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Transmission or Distribution - FERC Seven Factor Test

Paul Dumais's picture
CEO Dumais Consulting

Owner and CEO of Dumais Consulting (www.DumaisConsulting.com) which provides expert ratemaking services to energy companies. Dr. Dumais is a ratemaking and regulatory expert who specializes on...

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  • Dec 18, 2020
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Order No. 888 sets forth the Commission’s seven-factor test to identify distribution facilities, and include:  (1) local distribution facilities are normally in close proximity to retail customers; (2) local distribution facilities are primarily radial in character; (3) power flows into local distribution systems and it rarely, if ever, flows out; (4) when power enters a local distribution system, it is not re-consigned or transported on to some other market; (5) power entering a local distribution system is consumed in a comparatively restricted geographical area; (6) meters are based at the transmission/local distribution interface to measure flows into the local distribution system; and (7) local distribution systems are of reduced voltage.

 

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Bob Meinetz's picture
Bob Meinetz on Dec 18, 2020

Paul, though the Seven Factor Test is an interesting way to semantically distinguish "transmission" from "distribution", from a basis in electrodynamics its divisions are arbitrary.

Given electrical energy travels at very close to the speed of light, both "close proximity" and "comparatively restricted geographical area" are, for all practical purposes, meaningless.

Both transmission and distribution are primarily radial in character - like water, natural gas, even shipping networks, it's the most efficient way to both transmit and distribute any product to consumers.

Meters are based, and voltage is progressively reduced, at many locations along the journey from generator to consumer.

Not sure what the purpose of the Seven Factor Test is, but I suspect it has to do with attempting to identify FERC's regulatory jurisdiction. 

Paul Dumais's picture
Paul Dumais on Dec 18, 2020

FERC uses the seven-factor test to determine its jurisdiction but more so to determine what facilities are included in transmission rates.  

Howard Smith's picture
Howard Smith on Dec 28, 2020

I agree that these are FERC's way to determine Federal versus State jurisdiction.  Also, I agree with the challenges and issues that the others have posted.  I think it would be appropriate to have FERC clarify these concerns.

Dr. Amal Khashab's picture
Dr. Amal Khashab on Dec 20, 2020

I think that the  factor(3) contradicts with DG application.

Doug Houseman's picture
Doug Houseman on Dec 24, 2020

Here are my issues with 888.

 (1) local distribution facilities are normally in close proximity to retail customers - agreed but with transactive energy emerging and more customers allowed in the wholesale market - how will the definition of "retail" customer change to keep up.

(2) local distribution facilities are primarily radial in character - This limits resiliency, customers want more looped circuits and low voltage network, this definition is out of date already. 

 (3) power flows into local distribution systems and it rarely, if ever, flows out - this limits distributed generation, in HA - we see 8+ hours a day of reverse power flow on some circuits. 

(4) when power enters a local distribution system, it is not re-consigned or transported on to some other market - storage is going to do both, and transactive energy will do even more. Then we have V2G starting which will absolutely make a mess of this test. 

(5) power entering a local distribution system is consumed in a comparatively restricted geographical area - again V2G breaks this test. A driver my charge in one state and discharge in another. 

 (7) local distribution systems are of reduced voltage - electrification will change this 69, 100, 120KV are all going to be used in dense areas for sub-trans or distribution. 

Matt Chester's picture
Matt Chester on Dec 24, 2020

when power enters a local distribution system, it is not re-consigned or transported on to some other market - storage is going to do both, and transactive energy will do even more. Then we have V2G starting which will absolutely make a mess of this test. 

That's an interesting point-- suddenly we'll see literal movement of energy taking place outside the grid but then plugging back into the grid. They aren't kidding when they say we're looking at a new paradigm of utilities!

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