California Independent System Operator (CAISO) is a not-for-profit public benefit corporation that maintains the reliability of one of the largest and most modern power grids in the world and operates a transparent, accessible wholesale energy market. Headquartered in Folsom, CA, CAISO works diligently around the clock to meet the electricity needs of consumers, while increasing the amount of renewable energy to usher in the clean, green grid of the future.
The Federal Energy Regulatory Commission, or FERC, is an independent agency that regulates the interstate transmission of natural gas, oil, and electricity. FERC also regulates natural gas and hydropower projects. FERC’s Mission is to assist consumers in obtaining economically efficient, safe, reliable, and secure energy services at a reasonable cost through appropriate regulatory market means, and collaborative efforts.
Electric transmission facilities consist of transmission lines, substations, transformers, and other related equipment. Transmission lines transport high-voltage electricity from generation facilities to local distribution systems, which then disperse lower-voltage electricity to homes and businesses for use. These transmission lines can be overhead wires or underground cables, depending the electrical grid, environmental, and community needs for a specific application. Substations are the intersections of transmission lines that allow electricity to flow from one circuit to another on its way to consumers. Substations also contain specialized equipment that monitors and protects the electrical grid, controls flows to prevent overloads, and transforms electricity from higher voltages that enable efficient long-distance transmission to lower voltages that can be used in homes and business.
FERC Order No. 1000 is a Final Rule that reforms the Commission’s electric transmission planning and cost allocation requirements for public utility transmission providers. The rule builds on the reforms of Order No. 890 and corrects remaining deficiencies with respect to transmission planning processes and cost allocation methods. Importantly, FERC Order No. 1000 eliminated the federal right of first refusal and opened certain transmission projects to competition.
Competition in regional transmission planning processes introduces new and innovative solutions to the design, construction, finance, and operation of transmission projects. Most importantly, though, competition has led to the introduction of cost caps that shift the risk of project cost overruns to developers and away from ratepayers. Without competition, incumbent utilities have not been willing to accept the risk of cost overruns on their transmission projects.
A Right of First Refusal (ROFR) is an anti-competitive statutory provision allowing incumbent utilities to construct, own and operate new transmission facilities in the absence of competitive bidding. ROFR laws harm consumers in the states in which they are enacted and in nearby states where the costs of new transmission projects are shared.