FERC and Transmission Incentives
- Mar 20, 2020 12:40 am GMT
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FERC today issued a Notice of Proposed Rulemaking (NOPR) that focuses transmission incentives on the benefits to consumers. It would eliminate Order No. 679’s “nexus test” and instead provide a series of incentives based on economic and reliability benefits.
Among the proposed reforms:
Increase the RTO Adder from 50 basis points to 100 basis points and make the incentive available regardless of whether that participation is voluntary.
Provide 50 or 100 basis point ROE Adder for transmission projects that meet a pre-construction benefit-to-cost ratio in the top 25 percent or top 10%, respectively, of projects examined over a sample period.
Provide up to a 50 basis point ROE adder for projects that demonstrate reliability benefits by providing quantitative analysis, where possible, as well as qualitative analysis.
Offer a 100-basis-point incentive for transmission technologies that enhance reliability, efficiency and capacity as well as improve the operation of new or existing transmission facilities.
The NOPR proposes to replace the current policy of limiting incentives to the base ROE zone of reasonableness with a 250-basis-point cap on total ROE incentives. Comments on the NOPR are due approximately mid-June 2020.