Last week, the U.S. Court of Appeals for the District of Columbia Circuit heard a case regarding the Federal Energy Regulatory Commission's Order 1000, which seeks to address some of the modernization challenges facing the grid. During today's OnPoint, Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy, a plaintiff in the case, discusses the four key issues at play and the rationale behind the plaintiffs' petition. She also explains how this case is significant to the larger debate over Order 1000.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy. Sue, thanks for coming back on the show.
Sue Sheridan: Thanks for asking me back.
Monica Trauzzi: Sue, the D.C. Circuit Court of Appeals heard a case last week regarding FERC's Order 1000, which seeks to address some of the modernization challenges facing the grid. The coalition is one of numerous plaintiffs in the case, and there were four key issues that the judges were taking a look at. Walk us through those four issues briefly.
Sue Sheridan: Surely. Well, under Order 1000, as you said, they had broke it up into four different areas: planning for new transmission, allocation of cost for new transmission, concerns about states' roles and whether or not FERC was outside of its authority and essentially infringing on states' concerns, and the right of first refusal.
Monica Trauzzi: Mm-hmm. And on cost allocation and transmission planning you believe that FERC lacks the legal justification, but isn't that what FERC does? I mean, isn't this well within the jurisdiction of the agency on those two issues?
Sue Sheridan: Well, it's interesting that you ask that question because one of the lengthier sets of questions back and forth with the justices and the attorneys arguing the planning provision was whether or not FERC's planning rules under and requirements under Order 1000 fit with specific parts of the statute, including one that was adopted in 2005 under the Energy Policy Act, so really parsing the language of the act.
Monica Trauzzi: And so what did you think more broadly on the questions coming from the judges?
Sue Sheridan: Well, they certainly zeroed in on one of our concerns, whether or not FERC has statutory authority to require the sort of planning it is, and whether or not FERC's theoretical basis for issuing Order 1000 is sufficient and whether FERC presented enough evidence essentially in its rulemaking to pass judicial muster.
Monica Trauzzi: I know judges are hard to read, but what would you infer by what they asked?
Sue Sheridan: I think there was a lot of probing again about specific sections of the Power Act: 202, 206, 217, even broken down into the subsections. And I think that the justices were trying, or the judges were trying to determine whether or not FERC had proven that there was a real change in circumstances that requires it to issue Order 1000 and change the way it's gone about planning and cost allocation.
Monica Trauzzi: Industry has such a big issue right now with the right of first refusal, which you mentioned at the top. Why do you think that that continues to be such a critical sticking point when competition could be really good for all parties involved, including customers?
Sue Sheridan: Well, I should say first that that's not something our coalition has taken a position on. We're just not on the right of first refusal. But just as an observer listening I think it gets into the question of what states do, state regulators do and what federal regulators do, and the questions about competition that remain with states being so varied.
Monica Trauzzi: Mm-hmm. In the broader context of the debate of FERC Order 1000, where does this case fit in? Why is it so significant?
Sue Sheridan: You may be able to remember the 7th Circuit case ... Commerce Commission that came out. It was one that set up the roughly commensurate standards, saying the costs for new transmission had to be roughly commensurate to benefits in order to allocate them correctly. That's a rather broad finding in and of itself. The Supreme Court didn't take up that case on appeal, so that really puts the pressure on Order 1000, which is a general rule of applicability and sets forth what that roughly commensurate could mean.
Monica Trauzzi: So moving away from what the court took before them last week, moving towards Congress, what might we see Congress do on Order 1000, and what could Chairwoman -- now the chairwoman of Senate Energy, Chairwoman Landrieu -- mean for the discussion?
Sue Sheridan: That's a very good question. She in 2009 when she was a member of the committee voted for the Corker Amendment, I believe. I don't know what position she may have at this point, but when Norman Bay's confirmation hearing comes up before FERC, and I gather his papers are at the committee, but whenever that's scheduled that will give another opportunity for members, senators to ask questions about what he thinks about FERC's authority and what's going on in the markets right now.
Monica Trauzzi: All right, we'll end it there. Thank you very much for coming on the show.
Sue Sheridan: All right, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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