The Department of Energy recently released a Quadrennial Energy Review that identified a pressing need for new electricity transmission facilities, among other infrastructure issues.  Encouraging new transmission investment has also been a decade-long priority policy goal of FERC reflected in the Energy Policy Act of 2005 and FERC’s seminal Order No. 1000.  In furtherance of this priority goal, FERC staff recently announced that it is developing quantitative metrics regarding transmission investment adequacy and the impact of FERC’s policies.

The metrics under development would help the Commission to assess the adequacy of transmission infrastructure and the effectiveness of FERC policies in achieving appropriate levels of transmission investment needed to meet reliability, economic and public policy concerns.  At the recent FERC meeting, staff described specific metrics for which adequate data are available.  The metrics fall into three broad categories.

Metrics to assess the adequacy of transmission infrastructure.  Staff will identify persistent costly line congestion as a measure of inadequate transmission investment.  One metric, to be used for facilities not under the control of a regional grid operator, will look at the number of incidents where the grid operator needed to take action to address congestion problems, weighted by the quantity of end-user, or retail, load.  For facilities under the control of a regional grid operator (Regional Transmission Operators or RTOs, and Independent System Operators, or ISOs), staff will identify persistent price differentials between locations on the grid.  This different metric is needed for RTOs and ISOs because they operate markets that place a price on congestion and thus do not rely on operator actions for congestion management such as curtailment.

Metrics to measure relative transmission investment.  Staff will develop three metrics:

  • Circuit miles of transmission added to the grid, divided by retail load.
  • Investment in new capital additions to the grid, divided by retail load.
  • Circuit miles of transmission added, divided by the associated investment dollars.  The resulting metric, circuit miles per dollar of investment, measures the effectiveness of investments.

Metrics to evaluate key goals of Order No. 1000.  Staff identified only one metric in this category: the percentage of transmission project proposals made by nonincumbent (i.e., non-utility) transmission developers.  One of the major goals of Order No. 1000 is supporting competition in transmission development.  This metric measures the participation of nonincumbent developers in regional planning processes. 

Staff indicated that it will consider whether additional metrics would be helpful.

New FERC Chairman Norman Bay told staff “This is important work that you’re doing.  The metrics presented by staff today will allow the commission and its staff to better see what works and what needs further improvement,” according to RTO Insider.