identify and Plan for Long-Term Transmission Needs
59. Based on the record, the Commission found that Order No. 1920's
requirements will help to ensure just and reasonable Commission-
jurisdictional rates by addressing deficiencies in the existing
regional transmission planning and cost allocation requirements and
promoting

[[Page 97186]]

enhanced reliability and more efficient or cost-effective transmission
solutions.\114\ The Commission noted evidence in the record
demonstrating that the kind of regional transmission planning required
by Order No. 1920 will help transmission providers to identify,
evaluate, and select more efficient or cost-effective transmission
solutions to Long-Term Transmission Needs.\115\
---------------------------------------------------------------------------

\114\ Id. P 134.
\115\ Id. P 135.
---------------------------------------------------------------------------

60. The Commission found that Long-Term Regional Transmission
Planning that expands the transmission planning horizon and considers
factors affecting Long-Term Transmission Needs as well as a broader
list of benefits will: (1) reduce reliance on transmission solutions
that are relatively inefficient or less cost-effective because they
address only short-term transmission needs; (2) unlock the benefits of
economies of scale in transmission investment; \116\ (3) enable
opportunities to ``right size'' replacement transmission facilities;
\117\ (4) facilitate the selection of regional transmission facilities
that could address multiple transmission needs over different time
horizons; and (5) provide states, utilities, customers, and other
stakeholders with greater insight and transparency into the costs and
benefits of particular transmission solutions to address Long-Term
Transmission Needs. The Commission concluded that these regional
transmission planning and cost allocation reforms will help to ensure
just and reasonable rates.\118\ The Commission added that sufficiently
long-term, forward-looking, and comprehensive regional transmission
planning and cost allocation processes will also enhance reliability
because a robust, well-planned transmission system is foundational to
ensuring an affordable, reliable supply of electricity.\119\
Additionally, the Commission cited evidence demonstrating how long-
term, forward-looking, and more comprehensive regional transmission
planning can better identify reliability needs and resolve those needs
with more efficient or cost-effective transmission solutions.\120\
---------------------------------------------------------------------------

\116\ Id. P 136 (citation omitted).
\117\ Id. (citations omitted).
\118\ Id. (citations omitted).
\119\ Id. P 137.
\120\ Id. P 138 (citations omitted).
---------------------------------------------------------------------------

B. The Commission Adequately Demonstrated That Existing Rates, or
Practices Affecting Rates, Are Unjust and Unreasonable

61. We sustain the Commission's determination in Order No. 1920
that existing regional transmission planning and cost allocation
processes are unjust and unreasonable, and unduly discriminatory or
preferential. We conclude that this finding, as well as the
Commission's finding that the identified deficiencies in transmission
planning and cost allocation processes render existing Commission-
jurisdictional rates unjust and unreasonable, was based on substantial
record evidence, reflecting significant input from nearly 200
stakeholders across the country, third-party reports and studies, and
the Commission's extensive knowledge of the industry and expert
predictions regarding the transmission planning processes and cost
allocation requirements that the Commission itself has established and
oversees in carrying out its statutory responsibilities. We disagree
with several rehearing parties who argue that the Commission failed to
satisfy its burden under the first prong of FPA section 206 to show
that Order No. 1000 regional transmission planning and cost allocation
processes are unjust, unreasonable, or unduly discriminatory and
preferential.\121\ First, we disagree with certain rehearing parties as
to the nature of the Commission's evidentiary burden under FPA section
206. Second, we conclude that the Commission's factual findings and the
substantial evidence supporting those findings satisfies, and exceeds,
the Commission's burden under FPA section 206. Third, we find that the
``deficiencies identified by the Commission'' in Order No. 1920 do not
```exist[ ] only in isolated pockets' '' and such evidence is supported
by the record. Finally, we conclude that the Commission has authority
to conduct a nationwide rulemaking. We address these points in turn.
---------------------------------------------------------------------------

\121\ Alabama Commission Rehearing Request at 3-4; Designated
Retail Regulators Rehearing Request at 3, 7-8, 19-22; Industrial
Customers Rehearing Request at 3-4, 6, 11-18; SERTP Sponsors
Rehearing Request at 28-29, 31-37; Undersigned States Rehearing
Request at 7, 19-21; Arizona Commission Rehearing Request at 19-20.
---------------------------------------------------------------------------

1. The Commission Correctly Characterized Its Statutory Burden
a. Requests for Rehearing
62. SERTP Sponsors contend that the Commission must demonstrate
more than theoretical deficiencies to support nationwide policies and
that systemic problems must be demonstrated beyond isolated
issues.\122\ SERTP Sponsors argue that Order No. 1920's findings, which
are based on theory and supposition, are insufficient to carry the
applicable burden and are contradicted by substantial specific evidence
about SERTP.\123\ SERTP Sponsors argue that South Carolina Public
Service Authority v. FERC ``does not stand for the proposition that any
assertion of any theoretical problem by FERC is enough to satisfy the
first step of the analysis under [s]ection 206.'' \124\ SERTP Sponsors
contend that except in limited circumstances--e.g., when there is a
lack of empirical evidence--the D.C. Circuit requires more than
theoretical deficiencies to support nationwide policies.\125\
---------------------------------------------------------------------------

\122\ SERTP Sponsors Rehearing Request at 34 (citing S.C. Pub.
Serv. Auth. v. FERC, 762 F.3d at 71).
\123\ Id.
\124\ Id. at 31 (citing S.C. Pub. Serv. Auth. v. FERC, 762 F.3d
at 65).
\125\ Id. at 29, 31, 34.
---------------------------------------------------------------------------

63. Relatedly, Industrial Customers claim that Order No. 1920 is
``legally infirm'' because it does not make specific findings that
rates and practices are unjust, unreasonable, or unduly discriminatory
or preferential and instead ``proposes to amend Order No. 1000 based
upon mere concerns that Order No. 1000 may not be planning transmission
in a manner that comports with the FPA.'' \126\
---------------------------------------------------------------------------

\126\ Industrial Customers Rehearing Request at 16-17 (emphasis
in original).
---------------------------------------------------------------------------

b. Commission Determination
64. We sustain our determination under the first prong of FPA
section 206 and find that the Commission relied on sufficient and
appropriate evidence to support its determination that existing rates
are unjust and unreasonable. We disagree with SERTP Sponsors' and
Industrial Customers' arguments that the Commission did not satisfy its
section 206 burden because its analysis under the first prong of FPA
section 206 was predicated ``entirely on theory and supposition'' \127\
or on ``mere concerns'' that Order No. 1000 processes ``may not be
planning transmission in a manner that comports with the FPA.'' \128\
Setting aside that in making this determination the Commission did not
rely solely on ``supposition'' or ``mere concerns'' about deficiencies
in the Order No. 1000 regional transmission planning and cost
allocation processes,\129\ SERTP

[[Page 97187]]

Sponsors' and Industrial Customers' arguments disregard well-
established principles regarding the findings and type of evidence
sufficient to support a conclusion that the Commission's burden under
the first prong of FPA section 206 has been satisfied, as established
by longstanding authority, including the D.C. Circuit's opinion in
South Carolina Public Service Authority v. FERC.
---------------------------------------------------------------------------

\127\ SERTP Sponsors Rehearing Request at 31.
\128\ Industrial Customers Rehearing Request at 16-17.
\129\ See, e.g., Order No. 1920, 187 FERC ] 61,068 at PP 93-97,
114-123 (discussed below in The Commission Adequately Supported Its
Determination on Step One of Section 206 section).
---------------------------------------------------------------------------

65. In South Carolina Public Service Authority v. FERC, the D.C.
Circuit--reviewing Order No. 1000, which the Commission adopted to
address the ``theoretical threat'' of unjust or unreasonable rates
``stemm[ing] from the absence of [transmission] planning processes that
take a sufficiently broad view of both the tasks involved and the means
of addressing them''--rejected arguments similar to those made here by
Industrial Customers.\130\ In particular, petitioners there, similar to
Industrial Customers here, argued that the ```theoretical threat'
described by the Commission fail[ed] to satisfy its evidentiary burden
under [s]ection 206 . . . .'' \131\
---------------------------------------------------------------------------

\130\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 64 (alteration
omitted) (quoting Order No. 1000, 136 FERC ] 61,051 at P 52).
\131\ Id.
---------------------------------------------------------------------------

66. The court squarely rejected that contention.\132\ It explained
that the substantial evidence required to support a finding that an
existing practice affecting rates is ``unjust, unreasonable, unduly
discriminatory or preferential'' pursuant to FPA section 206 ``requires
`more than a scintilla' but `less than a preponderance' of evidence.''
\133\ Substantial evidence, however, ``does not necessarily mean
empirical evidence,'' \134\ and, in satisfying the substantial evidence
standard, the Commission may rely on its own predictions as long as
they are ```at least likely enough to be within the Commission's
authority' and [are] based on reasonable economic propositions.'' \135\
As the court recognized, ``[a]gencies do not need to conduct
experiments in order to rely on the prediction that an unsupported
stone will fall.'' \136\
---------------------------------------------------------------------------

\132\ Id.
\133\ Id. at 54 (quoting Fla. Gas Transmission Co. v. FERC, 604
F.3d 636, 645 (D.C. Cir. 2010)), 64-65 (citing 16 U.S.C. 824e(a)), 5
U.S.C. 706(2)(E))).
\134\ Id. at 65 (citing 5 U.S.C. 706(2)(E)); see also Xcel
Energy Servs. Inc. v. FERC, 41 F.4th 548, 560-61 (D.C. Cir. 2022)
(``In making decisions, it is `perfectly legitimate for the
Commission to base its findings on basic economic theory,' including
relying on `generic factual predictions,' as long as the agency
`explains and applies the relevant economic principles in a
reasonable manner.''' (cleaned up) (quoting Sacramento Mun. Util.
Dist. v. FERC, 616 F.3d 520, 531 (D.C. Cir. 2010) (per curiam)));
id. (``Where the `promulgation of generic rate criteria clearly
involves the determination of policy goals or objectives, and the
selection of means to achieve them,' the `courts reviewing an
agency's selection of means are not entitled to insist on empirical
data for every proposition on which the selection depends.'''
(alterations omitted) (quoting Associated Gas Distribs. v. FERC, 824
F.2d 981, 1008 (D.C. Cir. 1987) (Associated Gas Distributors))).
\135\ Id.; see also id. at 76 (``[A]t least in circumstances
where it would be difficult or even impossible to marshal empirical
evidence, the Commission is free to act based upon reasonable
predictions rooted in basic economic principles.'').
\136\ Id. at 65 (quoting Associated Gas Distributors, 824 F.2d
at 1008); see also Cent. Hudson Gas & Elec. Corp. v. FERC, 783 F.3d
92, 109 (2d Cir. 2015) (``FERC may permissibly rely on economic
theory alone to support its conclusions so long as it has applied
the relevant economic principles in a reasonable manner and
adequately explained its reasoning.'').
---------------------------------------------------------------------------

67. The court in reviewing Order No. 1000 determined that the
Commission had satisfied its evidentiary burden under section 206. In
particular, the Commission had identified ``significant changes in the
nation's electric power industry'' that presented ``significant
challenges to the development and cost allocation of interstate
transmission projects'' and highlighted five deficiencies in Order No.
890's transmission planning and cost allocation processes.\137\
Ultimately, the court held that the Commission's determination that the
then-current transmission planning and cost allocation practices were
unjust or unreasonable was based on substantial evidence.\138\
---------------------------------------------------------------------------

\137\ Id. at 66.
\138\ See id.at 67.
---------------------------------------------------------------------------

68. By insisting that the Commission was required to demonstrate
that rates or practices are, in fact, unjust, unreasonable, or unduly
discriminatory or preferential,\139\ SERTP Sponsors and Industrial
Customers overlook principles articulated in South Carolina Public
Service Authority v. FERC, including that the Commission need not
provide empirical evidence for every proposition and may instead rely
upon the threat of unjust and unreasonable rates as a basis for taking
action.\140\ Their argument is predicated on a faulty premise that, in
a rulemaking setting, the Commission must wait for a threat to result
in actual harm, and may not act where it anticipates harmful
consequences.\141\ But in South Carolina Public Service Authority v.
FERC, the court explicitly reached the opposite conclusion, holding
that the Commission satisfied its evidentiary burden under section 206
by relying on the theoretical threat to just and reasonable rates even
though the Commission acknowledged other evidence in the record.\142\
SERTP Sponsors are thus incorrect to suggest that the South Carolina
Public Service Authority v. FERC court allowed the Commission to rely
on generic factual findings only because the record lacked empirical
evidence.\143\
---------------------------------------------------------------------------

\139\ Industrial Customers Rehearing Request at 16-17; SERTP
Sponsors Rehearing Request at 34.
\140\ See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 64-65; see
also id. at 85 (``[W]hether a threat of unjust or unreasonable rates
derives from a practice or the absence thereof, Section 206 empowers
the Commission to address it.''); Nat'l Fuel Gas Supply Corp. v.
FERC, 468 F.3d 831, 844 (D.C. Cir. 2006) (stating that the
Commission could choose to ``rely solely on a theoretical threat'').
\141\ See Industrial Customers Rehearing Request at 16-17.
\142\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 64, 67.
\143\ SERTP Sponsors Rehearing Request at 29.
---------------------------------------------------------------------------

69. South Carolina Public Service Authority v. FERC makes clear
that, because ``substantial evidence'' is not limited to empirical
evidence and may include generic factual predictions, the Commission
could have satisfied its evidentiary burden under the first prong of
FPA section 206 with analysis based on theoretical threats and
predictions regarding such threats based on reasonable economic
propositions within the Commission's expertise.\144\ Here, however, the
Commission established a theoretical threat and, as discussed below,
also cited substantial empirical and other record evidence to support
its finding that the existing regional transmission planning processes
and cost allocation requirements--and the rates that have resulted from
them--are unjust and unreasonable.
---------------------------------------------------------------------------

\144\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 65 (quoting
Associated Gas Distributors, 824 F.2d at 1008).
---------------------------------------------------------------------------

2. The Commission Adequately Supported Its Determination on Step One of
Section 206
a. Requests for Rehearing
70. Designated Retail Regulators argue that, in its analysis under
the first prong of section 206 of the FPA, the Commission made
conclusory, ``blanket claims that are unsupported by evidence.'' \145\
Undersigned States similarly assert that the Commission does not
``point to evidence in the record sufficient to support'' a finding
that existing regional transmission planning and cost allocation
processes are resulting in unjust, unreasonable, unduly discriminatory,
and preferential Commission-jurisdictional rates because ``such
evidence does not exist.'' \146\ Arizona Commission contends that the
evidence in the record used to support Order No. 1920's section 206
finding

[[Page 97188]]

consists largely of comments from special interest groups that will
profit from Order No. 1920 and not evidence specific to the Arizona
Commission.\147\
---------------------------------------------------------------------------

\145\ Designated Retail Regulators Rehearing Request at 20-21.
\146\ Undersigned States Rehearing Request at 21.
\147\ Arizona Commission Rehearing Request at 19.
---------------------------------------------------------------------------

71. Industrial Customers claim that, rather than making specific
findings that existing practices are unjust and unreasonable, the
Commission made ``several generic assertions . . . to reach very broad
conclusions,'' \148\ and ``generically assert[ed]'' that the Commission
satisfies its burden under the first prong of the FPA section 206
inquiry ``based on the record.'' \149\ Industrial Customers assert that
the failure to reach specific findings, supported by substantial
evidence, under the first prong of FPA section 206 renders Order No.
1920 legally infirm.\150\ Industrial Customers claim that the absence
of detailed and substantiated findings makes it ``difficult, if not
impossible'' for transmission providers to file compliance filings
because it will be challenging to develop and propose solutions without
an understanding of the root problem the Commission is trying to
fix.\151\
---------------------------------------------------------------------------

\148\ Industrial Customers Rehearing Request at 16.
\149\ Id. at 13 (alteration omitted).
\150\ Id. at 17.
\151\ Id. at 17-18.
---------------------------------------------------------------------------

b. Commission Determination
72. We continue to find that the Commission made adequate findings
under the first prong of FPA section 206 and marshalled substantial
evidence to support those findings. We are therefore not persuaded by
rehearing parties' arguments to the contrary. Below, we first summarize
the empirical and other record evidence the Commission cited to support
its findings that Commission-jurisdictional regional transmission
planning and cost allocation processes are unjust and unreasonable
because they result in transmission providers failing to identify Long-
Term Transmission Needs, to evaluate and select more efficient or cost-
effective transmission solutions to meet those transmission needs, and
to allocate the costs of transmission facilities selected to meet those
transmission needs in a manner that is at least roughly commensurate
with benefits.\152\ Next, we summarize the Commission's generic factual
predictions. We conclude that this evidence is more than sufficient to
meet the Commission's evidentiary burden under section 206.
---------------------------------------------------------------------------

\152\ Order No. 1920, 187 FERC ] 61,068 at PP 114-122.
---------------------------------------------------------------------------

73. Based on the robust record before it, the Commission concluded
that transmission investment, which has increased nationwide since the
Commission issued Order No. 1000,\153\ is likely to grow substantially
in coming years due to three factors that are driving a growing need
for new transmission infrastructure.\154\ First, reports and comments
in the record demonstrated that longer-term reliability needs are
changing as transmission providers increasingly rely on regional
transmission facilities to ensure operational stability as extreme
weather events become more frequent and variable resources increasingly
enter the resource mix.\155\ Based on evidence in the record, the
Commission concluded that transmission investment is likely to be more
critical, and produce more reliability benefits for customers, as
extreme weather and other system contingencies become more
frequent.\156\ Second, the Commission noted evidence that electric
demand is projected to increase significantly in the coming decades due
to electrification trends and new large loads associated with evolving
industrial and commercial needs.\157\ Again, relying on record
evidence, the Commission found that these increases in aggregate
electricity demand will have significant consequences for the
transmission system.\158\ Third, the Commission found that the resource
mix is changing due to federal, federally-recognized Tribal, state, and
local policies,\159\ customer demands for clean energy,\160\ utility

[[Page 97189]]

emission commitments,\161\ and the changing economics of resources that
comprise the resource mix.\162\
---------------------------------------------------------------------------

\153\ Id. P 92 (referencing a study by the US DOE, which found
that annual investment in transmission first exceeded $5 billion per
year in 2006, doubled to more than $10 billion per year by 2010,
doubled again by 2016, and has been between $18 billion and $22
billion annually since 2014 (quoting US DOE, National Electric
Transmission Congestion Study, at 9-10 (Sept. 2020), <a href="https://www.energy.gov/sites/default/files/2020/10/f79/2020%20Congestion%20Study%20FINAL%2022Sept2020.pdf">https://www.energy.gov/sites/default/files/2020/10/f79/2020%20Congestion%20Study%20FINAL%2022Sept2020.pdf</a>)); id. (citing
estimates from The Brattle Group and Grid Strategies that
transmission developers in the United States invested $20 to $25
billion annually in transmission facilities from 2013 to 2020
(citing Brattle-Grid Strategies Oct. 2021 Report at 2); Brattle Apr.
2019 Competition Report at 2-3 & fig.1)).
\154\ Id. P 93 (citing a number of studies projecting sustained
transmission spending through at least 2050, including one by
Princeton University projecting that high voltage transmission
capacity must expand by 60 percent by 2030 at a capital cost of $330
billion and must triple by 2050 at a capital cost of $2.2 trillion,
as well as another by The Brattle Group projecting $750 billion of
new transmission investment between 2023 and 2050. (citing Eric
Larson et al., Princeton Univ., Net-Zero America: Potential
Pathways, Infrastructure, and Impacts, at 108 (Oct. 2021), <a href="https://netzeroamerica.princeton.edu/the-report">https://netzeroamerica.princeton.edu/the-report</a>; J[uuml]rgen Weiss et al.,
The Brattle Group, The Coming Electrification of the North American
Economy, at iii (2019), <a href="https://wiresgroup.com/wp-content/uploads/2020/05/2019-03-06-Brattle-Group-The-Coming-Electrification-of-the-NA-Economy.pdf">https://wiresgroup.com/wp-content/uploads/2020/05/2019-03-06-Brattle-Group-The-Coming-Electrification-of-the-NA-Economy.pdf</a>)).
\155\ The Commission cited comments and reports demonstrating
that transmission infrastructure can be critical to system
reliability during extreme weather events such as Winter Storm Uri.
Id. P 94 & n.209 (citing ACEG NOPR Initial Comments at 22 n.63
(stating that during Winter Storm Uri, ``[a]n additional 1 gigawatt
(GW) of transmission ties between ERCOT and the Southeastern U.S.
could have saved nearly $1 billion and kept power flowing to
hundreds of thousands of Texans.''); Grid Strategies July 2021
Extreme Weather Report at 7-8 (``The value of transmission for
resilience can be seen in the drastically different outcomes of MISO
and SPP relative to ERCOT during [Winter Storm Uri]. . . . In
contrast to the 13,000 MW MISO was importing during the peak of
[the] event, ERCOT was only able to import about 800 MW of power
throughout the event.'')). The Commission also cited research from
US DOE's Lawrence Berkeley National Laboratory suggesting that 50%
of the value created by alleviating transmission system congestion
occurs during only 5% of the hours during which the transmission
system is used, further evidence of the significant value of
transmission during unanticipated events. Id.P 94 (citing LBNL Aug.
2022 Transmission Value Study at 33).
\156\ Id. P 94 (citing LBNL Aug. 2022 Transmission Value Study
at 33; Clean Energy Associations NOPR Initial Comments at 5).
\157\ Id. P 95 (citing J[uuml]rgen Weiss et al., The Brattle
Group, The Coming Electrification of the North American Economy
(Mar. 2019), <a href="https://wiresgroup.com/wp-content/uploads/2020/05/2019-03-06-Brattle-Group-The-Coming-Electrification-of-the-NA-Economy.pdf">https://wiresgroup.com/wp-content/uploads/2020/05/2019-03-06-Brattle-Group-The-Coming-Electrification-of-the-NA-Economy.pdf</a>); John D. Wilson and Zach Zimmerman, Grid Strategies,
The Era of Flat Power Demand is Over, at 3 (Dec. 2023), <a href="https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf">https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf</a> (``Over [2023], grid planners nearly doubled
the 5-year load growth forecast. The nationwide forecast of
electricity demand shot up from 2.6% to 4.7% growth over the next
five years, as reflected in 2023 FERC [Form 714] filings. Grid
planners forecast peak demand growth of 38 gigawatts (GW) through
2028.''); N. Amer. Elec. Reliability Corp., 2023 Long-Term
Reliability Assessment, at 33 (Dec. 2023), <a href="https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2023.pdf">https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2023.pdf</a>
(``Electricity peak demand and energy growth forecasts over the 10-
year assessment period are higher than at any point in the past
decade. The aggregated assessment area summer peak demand forecast
is expected to rise by 79 GW, and aggregated winter peak demand
forecasts are increasing by nearly 91 GW. Furthermore, the growth
rates of forecasted peak demand and energy have risen sharply since
the 2022 [Long-Term Reliability Assessment], reversing a decades-
long trend of falling or flat growth rates.'')).
\158\ See id. P 95 (citing National Grid NOPR Initial Comments
at 6 (discussing preliminary findings of the ISO-NE 2050
Transmission Study, which show ``significant new transmission will
be needed to reliably serve'' increased future loads assumed in the
study (citing ISO-NE, 2050 Transmission Study (2023), <a href="https://www.iso-ne.com/static-assets/documents/2023/08/2050_study_ma_cetwg_2023_aug_final.pdf">https://www.iso-ne.com/static-assets/documents/2023/08/2050_study_ma_cetwg_2023_aug_final.pdf</a>))).
\159\ Id. P 96 & nn.223-227 (noting numerous jurisdictions that
have adopted decarbonization, electrification, and renewable energy-
related laws and policies); id. (citing ACORE NOPR Initial Comments
at 1-2 & n.2; American Clean Power Ass'n, It's a Big Deal for Job
Growth and for a Clean Energy Future (2022), <a href="https://cleanpower.org/blog/its-a-big-deal-for-job-growth-and-for-a-clean-energy-future">https://cleanpower.org/blog/its-a-big-deal-for-job-growth-and-for-a-clean-energy-future</a>
(``Analysis suggests that the [Inflation Reduction Act] could more
than triple clean energy production in the U.S. and lead to $600
billion in capital investment in clean energy infrastructure.'');
Evergreen Action NOPR Initial Comments at 3-4; NextEra NOPR Reply
Comments at 5); id. P 99.
\160\ Id. P 97 (``Since 2014, for example, `commercial and
industrial customers have contracted for more than 52 GW of clean
energy.''' (alteration omitted) (quoting Advanced Energy Buyers NOPR
Initial Comments at 5)).
\161\ Id. P 97 & nn.233-37 (noting that Exelon, Dominion, AEP,
Southern, Entergy, Duke Energy, NextEra, and Tennessee Valley
Authority have all announced some version of a net-zero carbon
emission plan or commitment).
\162\ Id. P 97 & n.239 (citing ACORE ANOPR NOPR Initial Comments
at app. 1, p. 22 (``Wind and solar energy costs have fallen 70 and
89 percent, respectively, in the last ten years, from 2009 through
2019.'')); Order No. 1920, 187 FERC ] 61,068 at P 99 (``[A]s of
2021, nearly 70% of capacity additions across the country were from
new, utility-scale wind and solar resources[,] . . . [and] those
trends are projected to continue, with over 1,300 GW of wind, solar,
and storage resources in interconnection queues across the country
as of 2021.'' (citing SREA NOPR Initial Comments at 1-2; AEE NOPR
Initial Comments at 12-13; California Commission NOPR Initial
Comments at 65; Renewable Northwest NOPR Initial Comments at 36;
FERC, State of the Markets 2020, at 10, 12 (Mar. 2021); FERC, State
of the Markets 2023, at 4 (Mar. 2024); US DOE Initial Comments at
app. B, PP. 8-9, 26).
---------------------------------------------------------------------------

74. Considering the changing transmission investment landscape, the
Commission then relied on substantial record evidence to find that the
Commission's existing regional transmission planning and cost
allocation requirements are deficient in three ways and therefore fail
to require transmission providers to adequately plan on a sufficiently
long-term, forward-looking, and comprehensive basis.\163\
---------------------------------------------------------------------------

\163\ Id. P 112.
---------------------------------------------------------------------------

75. The first deficiency that the Commission identified is the lack
of a sufficiently long-term assessment of transmission needs.\164\ The
Commission explained that most transmission planning regions do not
plan beyond a 10-year transmission planning horizon,\165\ which is
shorter than the time needed to plan and construct large (e.g., high
voltage or long distance) transmission facilities \166\ or to capture
all of the benefits that regional transmission facilities can
provide.\167\ According to comments and studies in the record, short-
term transmission planning also fails to take advantage of the
potential for efficiencies or economies of scale that regional
transmission facilities can provide and does not create opportunities
to ``right size'' the replacement of aging transmission
facilities.\168\ Based on this evidence, the Commission concluded that
relying solely on shorter-term transmission planning and studies fails
to identify Long-Term Transmission Needs and consequently undervalues
or entirely ignores the benefits of transmission investments to meet
those needs.\169\
---------------------------------------------------------------------------

\164\ Order No. 1920, 187 FERC ] 61,068 at P 115 (citing MISO
ANOPR Reply Comments at 5 (``[G]iven long-term needs of an evolving
system, additional transmission is necessary to reliably serve
customers now and into the future. These challenges require
immediate action and further delay only increases the risk that
system enhancements may not be in place in the timeframe needed.'');
PIOs NOPR Initial Comments at 13 (``[A] short-term outlook under-
forecasts longer-term transmission needs, preventing the development
of more cost-effective transmission facilities, and fails to
consider how the needs of the transmission system are shifting.'');
US DOE ANOPR Initial Comments at 10 (stating that failure to plan
transmission far enough ahead results in ``adverse implications for
system reliability, resilience, consumers' electricity rates, and
the achievement of clean energy goals'')).
\165\ Id. (noting that commenters point out that ISO-NE, SERTP,
and NorthernGrid use a 10-year transmission planning horizon, while
PJM uses a 5-year transmission planning horizon for what it refers
to as its short-term transmission planning process and a 6-to-15-
year transmission planning horizon for what it refers to as its
intermediate-term transmission planning process).
\166\ Id. P 116 (citing AEP NOPR Initial Comments at 11; Nevada
Commission NOPR Initial Comments at 7 n.24; PIOs NOPR Initial
Comments at 14; Renewable Northwest NOPR Initial Comments at 5; SEIA
NOPR Initial Comments at 6). The Commission discussed MISO's MVP
initiative, which took a decade to move from approval by the MISO
Board of Directors in 2011 to completion of most of the projects by
2021, a 10-year period that does not even account for the
significant transmission facility development efforts that occurred
prior to the MISO Board of Directors' approval. Order No. 1920, 187
FERC ] 61,068 at P 116 (citing AESL Consulting, A Transmission
Success Story: The MISO MVP Transmission Portfolio, at 39 (2021)).
\167\ Id. (citing SEIA NOPR Initial Comments at 6; US DOE NOPR
Initial Comments at 33).
\168\ Id. (citing ACORE NOPR Initial Comments at 4 (``The
narrowly focused current approaches [to transmission planning] do
not identify opportunities to take advantage of the large economies
of scale in transmission that come from `up-sizing' reliability
projects to capture additional benefits, such as congestion relief,
reduced transmission losses, and facilitating the more cost-
effective interconnection of the renewable and storage resources
needed to meet public policy goals.'' (quoting Brattle-Grid
Strategies Oct. 2021 Report at 3)); PIOs ANOPR Initial Comments at
10-11; SEIA ANOPR Initial Comments at 14).
\169\ Id. P 117 & n.290 (``Relying on successive small
transmission expansion projects to meet foreseeable long-term needs
may lead to the need for expensive retrofits (at customers' expense)
at a later date. Economies of scale and network economies suggest
that an initial larger-scale buildout will often represent a lower-
cost solution.'' (quoting US DOE ANOPR Initial Comments at 10)); id.
(``While the Tranche 1 Portfolio is the result of MISO's long-range
planning process being executed for only the second time, the rapid
change within the industry will require that it become a more
routine aspect of the MISO planning process going forward.''
(quoting Midcontinent Independent System Operator, MTEP21 Report
Addendum: Long Range Transmission Planning Tranche 1 Portfolio
Report, at 6 (July 28, 2022), <a href="https://cdn.misoenergy.org/MTEP21%20Addendum-LRTP%20Tranche%201%20Report%20with%20Executive%20Summary625790.pdf">https://cdn.misoenergy.org/MTEP21%20Addendum-LRTP%20Tranche%201%20Report%20with%20Executive%20Summary625790.pdf</a>)).

---------------------------------------------------------------------------

76. The second deficiency that the Commission identified is that
transmission providers are not required to account adequately on a
forward-looking basis for known determinants of Long-Term Transmission
Needs or to account for such known determinants in a manner that
ensures the identification and evaluation of more efficient or cost-
effective regional transmission facilities to meet Long-Term
Transmission Needs.\170\ The Commission highlighted concrete evidence
of this deficiency, including that some regional transmission planning
processes ignore factors relevant to identifying transmission
needs,\171\ while others fail to account for factors that will shape
future load.\172\ The Commission added that, while forecasting
necessarily involves uncertainty, the record demonstrates that there
are numerous factors that increasingly shape Long-Term Transmission
Needs, that are known and identifiable, and have reasonably predictable
effects, especially in the aggregate.\173\ These include, for example,
reliability needs driven by the impact of extreme weather,\174\ trends
in future generation additions and retirements,\175\ load growth,\176\
federal, federally-recognized Tribal, state, and local laws and

[[Page 97190]]

regulations,\177\ and utility goals.\178\ The Commission explained,
however, that existing regional transmission planning processes
frequently undervalue or do not consider some or all of these factors,
and the Commission's existing regional transmission planning
requirements do not ensure otherwise.\179\ The Commission found that
the failure to adequately consider such factors delays planning for the
transmission system's changing operational needs until shortly before
those transmission needs manifest, resulting in transmission planning
processes that are piecemeal and fail to take advantage of economies of
scale in transmission investment or opportunities to address multiple
transmission needs over multiple time horizons.\180\
---------------------------------------------------------------------------

\170\ Id. P 118.
\171\ Id. (discussing record evidence that some existing
regional transmission planning processes ignore trends in future
generation, the impact of extreme weather, state laws, and utility
goals) (citing Acadia Center and CLF NOPR Initial Comments at 1;
GridLab NOPR Initial Comments at 4-5; Brattle-Grid Strategies Oct.
2021 Report at 36; Grid Strategies July 2021 Extreme Weather Report
at 5; SPP Market Monitor ANOPR Initial Comments at 3 & n.5;
Renewable Northwest NOPR Initial Comments at 4, 8, 12; SREA NOPR
Initial Comments at 25)).
\172\ Id. (discussing record evidence that existing regional
transmission planning processes fail to account for factors shaping
electrification trends like electric vehicles and data centers
(citing AEE ANOPR Initial Comments at 18; Clean Energy Buyers NOPR
Initial Comments at 7-8; National Grid NOPR Initial Comments at 8;
AEE ANOPR Initial Comments at 18; Rocky Mountain Institute NOPR
Supplemental Comments at 1; WIRES NOPR Supplemental Comments at
attach. 1, p. 36)).
\173\ Id. P 119.
\174\ Id. P 120 (citing ACEG NOPR Initial Comments at 63; NERC
NOPR Initial Comments at 6; Evergreen Action NOPR Initial Comments
at 2 (``[A]dditional transmission built under improved planning
procedures would [ ] create large reliability benefits. With
increasing extreme weather events due to climate change--including
wildfires, winter storms, hurricanes, and more--additional
transmission infrastructure and grid improvements are increasingly
necessary for resilience purposes.''); WE ACT NOPR Initial Comments
at 2).
\175\ Id. P 120 (citing Pattern Energy NOPR Initial Comments at
26; SEIA NOPR Initial Comments at 9).
\176\ Id. (citing Northwest and Intermountain NOPR Initial
Comments at 5 n.12; John Wilson and Zach Zimmerman, The Era of Flat
Demand is Over, Grid Strategies, at 3, 6 (Dec. 2023), <a href="https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf">https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf</a> (noting the 5-year load growth forecast has
nearly doubled from 2.6% to 4.7% and ``transmission investments need
to increase just to keep up with demand'')).
\177\ Id. PP 119, 120 (citing Acadia Center and CLF NOPR Initial
Comments at 8; AEE NOPR Initial Comments at 10 (noting that ``[a]s
of September 2020, 38 states and the District of Columbia had
adopted renewable portfolio standards, and 21 states (plus the
District of Columbia and Puerto Rico)--representing more than half
of the U.S. population--include a target of 100% renewable energy by
2050 or sooner. Many of these requirements have been enacted in
statute and are binding on utilities and retail energy
providers.'')).
\178\ Id. P 120 (citing Renewable Northwest NOPR Initial
Comments at 6; SREA NOPR Initial Comments at 41-46).
\179\ Id.
\180\ Id. P 121 (PIOs NOPR Initial Comments at 10-11; Renewable
Northwest NOPR Initial Comments at 8).
---------------------------------------------------------------------------

77. The Commission explained that the third deficiency is that
transmission providers are not required to adequately consider the
broader set of benefits that accrue to regional transmission facilities
planned to meet Long-Term Transmission Needs.\181\ Relying on record
evidence, the Commission found that many current regional transmission
planning and cost allocation processes consider only a narrow subset of
benefits that regional transmission facilities provide \182\ or fail
entirely to consider cost savings associated with certain transmission
facilities.\183\
---------------------------------------------------------------------------

\181\ Id. P 122 (citation omitted).
\182\ Id. (citing Brattle-Grid Strategies Oct. 2021 Report at 2
(``[M]ost of [the nation's recent transmission] investment addresses
individual local asset replacement needs, near-term reliability
compliance, and generation-interconnection-related reliability needs
without considering a comprehensive set of multiple regional needs
and system-wide benefits.''); Massachusetts Attorney General ANOPR
Initial Comments at 22; PIOs NOPR Initial Comments at 10-11).
\183\ Id. (citing SREA NOPR Initial Comments at 24 (``SERTP
participants explained that SERTP is unable to conduct adjusted
production cost savings, because none of the utilities involved in
SERTP have the software capable of doing so. In effect, the
`Economic Planning Studies' only evaluate the costs of potential
upgrades to the system, but none of the benefits.'')).
---------------------------------------------------------------------------

78. These deficiencies have concrete consequences that illustrate
the deleterious effects of inadequate regional transmission planning
processes. For instance, the Commission cited evidence showing that
investment in regional transmission facilities has declined in some
regions as compared to the investment that was occurring prior to Order
No. 1000 and that, across all non-RTO/ISO regions, not a single
transmission facility has been selected since implementation of Order
No. 1000.\184\ Further, the Commission noted that within some RTO/ISO
regional transmission planning processes, even where investments
through the regional transmission planning process occur, much of that
investment has been in transmission projects that only address
immediate reliability needs.\185\
---------------------------------------------------------------------------

\184\ Id. P 101 (citing Rob Gramlich and Jay Caspary, Americans
for a Clean Energy Grid, Planning for the Future: FERC's Opportunity
to Spur More Cost-Effective Transmission Infrastructure, at 25 & fi.
8 (Jan. 2021), <a href="https://cleanenergygrid.org/wp-content/uploads/2021/01/ACEG_Planning-for-the-Future1.pdf">https://cleanenergygrid.org/wp-content/uploads/2021/01/ACEG_Planning-for-the-Future1.pdf</a>; ACORE ANOPR Initial Comments
at 4 (``Despite the potential benefits, regional transmission
investment has not increased and in some regions even has declined
over the past decade.'') (citation omitted); State Agencies NOPR
Initial Comments at 23 (``Regionally planned projects have [ ]
declined in RTOs/ISOs . . . .'' (citing John C. Gravan & Rob
Gramlich, NRRI Insights, A New State-Federal Cooperation Agenda for
Regional and Interregional Transmission, at 2 (Sept. 2021), <a href="https://pubs.naruc.org/pub/FF5D0E68-1866-DAAC-99FB-A31B360DC685">https://pubs.naruc.org/pub/FF5D0E68-1866-DAAC-99FB-A31B360DC685</a>); FERC,
Staff Report, 2017 Transmission Metrics, at 19 (Oct. 6, 2017),
<a href="https://www.ferc.gov/sites/default/files/2020-05/transmission-investment-metrics.pdf">https://www.ferc.gov/sites/default/files/2020-05/transmission-investment-metrics.pdf</a>).
\185\ Id. P 101 (citing Southwestern Power Group NOPR Initial
Comments at 15; PIOs ANOPR Initial Comments at 93 & n.276; Ari
Peskoe, Is the Utility Syndicate Forever?, 42 Energy L.J. 1, 56-57
(2021)).
---------------------------------------------------------------------------

79. At the same time, the Commission found, significant expansion
of the transmission system is occurring through one-off, piecemeal,
interconnection-related network upgrades constructed in response to
individual generator interconnection requests.\186\ The Commission
noted the shortcomings of relying on the generator interconnection
process for addressing transmission needs, including that the generator
interconnection process does not look at time horizons beyond the
specific interconnection request(s) being studied, comprehensively
assess any transmission needs beyond those created by the specific
interconnection request(s), or achieve the economies of scale in
transmission investment that long-term, forward-looking, and more
comprehensive regional transmission planning processes can
provide.\187\
---------------------------------------------------------------------------

\186\ Id. P 104 (citing Pine Gate NOPR Initial Comments at 6, 8-
10; PIOs NOPR Initial Comments at 9).
\187\ Id. P 106 (citing Anbaric NOPR Initial Comments at 5;
Clean Energy Associations NOPR Initial Comments at 15; Exelon NOPR
Initial Comments at 5; Pine Gate NOPR Initial Comments at 9; PIOs
NOPR Initial Comments at 10; SEIA NOPR Initial Comments at 2;
Southeast PIOs NOPR Initial Comments at 37).
---------------------------------------------------------------------------

80. The Commission also cited evidence that, since the issuance of
Order No. 1000, the majority of investment in transmission facilities
has been in local transmission facilities, a trend that is accelerating
across multiple regions.\188\ The Commission pointed out that in RTO/
ISO regions one half of the nearly $70 billion in aggregate
transmission investments by Commission-jurisdictional transmission
providers between 2013 and 2017 was approved outside of regional
transmission planning processes.\189\
---------------------------------------------------------------------------

\188\ Id. P 109 (citing NOPR, 179 FERC ] 61,028 at PP 39-40
(2022)).
\189\ Id. (citing PIOs NOPR Initial Comments at 9).
---------------------------------------------------------------------------

81. Relying on the foregoing record of empirical and other record
evidence, the Commission found that existing regional transmission
planning requirements are deficient and fail to require transmission
providers to adequately plan on a sufficiently long-term, forward-
looking, and comprehensive basis.\190\ Substantial facts in the record
also supported the Commission's finding that the absence of
sufficiently long-term, forward-looking, and comprehensive regional
transmission planning processes is resulting in piecemeal transmission
expansion to address relatively near-term transmission needs,\191\ a
trend that

[[Page 97191]]

reflects that existing regional transmission planning requirements are
leading to relatively inefficient or less cost-effective results.
---------------------------------------------------------------------------

\190\ Id. P 127 (citing New Jersey Commission NOPR Initial
Comments at 8 (explaining that, outside of limited circumstances,
PJM, Florida, ISO-NE, Southeastern Regional, South Carolina
Regional, WestConnect, NorthernGrid, NYISO, SPP, and CAISO do not
conduct multi-driver or portfolio transmission planning, which has
required ratepayers to pay for tens of billions of dollars in
unnecessary transmission projects); NextEra ANOPR Initial Comments
at 71 (``While there are examples of longer-term planning currently
being utilized by some regions, such as MISO's annual 15-year
Futures assessment or SPP's 20-year Integrated Transmission Plan run
every five years, there is no standard as to what time horizon long-
term planning must study, nor how often this planning should be
done. Further, no standards or guidelines exist as to what should be
included in such long-term planning to ensure that customers are
charged just and reasonable rates for the most efficient and cost-
effective investments given the most comprehensive and up-to-date
information available.''); Western PIOs NOPR Initial Comments at 4-
28 (arguing that in the Western United States transmission planning
outside of CAISO is not developed and is ineffective); Brattle-Grid
Strategies Oct. 2021 Report at 13-15 & tbl. 2 (documenting
inconsistent ``use of proactive, scenario-based, multi-value
processes'' across various planning authorities, including NYISO,
CAISO, MISO, PJM, ISO-NE, Florida, Southeast Regional, and South
Carolina'')).
\191\ Id. PP 127-128 (citing LS Power NOPR Initial Comments at
46-50; PIOs NOPR Initial Comments at 9-10 (explaining that about
half of the approximately $70 billion in aggregate transmission
investment by Commission-jurisdictional transmission owners in RTO/
ISO regions was approved outside of regional transmission planning
processes)).
---------------------------------------------------------------------------

82. Moreover, as courts have made clear, the Commission was also
entitled to base its findings regarding the need for reform on generic
factual predictions.\192\ In Associated Gas Distributors, the court
explained that the Commission is permitted to act on predictions that
are unsupported by record evidence when such predictions are ``at least
likely enough to be within the Commission's authority'' and based on
reasonable behavioral or economic assumptions.\193\ Indeed,
``[a]gencies do not need to conduct experiments in order to rely on the
prediction that an unsupported stone will fall.'' \194\ Thus, in South
Carolina Public Service Authority v. FERC, the court held that the
Commission satisfied its burden on the first prong of FPA section 206
analysis where ``[t]he threat to just and reasonable rates arose, in
the Commission's judgment, from existing planning and cost allocation
practices that could thwart the identification of more efficient and
cost-effective transmission solutions.'' \195\
---------------------------------------------------------------------------

\192\ See Citadel FNGE Ltd. v. FERC, 77 F.4th 842, 858 (D.C.
Cir. 2023); Xcel Energy Servs. Inc. v. FERC, 41 F.4th at 560-61;
Associated Gas Distributors, 824 F.2d at 1008.
\193\ Associated Gas Distributors, 824 F.2d at 1008 (discussing
Wis. Gas Co. v. FERC, 770 F.2d 1144 (D.C. Cir. 1985); Elec.
Consumers Res. Council v. FERC, 747 F.2d 1511 (D.C. Cir. 1984)).
\194\ Associated Gas Distributors, 824 F.2d at 1008.
\195\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 66 (emphasis
added).
---------------------------------------------------------------------------

83. Here, relying on its expertise and knowledge of the industry,
the Commission made several predictions that were fully consistent with
the grounds for action that courts have accepted in the past, including
in Associated Gas Distributors and South Carolina Public Service
Authority v. FERC. First, the Commission made such predictions when it
explained how observed deficiencies in existing regional transmission
planning and cost allocation requirements are resulting in deleterious
consequences and ultimately rendering rates unjust and
unreasonable.\196\ Next, the Commission predicted that existing cost
allocation requirements--which were designed and established in the
context of existing shorter-term Order No. 1000 regional transmission
planning processes and lack a dedicated process through which states
have an opportunity to participate in the development of regional cost
allocation methods--are insufficient to appropriately allocate costs
associated in the context of the Long-Term Regional Transmission
Planning requirements established in Order No. 1920.\197\ Finally, the
Commission anticipated that, absent Order No. 1920's reforms, regional
transmission planning processes will continue to fail to identify,
evaluate, and select regional transmission facilities that can more
efficiently or cost-effectively meet Long-Term Transmission Needs,
requiring customers to pay for relatively inefficient or less cost-
effective transmission development.\198\ Such predictions are precisely
the type of evidence that courts have permitted the Commission to use
as the basis for section 206 rulemaking.
---------------------------------------------------------------------------

\196\ See Order No. 1920, 187 FERC ] 61,068 at PP 117, 121, 123.
\197\ Id. P 126.
\198\ Id. P 113.
---------------------------------------------------------------------------

84. Given both the empirical and other record evidence and the
generic factual predictions on which the Commission relied, we are
unpersuaded by Designated Retail Regulators' and Undersigned States'
arguments \199\ that the Commission's determination under the first
prong of FPA section 206 was unsupported by substantial evidence.
Indeed, the Commission's findings regarding ongoing changes to the
nation's electric power industry and deficiencies in existing
transmission planning and cost allocation processes, along with the
evidence supporting those findings, are similar to, or the same as, the
type of findings and evidence that formed the basis for action in Order
No. 1000 and that the South Carolina Public Service Authority v. FERC
court determined satisfied the Commission's burden under the first
prong of FPA section 206.\200\
---------------------------------------------------------------------------

\199\ Designated Retail Regulators Rehearing Request at 20-21;
Undersigned States Rehearing Request at 21.
\200\ See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 65-67; see
also Order No. 1000, 136 FERC ] 61,051 at PP 44-47, 78-83.
---------------------------------------------------------------------------

85. For these same reasons, we disagree with Arizona Commission's
unsubstantiated contention that the evidence in the record on which the
Commission relied to satisfy its section 206 burden consists largely of
comments from special interest groups that will profit from the final
rule.\201\ The Commission's findings were based on an extensive record
consisting of over 30,000 pages of comments from nearly 200
stakeholders, including industry participants such as transmission
providers,\202\ generation developers,\203\ trade associations,\204\
customer groups,\205\ and governmental entities.\206\ The Commission's
findings also relied upon many reports and studies in the record and
the Commission's expert predictions.\207\ Arizona Commission disregards
this substantial evidence.
---------------------------------------------------------------------------

\201\ See Arizona Commission Rehearing Request at 19.
\202\ See, e.g., Order No. 1920, 187 FERC ] 61,068 at P 115
(citing PJM NOPR Initial Comments; MISO ANOPR Reply Comments; ITC
NOPR Initial Comments); id. P 116 (citing AEP NOPR Initial
Comments); id. P 118 (citing National Grid NOPR Initial Comments);
id. P 136 (citing Exelon NOPR Initial Comments.
\203\ See, e.g., id. P 120 (citing Pattern Energy NOPR Initial
Comments); id. P 127 (citing NextEra ANOPR Initial Comments; LS
Power NOPR Initial Comments).
\204\ See, e.g., id. P 116 (citing SEIA ANOPR Initial Comments);
id. P 137 (citing EEI NOPR Initial Comments).
\205\ See, e.g., id. P 118 (citing Clean Energy Buyers NOPR
Initial Comments; ELCON NOPR Initial Comments); id. PP 119-120
(citing Industrial Customers NOPR Initial Comments).
\206\ See, e.g., id. P 115 (citing Massachusetts Attorney
General NOPR Initial Comments; US DOE ANOPR Initial Comments); id. P
116 (citing Nevada Commission NOPR Initial Comments); id. P 120
(citing NERC NOPR Initial Comments); id. PP 121, 127, 135 (citing
New Jersey Commission NOPR Initial Comments); id. P 128 (citing
Michigan State Entities NOPR Initial Comments).
\207\ See, e.g., id. P 92 (citing US DOE, National Electric
Transmission Congestion Study, (Sept. 2020), <a href="https://www.energy.gov/sites/default/files/2020/10/f79/2020%20Congestion%20Study%20FINAL%2022Sept2020.pdf">https://www.energy.gov/sites/default/files/2020/10/f79/2020%20Congestion%20Study%20FINAL%2022Sept2020.pdf</a>); Brattle-Grid
Strategies Oct. 2021 Report); id. P 101 (citing ACEG Jan. 2021
Planning Report; John C. Gravan & Rob Gramlich, NRRI Insights, A New
State-Federal Cooperation Agenda for Regional and Interregional
Transmission (Sept. 2021), <a href="https://pubs.naruc.org/pub/FF5D0E68-1866-DAAC-99FB-A31B360DC685">https://pubs.naruc.org/pub/FF5D0E68-1866-DAAC-99FB-A31B360DC685</a>); FERC, Staff Report, 2017 Transmission
Metrics (Oct. 6, 2017), <a href="https://www.ferc.gov/sites/default/files/2020-05/transmission-investment-metrics.pdf">https://www.ferc.gov/sites/default/files/2020-05/transmission-investment-metrics.pdf</a>)); id. P 102 (citing
Midcontinent Indep. Sys. Operator, RGOS: Regional Generation Outlet
Study (Nov. 2020)); MTEP2017 Review); id. P 116 (citing AESL
Consulting, A Transmission Success Story: The MISO MVP Transmission
Portfolio (2021); Midcontinent Independent System Operator, MTEP21
Report Addendum: Long Range Transmission Planning Tranche 1
Portfolio Report (July 28, 2022), <a href="https://cdn.misoenergy.org/MTEP21%20Addendum-LRTP%20Tranche%201%20Report%20with%20Executive%20Summary625790.pdf">https://cdn.misoenergy.org/MTEP21%20Addendum-LRTP%20Tranche%201%20Report%20with%20Executive%20Summary625790.pdf</a>);
id. P 118 (citing Grid Strategies July 2021 Extreme Weather Report;
Regulatory Assistance Project, FERC Transmission: The Highest-Yield
Reforms (July 2022), <a href="https://www.raponline.org/wp-content/uploads/2023/09/rap-littell-prause-weston-FERC-transmission-highest-yield-reforms-2022-july.pdf">https://www.raponline.org/wp-content/uploads/2023/09/rap-littell-prause-weston-FERC-transmission-highest-yield-reforms-2022-july.pdf</a>; Rob Gramlich, et al., Fostering Collaboration
Would Help Build Needed Transmission (Feb. 2024)); id. P 120 (citing
BPA, TSR Study and Expansion Process (Dec. 7, 2021), <a href="https://www.bpa.gov/-/media/Aep/transmission/atc-methodology/2021-22tsep-overview.pdf">https://www.bpa.gov/-/media/Aep/transmission/atc-methodology/2021-22tsep-overview.pdf</a>; John Wilson and Zach Zimmerman, The Era of Flat Demand
is Over, Grid Strategies (Dec. 2023), <a href="https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf">https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf</a>).
---------------------------------------------------------------------------

86. We are also unpersuaded by Industrial Customers' assertion that
the absence of substantial evidence makes it ``difficult if not
impossible'' for transmission providers to submit compliance filings
because it will be challenging to develop and propose solutions without
an understanding of

[[Page 97192]]

the root problem that the Commission is trying to fix.\208\ As
discussed above, the Commission made detailed findings addressing the
deficiencies of existing transmission planning and cost allocation
requirements and the processes related to those requirements.\209\
Moreover, in developing their compliance filings, transmission
providers will rely on the Commission's specific identification of the
new requirements established under the second prong of FPA section 206,
not on the deficiencies in existing transmission planning and cost
allocation processes and requirements identified under the first prong
of the Commission's section 206 analysis. We are therefore not
persuaded that Order No. 1920's findings lack the requisite specificity
to enable transmission providers to make compliance filings.
---------------------------------------------------------------------------

\208\ Industrial Customers Rehearing Request at 17.
\209\ See supra Unjust, Unreasonable, and Unduly Discriminatory
or Preferential Commission-Jurisdictional Transmission Planning and
Cost Allocation Processes section.
---------------------------------------------------------------------------

3. The Commission Identified Deficiencies That Exist Beyond Isolated
Pockets
a. Requests for Rehearing
87. Alabama Commission and SERTP Sponsors assert that Order No.
1920's generalized observations criticizing the effectiveness of
existing transmission planning processes are based on examples from
other parts of the country and do not apply to, or address evidence
regarding, Alabama and the Southeast.\210\ According to Alabama
Commission, Alabama and SERTP already achieve many, if not most, of the
goals of the final rule.\211\ Alabama Commission contends that Alabama
has a resource planning process that accounts for needed transmission
buildout to maintain reliable service and proactively plans its
transmission system to maintain deliveries from existing resources and
accommodate generation additions.\212\ Alabama Commission adds that the
SERTP process ensures that there are no regional transmission solutions
that are more efficient and cost-effective than the solutions
identified through the underlying state-jurisdictional process.\213\
---------------------------------------------------------------------------

\210\ Alabama Commission Rehearing Request at 3; SERTP Sponsors
Rehearing Request at 28-29, 31.
\211\ Alabama Commission Rehearing Request at 3.
\212\ Id. at 3-4.
\213\ Id. at 4.
---------------------------------------------------------------------------

88. SERTP Sponsors allege that the SERTP process has been highly
efficient, and that its integrated resource plan and request for
proposal-driven transmission planning and other similar processes
effectively address the Commission's concerns regarding siloed
planning, lack of scenario planning, and local versus regional project
focus. SERTP Sponsors argue that, while the court in South Carolina
Public Service Authority v. FERC allowed the Commission to support a
rulemaking by finding a systemic problem not limited to isolated
pockets, given SERTP's scale, scope, and that it does not suffer from
the theoretical deficiencies identified in Order No. 1920, the
Commission has not satisfied the standard set out in South Carolina
Public Service Authority v. FERC.\214\ SERTP Sponsors claim that they
ensure a comprehensive and proactive approach to transmission system
development by incorporating various factors into their planning,
including reliability, economic growth, environmental attributes, and
public policy requirements.\215\ According to SERTP Sponsors, the
alternative projects identified through its regional transmission
planning analyses have not proved to be more efficient or cost-
effective than those identified through SERTP's integrated resource
plan and request for proposal-driven transmission planning.\216\
---------------------------------------------------------------------------

\214\ SERTP Sponsors Rehearing Request at 34 n.100.
\215\ Id. at 32.
\216\ Id. at 33.
---------------------------------------------------------------------------

89. SERTP Sponsors also disagree with Order No. 1920's finding that
nationwide transmission grid expansion is primarily driven through the
generator interconnection process, because in the Southeast,
transmission expansion is driven by the underlying integrated resource
plan/request for proposal and other similar planning processes.\217\
SERTP Sponsors state that Southern Companies added $5.3 billion in
transmission capital expenditures from 2017-2021, with only $57 million
(just over 1%) related to generation interconnection.\218\ Similarly,
SERTP Sponsors explain that Duke Energy added an estimated $503 million
of transmission facilities to its transmission plan, targeted at
unlocking areas of its transmission system that were repeatedly
identified in past generator interconnection studies as constrained to
more timely and cost-effectively integrate needed generation
resources.\219\ SERTP Sponsors contend that Order No. 1920 ignored this
evidence.\220\
---------------------------------------------------------------------------

\217\ Id. at 36.
\218\ Id. at 36-37.
\219\ Id. at 37 (citing Duke NOPR Initial Comments at 8-9).
\220\ Id. (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut.
Auto Ins. Co., 463 U.S. 29, 43 (1983) (State Farm) (internal
citation omitted)).
---------------------------------------------------------------------------

90. Designated Retail Regulators and Undersigned States aver that,
contrary to the Commission's claims, the evidence in the record
demonstrates that a substantial portion of transmission providers have
been and are engaging in long-term planning.\221\ For example,
Designated Retail Regulators and Undersigned States point to MISO's
Multi-Value Projects (MVP) process, which they claim includes most of
the requirements of Order No. 1920.\222\ Designated Retail Regulators
and Undersigned States also contend that CAISO, NYISO, Southern
Companies, and other transmission planners also have sufficient long-
term planning and that SPP indicated in its NOPR comments that its OATT
requires planning processes that are sufficient to meet the intent and
desired outcomes of Order No. 1920.\223\
---------------------------------------------------------------------------

\221\ Designated Retail Regulators Rehearing Request at 21-22;
Undersigned States Rehearing Request at 22-23.
\222\ Designated Retail Regulators Rehearing Request at 21-22;
Undersigned States Rehearing Request at 22.
\223\ Designated Retail Regulators Rehearing Request at 22
(citing Order No. 1920, 187 FERC ] 61,068 (Christie, Comm'r,
dissenting, at PP 65-66); SPP NOPR Initial Comments at 3);
Undersigned States Rehearing Request at 22-23 (citing Order No.
1920, 187 FERC ] 61,068 (Christie, Comm'r, dissenting, at PP 65-66);
SPP NOPR Initial Comments at 3).
---------------------------------------------------------------------------

b. Commission Determination
91. We disagree with rehearing parties who argue that the
Commission did not satisfy its burden under the first prong of FPA
section 206 because certain transmission providers may already engage
in some form of long-term transmission planning.\224\ We are satisfied
that the Commission identified deficiencies in existing regional
transmission planning and cost allocation processes that exist beyond
isolated pockets.
---------------------------------------------------------------------------

\224\ Alabama Commission at 3-4; Designated Retail Regulators
Rehearing Request at 21-22; Undersigned States Rehearing Request at
22-23; SERTP Sponsors Rehearing Request at 28-37.
---------------------------------------------------------------------------

92. First, ``[t]hat some commenters may engage in sufficient
transmission planning processes `is as unastonishing as it is
irrelevant,' '' where, as here, the deficiencies identified by the
Commission and supported by substantial evidence reach well beyond
``isolated pockets.'' \225\ Record evidence demonstrates that
transmission planning regions across the country--including ISO-NE,
SERTP, and NorthernGrid--do not plan beyond a 10-

[[Page 97193]]

year transmission planning horizon,\226\ which is problematic for
several reasons, including that regional transmission facilities often
have lead times that exceed 10 years \227\ and that a 10-year
transmission planning horizon is much too short to capture all of the
benefits that regional transmission facilities can provide.\228\
Further, comments and reports in the record establish that transmission
planning processes in several regions do not account for known
determinants of Long-Term Transmission Needs such as trends in future
generation \229\ and extreme weather.\230\ The record demonstrates that
many regional transmission planning processes also fail to adequately
consider the range of benefits of regional transmission facilities
planned to meet Long-Term Transmission Needs.\231\ And the Commission
cited evidence showing that, except in limited cases, transmission
providers in many regions do not conduct multi-driver or portfolio
transmission planning, which has led to ratepayers paying for
relatively inefficient or less cost-effective transmission
projects.\232\
---------------------------------------------------------------------------

\225\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 67 (first
quoting Wis. Gas Co. v. FERC, 770 F.2d at 1157; and then quoting
Associated Gas Distributors, 824 F.2d at 1019).
\226\ Order No. 1920, 187 FERC ] 61,068 at P 115 & n.282 (citing
ITC NOPR Initial Comments at 9 (referring to the ``broad use of a
10-year planning horizon in the existing transmission planning
processes of many major planning regions'')).
\227\ Id. P 116 (citing AEP NOPR Initial Comments at 11; Nevada
Commission NOPR Initial Comments at 7 n.24; PIOs NOPR Initial
Comments at 14; Renewable Northwest NOPR Initial Comments at 5; SEIA
NOPR Initial Comments at 6). The Commission discussed MISO's MVP
initiative, which took a decade to move from approval by the MISO
Board of Directors in 2011 to completion of most of the projects by
2021, a 10-year period that does not even account for the
significant transmission facility development efforts that occurred
prior to the MISO Board of Directors' approval. Order No. 1920, 187
FERC ] 61,068 at P 116 (citing AESL Consulting, A Transmission
Success Story: The MISO MVP Transmission Portfolio, at 39 (2021)).
\228\ Id. (citing SEIA NOPR Initial Comments at 6; US DOE NOPR
Initial Comments at 33).
\229\ Id. P 118 & n.294.
\230\ Id. P 118 & n.293.
\231\ Id. P 122 & nn.309-12 (citing Massachusetts Attorney
General ANOPR Initial Comments at 22 (``New England's siloed
approach to transmission planning inhibits identification of multi-
value solutions.''); PIOs Initial Comments at 10 (``[T]he vast
majority of current transmission projects are focused solely either
on network reliability or connecting the next generator in the
interconnection queue and ignore any other potential benefits,
possible economies of scale or other efficiencies that might occur
by considering multiple future needs . . . . [M]ultiple quantifiable
benefits to transmission . . . are being ignored in the transmission
planning process.''); SREA Initial Comments at 24 (``SERTP
participants explained that SERTP is unable to conduct adjusted
production cost savings, because none of the utilities involved in
SERTP have the software capable of doing so. In effect, the
`Economic Planning Studies' only evaluate the costs of potential
upgrades to the system, but none of the benefits.'').
\232\ Id. P 127 & n.318 (citing New Jersey Commission NOPR
Initial Comments at 8 (explaining that, outside of limited
circumstances, PJM, Florida, ISO-NE, Southeastern Regional, South
Carolina Regional, WestConnect, NorthernGrid, NYISO, SPP, and CAISO
do not conduct multi-driver or portfolio transmission planning,
which has required ratepayers to pay for tens of billions of dollars
in unnecessary transmission projects); NextEra ANOPR Initial
Comments at 71 (``While there are examples of longer-term planning
currently being utilized by some regions, such as MISO's annual 15-
year Futures assessment or SPP's 20-year Integrated Transmission
Plan run every five years, there is no standard as to what time
horizon long-term planning must study, nor how often this planning
should be done. Further, no standards or guidelines exist as to what
should be included in such long-term planning to ensure that
customers are charged just and reasonable rates for the most
efficient and cost-effective investments given the most
comprehensive and up-to-date information available.''); Western PIOs
NOPR Initial Comments at 4-28 (arguing that in the Western United
States transmission planning outside of CAISO is not developed and
is ineffective); Brattle-Grid Strategies Oct. 2021 Report at 13-15 &
tbl. 2 (documenting inconsistent ``use of proactive, scenario-based,
multi-value processes'' across various planning authorities,
including NYISO, CAISO, MISO, PJM, ISO-NE, Florida, Southeast
Regional, and South Carolina'')).
---------------------------------------------------------------------------

93. We are unpersuaded by SERTP Sponsors' argument that the
Commission failed to satisfy its burden under the first prong of FPA
section 206 analysis because it ignored evidence that transmission
expansion in SERTP is driven by ``planning processes that proactively
anticipate[ ] a changing resource mix and the use of firm `physical'
transmission service--and not by interconnection requests.'' \233\ As
Order No. 1920 makes clear, the deficiencies of existing transmission
planning and cost allocation processes result in various detrimental
outcomes reflecting that existing requirements are unjust and
unreasonable. Over-reliance on generator interconnection requests to
expand the transmission system is just one such example. The Commission
noted other existing deficiencies as well, including that the majority
of investments in transmission facilities are occurring through local
transmission planning processes and in-kind replacements, which focus
on the needs of individual transmission provider footprints and miss
the potential for more efficient or cost-effective regional
transmission facilities.\234\
---------------------------------------------------------------------------

\233\ SERTP Sponsors Rehearing Request at 36.
\234\ Order No. 1920, 187 FERC ] 61,068 at P 109-111.
---------------------------------------------------------------------------

94. Moreover, although SERTP Sponsors assert that SERTP ``does not
suffer from [Order No. 1920's] theoretical deficiencies,'' \235\ and
Alabama Commission asserts that that the Commission ignored evidence
that transmission planning in SERTP ``achieves many, if not most, of
the goals in the Final Rule,'' \236\ the Commission, in fact, cited
evidence that SERTP's transmission planning process suffers from each
of the three deficiencies that the Commission identified in Order No.
1920. Record evidence demonstrates that SERTP's regional transmission
planning and cost allocation process (1) does not perform a
sufficiently long-term assessment of transmission needs; \237\ (2) does
not adequately account on a forward-looking basis for known
determinants of Long-Term Transmission Needs; \238\ and (3) fails to
adequately consider the broader set of benefits of regional
transmission facilities planned to meet Long-Term Transmission
Needs.\239\
---------------------------------------------------------------------------

\235\ SERTP Sponsors Rehearing Request at 34 & n.100.
\236\ Alabama Commission Rehearing Request at 3.
\237\ Order No. 1920, 187 FERC ] 61,068 at P 115 (noting that
SERTP uses a 10-year transmission planning horizon (citing Southeast
PIOs NOPR Initial Comments at 12)).
\238\ Id. P 118 n.294 (explaining that in 2021, SERTP stated
that because it did not receive any proposals for transmission needs
driven by Public Policy Requirements for the 2021 planning cycle, it
identified no possible transmission needs driven by Public Policy
Requirements for further evaluation of potential transmission
solutions in that planning cycle (citing SREA NOPR Initial Comment
at 25)).
\239\ Id. P 122 n.312 (``SERTP participants explained that SERTP
is unable to conduct adjusted production cost savings, because none
of the utilities involved in SERTP have the software capable of
doing so. In effect, the `Economic Planning Studies' only evaluate
the costs of potential upgrades to the system, but none of the
benefits.'' (quoting SREA NOPR Initial Comments at 24)).
---------------------------------------------------------------------------

95. Further, Designated Retail Regulators and Undersigned States
provide no support for their claim that ``a substantial portion of
transmission providers'' are currently conducting ``effective long-term
planning.'' \240\ Instead, they assert that CAISO, NYISO, Southern
Companies, and ``[o]ther regions . . . have sufficient long-term
planning'' \241\ without explaining how the transmission planning
processes in those regions do not suffer from the deficiencies that the
Commission identified in Order No. 1920 as necessitating reform of its
existing regional transmission planning and cost allocation
requirements. Similarly, Designated Retail Regulators' and Undersigned
States' conclusion that SPP's transmission planning processes are
``sufficient to meet the Commission's

[[Page 97194]]

desired outcomes'' \242\ cites to a single sentence in comments SPP
filed nearly two years before the Commission adopted Order No. 1920, in
which SPP stated only that it ``believe[d] its current study processes
and initiatives [to be] sufficient to meet the Commission's desired
outcomes.'' \243\ Such unsupported statements about the sufficiency of
transmission planning processes in various transmission planning
regions similarly fail to establish that those transmission providers'
existing transmission planning and cost allocation processes do not
suffer the deficiencies that the Commission identified in Order No.
1920. While MISO's regional transmission planning process may satisfy
certain of Order No. 1920's requirements, this does not establish that
deficiencies in existing regional transmission planning and cost
allocation processes are occurring only in ``isolated pockets.''
---------------------------------------------------------------------------

\240\ See Designated Retail Regulators Rehearing Request at 21;
Undersigned States Rehearing Request at 22.
\241\ Designated Retail Regulators Rehearing Request at 22
(citing Order No. 1920, 187 FERC ] 61,068 (Christie, Comm'r,
dissenting, at PP 65-66)); Undersigned States Rehearing Request at
23 (citing Order No. 1920, 187 FERC ] 61,068 (Christie, Comm'r,
dissenting, at PP 65-66)).
\242\ Designated Retail Regulators Rehearing Request at 22
(citing SPP NOPR Initial Comments at 3); Undersigned States
Rehearing Request at 22 (citing SPP NOPR Initial Comments at 3).
\243\ SPP NOPR Initial Comments at 3.
---------------------------------------------------------------------------

96. Moreover, SERTP Sponsors do not identify any authority
supporting the contention that the Commission cannot make a generic
finding under section 206 unless it shows that every transmission
provider's OATT is unjust and unreasonable or unduly discriminatory or
preferential. Nor are we convinced by SERTP Sponsors' attempts to
distinguish South Carolina Public Service Authority v. FERC, where the
court held that ``the Commission may act by generic rule . . . without
first finding that the rates charged by individual utilities are unjust
or unlawful when it concludes that any tariff violating the rule would
have such adverse effects on the interstate gas or energy market as to
render it unjust and unreasonable.'' \244\ SERTP Sponsors assert that,
given ``SERTP's scale and scope and the fact that it does not suffer
from [Order No. 1920's] theoretical deficiencies,'' the reasoning of
South Carolina Public Service Authority v. FERC is inapplicable here.
However, while we do not need to make specific findings regarding
individual transmission providers, we note, as discussed above, that
record evidence demonstrates that SERTP does suffer from each of the
theoretical deficiencies that the Commission identified in Order No.
1920. Significantly, in finding that existing regional transmission
planning and cost allocation requirements are not just and reasonable,
the Commission also recognized that ``the present is not a prediction
of the future'' \245\ in light of the threat, documented by substantial
evidence, that, absent Order No. 1920's reforms, regional transmission
planning processes will continue to fail to identify, evaluate, and
select regional transmission facilities that can more efficiently or
cost-effectively meet Long-Term Transmission Needs, requiring customers
to pay for relatively inefficient or less cost-effective transmission
development. That ``the present is not a prediction of the future'' is
especially true in a period of rapid change like the electric sector is
now experiencing. Given industry trends that the Commission highlighted
in Order No. 1920--changing longer-term reliability needs due to more
frequent extreme weather events and the increasing share of variable
resources entering the resource mix,\246\ significantly increasing
demand,\247\ and changes to the nation's resource mix \248\--even if
the identified deficiencies in existing regional transmission planning
and cost allocation requirements have yet to manifest clearly in every
transmission planning region, we can reasonably predict that they will
in the near future. The Commission acted within its authority to
prevent that eventuality from materializing.\249\
---------------------------------------------------------------------------

\244\ See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 86 (quoting
Associated Gas Distributors, 824 F.2d at 1008).
\245\ Id. at 67 (quoting Order No. 1000-A, 139 FERC ] 61,132 at
P 65); see also Order No. 1000-A, 139 FERC ] 61,132 at P 65 (``The
Commission is authorized to make rules with prospective effect that
will prevent situations that are inconsistent with the FPA from
occurring, which means that it is authorized to consider how the
future may be different from the present if the rules it proposes
are not adopted.'').
\246\ Order No. 1920, 187 FERC ] 61,068 at P 94.
\247\ Id. P 95.
\248\ Id. P 96.
\249\ See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 64-65, 85
(``[W]hether a threat of unjust or unreasonable rates derives from a
practice or the absence thereof, Section 206 empowers the Commission
to address it.'').
---------------------------------------------------------------------------

97. Moreover, the Commission found that the existing regional
transmission planning and cost allocation requirements are unjust and
unreasonable under of the first prong of FPA section 206.\250\ While
transmission planning regions vary in their specific approaches, and
some transmission providers, within their discretion, may have adopted
practices that satisfy some of Order No. 1920's requirements, there is
no guarantee that these practices will continue in the absence of Order
No. 1920's requirements. If transmission providers believe that they
already satisfy any of the requirements of Order No. 1920, they may
seek to demonstrate that they do so in their compliance filings.
---------------------------------------------------------------------------

\250\ Order No. 1920, 187 FERC ] 61,068 at P 114 (``Based on the
record, including the comments submitted in response to the NOPR, we
find that there is substantial evidence to support the conclusion
that deficiencies in the Commission's existing regional transmission
planning and cost allocation requirements are resulting in
Commission-jurisdictional rates that are unjust, unreasonable, and
unduly discriminatory or preferential.'') (emphasis added)).
---------------------------------------------------------------------------

4. The Commission Has the Authority To Conduct a Generic Rulemaking
a. Requests for Rehearing
98. Undersigned States argue that the Commission lacks authority to
make rate determinations on a generic, national level.\251\ Undersigned
States note that under section 206, the Commission has the power to
determine, after a hearing held upon its own motion or upon complaint,
that the rates charged by a specific utility subject to Commission
jurisdiction are unjust, unreasonable, unduly discriminatory, or
preferential, and if so, to adjust that rate.\252\ Undersigned States
claim that this does not authorize the Commission to issue Order No.
1920.\253\
---------------------------------------------------------------------------

\251\ Undersigned States Rehearing Request at 23.
\252\ Id. at 23-24 (citing 16 U.S.C. 824e).
\253\ Id. at 24.
---------------------------------------------------------------------------

99. Arizona Commission argues that there is no evidence that it has
acted in a discriminatory or unfair way while creating rates and
processes.\254\ Therefore, Arizona Commission argues, Order No. 1920's
section 206 finding is unlawful when applied to the Arizona Commission
because there must be an individual finding as to the Arizona
Commission before section 206 can be applied to it. Arizona Commission
states that it is arbitrary and capricious ``to infer any evidence in
the record supports the conclusion the [Arizona Commission] has acted
in a discriminatory or unfair way.'' \255\
---------------------------------------------------------------------------

\254\ Arizona Commission Rehearing Request at 19.
\255\ Id. at 19-20.
---------------------------------------------------------------------------

b. Commission Determination
100. We continue to find that the Commission has the authority to
institute the reforms adopted in Order No. 1920 and that it was not
required to demonstrate that transmission planning and cost allocation
processes are unjust, unreasonable, or unduly discriminatory or
preferential with respect to specific transmission providers. Rehearing
parties' arguments to the contrary seem to rely on a misinterpretation
of FPA section 206. Section 206 delegates substantial responsibility to
the Commission:
101. Whenever the Commission, after a hearing held upon its own
motion or

[[Page 97195]]

upon complaint, shall find that any rate, charge, or classification,
demanded, observed, charged, or collected by any public utility for any
transmission or sale subject to the jurisdiction of the Commission, or
that any rule, regulation, practice, or contract affecting such rate,
charge, or classification is unjust, unreasonable, unduly
discriminatory or preferential, the Commission shall determine the just
and reasonable rate, charge, classification, rule, regulation,
practice, or contract to be thereafter observed and in force, and shall
fix the same by order.\256\
---------------------------------------------------------------------------

\256\ 16 U.S.C. 824e.
---------------------------------------------------------------------------

102. As the Commission explained in Order No. 1920, and as courts
have confirmed, transmission planning and cost allocation processes are
``are practices affecting rates subject to the Commission's exclusive
jurisdiction.'' \257\ Rehearing parties cite no precedent suggesting
that section 206 requires the Commission to act on an individual,
utility-by-utility basis, and we are aware of none.
---------------------------------------------------------------------------

\257\ Order No. 1920, 187 FERC ] 61,068 at P 86 (citing S.C.
Pub. Serv. Auth. v. FERC, 762 F.3d at 55).
---------------------------------------------------------------------------

103. Contrary to Undersigned States' argument that the Commission
lacks authority to make rate determinations on a generic, national
level, courts have consistently interpreted section 206 to allow the
Commission to regulate on a national level, through notice-and-comment
rulemakings, when the Commission finds systemic issues throughout the
industry that cause practices affecting rates charged by public
utilities to be unjust, unreasonable, or unduly discriminatory or
preferential.\258\ Nearly 40 years of precedent has consistently
interpreted the Commission's FPA section 206 authority--and the
corresponding, nearly identical authority in the Natural Gas Act
\259\--as providing the Commission with the authority to ``rely on
`generic' or `general' findings of a systemic problem to support
imposition of an industry-wide solution.'' \260\ In fact, in
interpreting the nearly identical provision of the Natural Gas Act, the
D.C. Circuit stated that ``[t]he Commission is not required to make
individual findings, however, if it exercises its Natural Gas Act Sec.
5 authority by means of a generic rule.'' \261\ The Commission has,
time and time again, exercised section 206 authority through generic
rulemakings that rely on industry-wide findings rather than region-by-
region or utility-specific findings.\262\ Indeed, Order No. 1920 itself
builds upon existing transmission planning and cost allocation
requirements adopted by the Commission through other generally
applicable, nationwide rulemakings. Thus, the Commission was not
required to make specific findings as to the Arizona Commission or
transmission planning and cost allocation processes within Arizona or
any given state. Moreover, Order No. 1920's reforms are directed to
transmission providers, consistent with the Commission's
jurisdiction,\263\ and do not require any action by state regulatory
authorities.\264\ In light of the Commission's authority to act on a
generic basis to reform the practices of all transmission providers,
the Commission reasonably exercised its broad discretion to proceed by
nationwide rulemaking to remedy the deficiencies that it determined in
Order No. 1920 render its existing regional transmission planning and
cost allocation requirements unjust and unreasonable.\265\
---------------------------------------------------------------------------

\258\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (upholding
Order No. 1000); TAPS, 225 F.3d 667, aff'd sub nom. N.Y. v. FERC,
535 U.S. 1 (upholding Order No. 888).
\259\ 15 U.S.C. 717d(a).
\260\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 67 (quoting
Interstate Nat. Gas of Am. v. FERC, 285 F.3d at 37; see also TAPS,
225 F.3d at 687-88; Associated Gas Distributors, 824 F.2d 981; Wis.
Gas Co. v. FERC, 770 F.2d at 1166 & n.36.
\261\ Associated Gas Distributors, 824 F.2d at 1008. It is
``well settled that comparable provisions of the Natural Gas Act and
[FPA] are to be construed in pari materia.'' Ky. Utils. Co. v. FERC,
760 F.2d 1321, 1325 n.6 (D.C. Cir. 1985).
\262\ See, e.g., TAPS, 225 F.3d 667 (upholding Order No. 888,
which was promulgated under FPA section 206 and premised on general
systemic conditions rather than evidence regarding individual
utilities); S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (same for
Order No. 1000); Elec. Storage Participation in Mkts. Operated by
Reg'l Transmission Organs. and Indep. Sys. Operators, Order No. 841,
83 FR 9580 (Mar. 6, 2018), 162 FERC ] 61,127, at P 21 (2018), order
on reh'g, Order No. 841-A, 167 FERC ] 61,154 (2019), aff'd sub nom.
Nat'l Ass'n of Regul. Util. Comm'rs v. FERC, 964 F.3d 1177 (D.C.
Cir. 2020) (NARUC); Order No. 890, 118 FERC ] 61,119 at PP 41-43.
\263\ Order No. 1920, 187 FERC ] 61,068 at PP 1 n.2, 253.
\264\ See Order No. 1920, 187 FERC ] 61,068 at P 263 (``[T]his
final rule directly regulates transmission planning and cost
allocation processes, . . . directly regulates only those practices,
and it does not directly regulate any matter reserved to the states
by FPA section 201.'').
\265\ See Wis. Gas Co. v. FERC, 770 F.2d at 1157 (``An
administrative agency must be equipped to act either by general rule
or individual order. To insist upon one form of action to the
exclusion of the other is to exalt form over necessity. The choice
made between proceeding by general rule or by individual, ad hoc
litigation is one that lies primarily in the informed discretion of
the administrative agency.'' (alterations omitted) (quoting SEC v.
Chenery Corp., 332 U.S. 194, 202-03 (1947)).
---------------------------------------------------------------------------

C. The Commission Demonstrated That the Replacement Rate is Just and
Reasonable

1. Requests for Rehearing
104. Several rehearing parties argue that the Commission did not
demonstrate that the replacement tariff and transmission planning
requirements are just and reasonable.\266\ According to Designated
Retail Regulators, Order No. 1920 ``requires the construction of
transmission to socialize the costs of policies of some States and
parties over others and shifts the costs caused by interconnecting
remotely located generators to everyone,'' but provides ``no analysis
showing that the resulting rates are just and reasonable.'' \267\
Industrial Customers contend that Order No. 1920 generically asserts,
without ``evidence, proof, or data,'' that its reforms ``should provide
cost savings.'' \268\
---------------------------------------------------------------------------

\266\ Designated Retail Regulators Rehearing Request at 22-23;
Undersigned States Rehearing Request at 23.
\267\ Designated Retail Regulators Rehearing Request at 22-23;
see also Undersigned States Rehearing Request at 23 (similar).
\268\ Industrial Customers Rehearing Request at 20.
---------------------------------------------------------------------------

105. Designated Retail Regulators also claim that Order No. 1920
contradicts Order Nos. 888 and 890, under which the cost of
transmission is generally borne by load. Designated Retail Regulators
argue that, in contrast, the final rule promotes the construction of
long-haul transmission designed to move energy from remote resources
located in one state to load located in another without any contractual
or other assurance to the load-serving entity that the remotely located
resource will provide firm energy. Designated Retail Regulators contend
that, in the absence of a contractual or regulatory requirement to
supply firm energy, there is no reasonable rationale that would justify
allocating the cost for this transmission to remotely located
load.\269\ Designated Retail Regulators also argue that remotely
located customers who are required to pay for transmission facilities
without regulatory or contractual guarantees of receiving firm energy
are not beneficiaries, must less cost causers.\270\
---------------------------------------------------------------------------

\269\ Designated Retail Regulators Rehearing Request at 23.
\270\ Id. at 23-24.
---------------------------------------------------------------------------

106. Industrial Customers argue that Order No. 1920 is arbitrary
and capricious and does not reflect reasoned decision-making because it
fails to consider and address costs to consumers, which is an essential
element of the problem of transmission

[[Page 97196]]

planning and cost allocation.\271\ Arizona Commission echoes this
argument and contends that Order No. 1920 fails to protect consumers
and will saddle ratepayers with trillions of dollars in increased rates
in coming years, resulting in unfair rates.\272\ Arizona Commission
adds that the ``several factors'' that Order No. 1920 requires
transmission providers to ``consider[ ] in transmission planning and
cost allocation'' should have included fairness, reasonableness of
cost, or consideration of who caused the cost, as mandated by the
FPA.\273\
---------------------------------------------------------------------------

\271\ Industrial Customers Rehearing Request at 19-20 (citing
State Farm, 463 U.S. at 43).
\272\ Arizona Commission Rehearing Request at 20.
\273\ Id. at 21.
---------------------------------------------------------------------------

2. Commission Determination
107. We continue to find that the replacement regional transmission
planning and cost allocation requirements that the Commission adopted
in Order No. 1920 are just and reasonable.\274\ We disagree with
rehearing parties' arguments that the Commission did not demonstrate
that the replacement rate is just and reasonable, as it appears that
these arguments may mischaracterize Order No. 1920. Designated Retail
Regulators argue that Order No. 1920 ``requires the construction of
transmission to socialize the costs of the policies of some States and
parties over others and shifts the costs caused by interconnecting
remotely located generators to everyone.'' \275\ Like Order No. 1000,
Order No. 1920's ``transmission planning reforms are concerned with
process, and are not intended to dictate substantive outcomes.'' \276\
Order No. 1920 specifically provided that ``[t]he regional transmission
planning requirements and cost allocation requirements in this final
rule, like those of Order Nos. 890 and 1000, are focused on the
transmission planning process, and do not require any substantive
outcomes from this process.'' \277\
---------------------------------------------------------------------------

\274\ Order No. 1920, 187 FERC ] 61,068 at PP 134-138.
\275\ Designated Retail Regulators Rehearing Request at 22-23;
see also Undersigned States Rehearing Requests at 23 (similar).
\276\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 58 (quoting
Order No. 1000-A, 139 FERC ] 61,132 at P 188); see infra Statutory
Authority section.
\277\ Order No. 1920, 187 FERC ] 61,068 at P 232.
---------------------------------------------------------------------------

108. Moreover, Order No. 1920 did not change the Commission's cost
causation requirements and does not contradict Order Nos. 888 and 890,
under which the cost of transmission is generally borne by load.\278\
Order No. 1920 reiterated that ``any cost allocation method applied to
a Long-Term Regional Transmission Facility must ensure that costs are
allocated in a manner that is at least roughly commensurate with the
estimated benefits of the facility, consistent with cost causation and
court precedent.'' \279\ Order No. 1920 further stated that ``[n]othing
in this final rule requires states to subsidize other states' public
policies and, indeed, this final rule requires, consistent with long-
established Commission and court precedent, that transmission customers
within a transmission planning region need only pay costs that are
`roughly commensurate' with the benefits that transmission providers
estimate they will receive from a regional transmission facility.''
\280\ Thus, ``even if one state's public policy is a driver of a Long-
Term Transmission Need, the costs of a Long-Term Regional Transmissio

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on December 6, 2024.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.