The Federal Energy Regulatory Commission's Order No. 1000 "clearly exceeds" its authority under the Federal Power Act (FPA) and "must be revised," the Coalition for Fair Transmission Policy said in a request for rehearing filed yesterday at FERC.

"If not corrected on rehearing, the Final Rule could result in higher costs to many consumers, pre-emption of public utility and state prerogatives to determine and decide what generation resources best meet the reliability and economic needs of consumers and public policy requirements, and inefficiencies in competitive electric markets," the coalition's request stated.

"With respect to the potential impact on consumers, the Commission's failure to limit in any way what individual regions may consider as benefits for which costs may be allocated is a fatal flaw of the Final Rule," the coalition said.

"Broad definitions of benefits for transmission projects driven by economics or public policy requirements that suggest that certain types or classes of projects have regional benefits per se, and therefore should be widely socialized, are not sufficient to ensure just and reasonable rates," added the coalition filing.

"The coalition is concerned that FERC's order is inconsistent with its stated objectives in several areas and therefore fails to protect consumers," said Sue Sheridan, the coalition's president and chief counsel.

The coalition listed four specific aspects of Order No. 1000 that should be revised, amplified or clarified to meet the requirements of the FPA and the Administrative Procedures Act:

• Allowing Regions to Define Benefits Too Broadly—"The potential for an overly broad definition of 'benefits' could result in regions considering highly speculative benefits that cannot be quantified and are beyond a typical planning horizon as a basis for cost allocation, resulting in the broad socialization of costs."
• Assigning Benefits (and Allocating Costs) of New Transmission Projects to Those Without a Customer or Service Relationship—"Public utilities and consumers should not be allocated the costs of new transmission facilities built by developers with whom they have no transmission service arrangement."
• Ability to Depart from Bottom-Up Planning—"The regional transmission planning process should consider state and federal public policy requirements, but such consideration should be driven by resource needs identified by those entities upon which the public policy requirement is placed."
• Inter-regional Cost Allocation Flexibility—"The same flexibility afforded public utility transmission providers to opt-out of the cost allocation methodology prescribed within a regional transmission policy process (and pursue development using other cost allocation methodologies) should be confirmed as available for both regional and inter-regional projects."

"Unless these issues are properly dealt with on rehearing, electric consumers could face higher costs as a result of Order No. 1000, utilities may be unable to meet the needs of consumers with the resources best suited to their own situations, and decision-making in competitive electric markets will be skewed by transmission cost socialization that requires consumers to subsidize transmission for which they receive no real benefit," the coalition said.

The coalition "acknowledges and agrees" with FERC's 'expressed intent to build upon what is working and retain parts of the existing transmission and cost allocation frameworks that are proven and effective."

The coalition is a diverse group of seven geographically and structurally diverse investor-owned electric utilities that have joined together for purposes of promoting legislative and regulatory policies that will lead to customer-focused development of the nation's electric transmission system in support of the growing demand for clean generation resources. The coalition's members, and those on record supporting the coalition's goals, serve more than 28 percent of electric customers in the United States in 26 states. The members are CMS Energy Corporation, Consolidated Edison, Inc., DTE Energy Company, Progress Energy Inc., Public Service Enterprise Group, SCANA Corporation, and Southern Company.