Promoting Transmission Investment Through Pricing Reform, 30869-30878 [2011-13150]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 76, Number 103 (Friday, May 27, 2011)]
[Proposed Rules]
[Pages 30869-30878]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-13150]



[[Page 30869]]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Chapter I

[Docket No. RM11-26-000]


Promoting Transmission Investment Through Pricing Reform

May 19, 2011.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of inquiry.

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SUMMARY: In this Notice of Inquiry, the Federal Energy Regulatory 
Commission (Commission) seeks comment on the scope and implementation 
of its transmission incentives regulations and policies under Order No. 
679. It has been nearly five years since the Commission promulgated 
rules to implement the directives of section 1241 of the Energy Policy 
Act of 2005 (EPAct 2005), which added a new section 219 to the Federal 
Power Act (FPA). In the past five years, the Commission has received 
over 75 applications for transmission incentives. The requested 
incentives have been varied, and the demonstrations supporting the 
incentives applications have likewise been varied.
    During this time, the electric industry has continued to evolve, 
and the Commission has issued corresponding regulations, policy 
statements, and case-by-case determinations. Given the changes in the 
electric industry, the Commission's experience to date applying Order 
No. 679, and the ongoing need to ensure that our incentives regulations 
and policies are encouraging the development of transmission 
infrastructure in a manner consistent with FPA sections 219 and 205 and 
206, the Commission now issues this Notice of Inquiry.

DATES: Comments are due July 26, 2011.

ADDRESSES: You may submit comments, identified by docket number and in 
accordance with the requirements posted on the Commission's Web site 
https://www.ferc.gov. Comments may be submitted by any of the following 
methods:
     Agency Web Site: Documents created electronically using 
word processing software should be filed in native applications or 
print-to-PDF format, and not in a scanned format, at https://www.ferc.gov/docs-filing/efiling.asp.
     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand deliver an original of their comments 
to: Federal Energy Regulatory Commission, Secretary of the Commission, 
888 First Street, NE., Washington, DC 20426. These requirements can be 
found on the Commission's Web site, see, e.g., the ``Quick Reference 
Guide for Paper Submissions,'' available at https://www.ferc.gov/docs-filing/efiling.asp, or via phone from FERC Online Support at 202-502-
6652 or toll-free at 1-866-208-3676.

FOR FURTHER INFORMATION CONTACT:

David Borden (Technical Information), Office of Energy Policy and 
Innovations, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-8734, David.Borden@ferc.gov.
Andrew Weinstein (Legal Information), Office of General Counsel--Energy 
Markets, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-6230, Andrew.Weinstein@ferc.gov.

SUPPLEMENTARY INFORMATION: 

Notice of Inquiry

    1. In this Notice of Inquiry, the Federal Energy Regulatory 
Commission (Commission) seeks comment on the scope and implementation 
of its transmission incentives regulations and policies under Order No. 
679.\1\ It has been nearly five years since the Commission promulgated 
rules to implement the directives of section 1241 of the Energy Policy 
Act of 2005 (EPAct 2005),\2\ which added a new section 219 to the 
Federal Power Act (FPA).\3\ In the past five years, the Commission has 
received over 75 applications for transmission incentives. 
Collectively, the applicants in those cases sought incentives for 
investment in over $50 billion in proposed transmission infrastructure 
to ensure reliability or to reduce the cost of delivered power to 
customers by reducing transmission congestion.\4\ The requested 
incentives have been varied, and the demonstrations supporting the 
incentives applications have likewise been varied.
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    \1\ Promoting Transmission Investment through Pricing Reform, 
Order No. 679, 71 FR 43294 (Jul. 31, 2006), FERC Stats. & Regs. ] 
31,222 (2006), order on reh'g, Order No. 679-A, 72 FR 1152 (Jan. 10, 
2007), FERC Stats. & Regs. ] 31,236, order on reh'g, 119 FERC ] 
61,062 (2007).
    \2\ Energy Policy Act of 2005, Public Law 109-58, Sec. Sec.  
1261 et seq., 119 Stat. 594 (2005).
    \3\ 16 U.S.C. 824s.
    \4\ This figure is the sum of the proposed investment amounts 
included in transmission incentive applications submitted to the 
Commission pursuant to Order No. 679, as of April 2011. However, the 
approval of transmission rate incentives for many of those proposed 
projects does not mean that all of those proposed projects have gone 
into service or ultimately will be completed.
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    2. During this time, the electric industry has continued to evolve, 
and the Commission has issued corresponding regulations, policy 
statements, and case-by-case determinations.\5\ Given the changes in 
the electric industry, the Commission's experience to date applying 
Order No. 679, and the ongoing need to ensure that our incentives 
regulations and policies are encouraging the development of 
transmission infrastructure in a manner consistent with FPA sections 
219 and 205 and 206,\6\ the Commission now issues this Notice of 
Inquiry.
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    \5\ In the past five years, the electric industry has 
experienced significant changes. Among others, such changes include 
the implementation of Order No. 890 transmission planning processes; 
adoption of mandatory and enforceable reliability standards; 
increasing diversity of the generation fleet; and increasing 
investment in the development of smart grid technologies.
    \6\ 16 U.S.C. 824(d) and 824(e) (2006).
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I. Brief History/Background

    3. Section 1241 of EPAct 2005 added a new section 219 to the FPA. 
Section 219(a) of the FPA requires the Commission to establish by rule 
incentive-based, including performance-based, rate treatments for the 
transmission of electric energy in interstate commerce by public 
utilities for the purpose of benefiting consumers by ensuring 
reliability and reducing the cost of delivered power by reducing 
transmission congestion. Section 219(b) requires that the Rule:
     Promote reliable and economically efficient transmission 
and generation of electricity by promoting capital investment in the 
enlargement, improvement, maintenance, and operation of all facilities 
for the transmission of electric energy in interstate commerce, 
regardless of the ownership of the facilities;
     Provide a return on equity that attracts new investment in 
transmission facilities, including related transmission technologies;
     Encourage deployment of transmission technologies and 
other measures to increase the capacity and efficiency of existing 
transmission facilities and improve the operation of the facilities; 
and
     Allow the recovery of all prudently incurred costs 
necessary to comply with mandatory reliability standards issued 
pursuant to section 215 of the FPA, and all prudently incurred costs 
related to transmission infrastructure

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development pursuant to section 216 of the FPA.\7\
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    \7\ Section 216 addresses designation of and siting of 
transmission facilities within National Interest Electric 
Transmission Corridors. 16 U.S.C. 824p (2006).
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    4. Section 219(c) requires that the Rule provide for incentives to 
each transmitting utility or electric utility that joins a Transmission 
Organization and ensure that any recoverable costs associated with 
joining such Transmission Organization may be recovered through 
transmission rates charged by the utility or through the transmission 
rates charged by the Transmission Organization that provides 
transmission service to the utility. Finally, section 219(d) provides 
that all rates approved under the Rule are subject to the requirements 
of sections 205 and 206 of the FPA, which require that rates, charges, 
terms and conditions of service be just and reasonable and not unduly 
discriminatory or preferential.
    5. On July 20, 2006, the Commission issued Order No. 679, Promoting 
Transmission Investment through Pricing Reform, which was further 
refined in Order No. 679-A, and a subsequent order on rehearing, issued 
in December 2006, and April 2007, respectively. In this series of 
orders, the Commission stated that Section 219 reflects Congress' 
determination that the Commission's traditional ratemaking policies may 
not be sufficient to encourage new transmission infrastructure.\8\ 
Thus, the Commission identified instances where its policies may no 
longer have struck the appropriate balance in encouraging new 
investments and set forth several broad categories of incentive rate 
treatments. The Commission declined to adopt specific criteria or 
conditions that applicants would be required to meet in order for their 
projects to be considered eligible for incentive rate treatments. The 
Commission stated that it would not establish such criteria ``at this 
time,'' on the grounds that to do so ``now would limit the flexibility 
of the Rule.'' \9\ Instead, as discussed more fully below, the 
Commission required that each applicant satisfy the statutory threshold 
set forth in section 219(a), by demonstrating that the facilities for 
which it seeks incentives either ensure reliability or reduce the cost 
of delivered power by reducing transmission congestion. Once that 
threshold is met, the applicant must demonstrate that there is a nexus 
between the incentive sought and the investment being made.
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    \8\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 5.
    \9\ Id. P 43.
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    6. With respect to the statutory threshold, the Commission 
established rebuttable presumptions to assist in determining whether 
proposed facilities either ensure reliability or reduce the cost of 
delivered power by reducing transmission congestion, consistent with 
section 219(a) of the FPA. The rebuttable presumptions apply to a 
transmission project that (i) results from a fair and open regional 
planning process that considers and evaluates projects for reliability 
and/or congestion and is found to be acceptable to the Commission; or 
(ii) has received construction approval from an appropriate state 
commission or state siting authority.\10\ If a proposed project does 
not qualify for the rebuttable presumption, an applicant bears the 
burden of otherwise demonstrating that its project satisfies the 
statutory criteria and therefore is eligible for incentives.
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    \10\ Id. P 58.
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    7. As mentioned above, after satisfying the statutory threshold of 
section 219(a), applicants for incentives must then show that there is 
a nexus between the incentive sought and the investment being made, 
i.e., that the incentives being requested are ``rationally tailored to 
the risks and challenges faced by a project.'' \11\ In Order No. 679-A, 
the Commission stated that ``[i]n evaluating whether an applicant has 
satisfied this nexus test, the Commission will examine the total 
package of incentives being sought, the inter-relationship between any 
incentives, and how any requested incentives address the risks and 
challenges faced by a project.'' \12\
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    \11\ Id. P 26.
    \12\ Order No. 679-A, FERC Stats. & Regs. ] 31,236 at P 21.
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    8. The Commission stated that the rebuttable presumptions and the 
nexus test are not prescriptive by design, and are intended to be 
applied on a case-by-case basis.\13\ The Commission also stated that 
the ``most compelling'' candidates for incentives are ``new projects 
that present special risks or challenges, not routine investments made 
in the ordinary course of expanding the system to provide safe and 
reliable transmission service.'' \14\
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    \13\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 22, 24.
    \14\ Id. P 23, 60.
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    9. The Commission also discussed the potential benefits of specific 
incentives for which applications could be filed under Order No. 679. 
These incentives included incentive adders to a base return on equity 
(ROE), recovery of 100 percent of prudently incurred costs of 
transmission facilities that are cancelled or abandoned due to factors 
that are beyond the control of the public utility, inclusion of 100 
percent of construction work in progress (CWIP) in rate base, 
hypothetical capital structures, accelerated depreciation for rate 
recovery, and recovery of prudently incurred pre-commercial operations 
costs.

II. Subject of the Notice of Inquiry

    10. In Order No. 679, the Commission established a policy for rate 
incentives to achieve the goals of section 219 to promote 
``transmission infrastructure investment that will help ensure the 
reliability of the bulk power transmission system in the United States 
and reduce the cost of delivered power to customers by reducing 
transmission congestion.''\15\ The Commission believes that there 
remains a need for additional transmission investment to ensure the 
reliable operation of the grid and reduce the cost of delivered power 
by reducing transmission congestion.
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    \15\ Id. P 1.
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    11. By issuing this Notice of Inquiry, the Commission is not 
departing from the Congressional mandate set forth in section 219.
    12. Similarly, by issuing this Notice of Inquiry, the Commission is 
not departing from its longstanding recognition of the need to balance 
consumer and investor interests. For example, in Order No. 679, the 
Commission stated:

    The incentives adopted by this Final Rule are properly 
understood only in the context of the traditional regulatory 
principles they seek to further. The longstanding rule is that 
utility rate regulation must adequately balance both consumer and 
investor interests. It is not enough to ensure investors are 
properly compensated, and it is not enough to ensure that consumers 
are protected against excessive rates. Our policies must ensure both 
outcomes and, in doing so, strike the appropriate balance between 
these twin objectives.\16\
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    \16\ Id. P 21.

    13. This Notice of Inquiry does not seek to overturn the need for 
balance between consumer and investor interests. In Order No. 679, the 
Commission stated that the purpose of the incentives policy ``is to 
benefit customers by providing real incentives to encourage new 
infrastructure, not simply increasing rates in a manner that has no 
correlation to encouraging new investment.'' \17\ We will continue to 
balance the interests of consumers and investors and ensure that our 
implementation of section 219 provides

[[Page 30871]]

incentives to encourage new infrastructure as we evaluate future 
requests for incentives for investment in transmission 
infrastructure.\18\
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    \17\ Id. P 6.
    \18\ During the pendency of this proceeding, the Commission will 
continue to evaluate incentive requests under Order No. 679 on a 
case-by-case basis.
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    14. The Commission has discretion in implementing transmission 
incentives policies to achieve the broad goals of section 219. Through 
this Notice of Inquiry, the Commission is seeking input from 
stakeholders on the scope and implementation of its transmission 
incentives policies, and on what steps the Commission could take 
evaluating future requests for incentives for investment in 
transmission infrastructure to ensure that its incentives policies 
appropriately encourage the development of transmission infrastructure 
in a manner consistent with our statutory responsibilities.
    15. Immediately below, the Commission poses a number of overarching 
questions about our incentives policies under Order No. 679. The 
ensuing sections of this Notice of Inquiry pose more specific questions 
with respect to various aspects of the Commission's implementation of 
its transmission incentive policies.
    (Q1) What have been the effects of the incentives policies adopted 
in Order No. 679 with respect to the goals set forth in section 219?
    (Q2) Are the Commission's incentives policies appropriately 
promoting investment in transmission infrastructure in accordance with 
section 219?
    (Q3) Some barriers to construction of new transmission facilities 
fall outside of the Commission's jurisdiction. How do the Commission's 
incentives policies affect such barriers?
    (Q4) How can the Commission's rate incentives policies balance the 
need for regulatory certainty with the changing investment climate over 
time? Are there metrics the Commission should monitor to achieve this 
balance, and if so, what are they? Are there other factors that change 
over time that the Commission should consider in evaluating incentives 
applications? Should the Commission consider these changes over time on 
a generic or case-by-case basis?
    (Q5) Should specific rate incentives be tailored to address 
specific goals set forth by Congress in section 219?
    (Q6) Are there other factors or considerations which the Commission 
should consider as part of its transmission incentives policies, in 
order to be consistent with the goals of section 219?
    (Q7) Have the incentives granted to transmission projects had an 
impact on consumer rates and service, including impacts related to 
reliability and the reduction of congestion?
    (Q8) Have the incentives granted to transmission projects had an 
impact on investment patterns in the electricity industry? Do the 
incentives impact the allocation of investment capital among 
transmission, generation, and distribution facilities?
    (Q9) How should the Commission best balance the promotion of 
transmission investment with the assurance of just and reasonable 
rates?

A. Section 219(a) Statutory Threshold

    16. In Order No. 679, the Commission required that each applicant 
seeking transmission incentives in accordance with section 219 of the 
FPA, first satisfy the statutory threshold set forth in section 219(a) 
by demonstrating that a proposed project for which it seeks incentives 
either ensures reliability or reduces the cost of delivered power by 
reducing transmission congestion. The Commission has established 
rebuttable presumptions that a proposed transmission project satisfies 
the section 219(a) statutory threshold if such project: (i) Results 
from a fair and open regional planning process that considers and 
evaluates a project for reliability and/or congestion, and is found to 
be acceptable to the Commission; or (ii) has received construction 
approval from an appropriate state commission or state siting 
authority. In the alternative, if a proposed project does not qualify 
for the rebuttable presumption, an applicant can nevertheless make an 
independent showing that its project either ensures reliability or 
reduces transmission congestion and therefore is eligible for 
incentives.
    17. The Commission seeks comment regarding the following issues:
    (Q10) Do the rebuttable presumptions established in Order No. 679 
serve as appropriate bases for satisfying the statutory threshold for 
section 219(a)?
    (Q11) Are there other criteria that the Commission should adopt as 
additional rebuttable presumptions for satisfying the statutory 
threshold for section 219(a)?
    (Q12) What types of information, data, or studies should the 
Commission consider in evaluating whether an applicant has made an 
independent showing that satisfies section 219(a)?
    (Q13) Would it assist applicants if the Commission established a 
procedure that applicants may follow to make such an independent 
showing? If so, what should be the characteristics of that procedure?
    (Q14) In some cases, when an applicant has sought incentives, the 
Commission has conditionally approved the request subject to the 
project receiving approval in a regional transmission planning process 
or state siting process.\19\ Intervenors in various rate proceedings 
have raised concerns that a project scope may change in the planning 
and siting process. In light of this, how should the Commission balance 
the value of and need for the requested incentives in promoting project 
development and financing with the potential uncertainty surrounding 
project scope?
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    \19\ As discussed above, these processes are related to 
satisfying the rebuttable presumptions set forth in Order No. 679.
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B. Additional Goals in Section 219

    18. The Commission in Order No. 679 interpreted section 219 as 
intended to promote capital investment in a wide range of 
infrastructure that ensures reliability or reduces the cost of 
delivered power by reducing transmission congestion. This 
interpretation is primarily based on the language of section 219(a). In 
addition, section 219(b)(1) states that ``the Commission shall promote 
reliable and economically efficient transmission and generation of 
electricity by promoting capital investment in the enlargement, 
improvement, maintenance, and operation of all facilities for the 
transmission of electric energy in interstate commerce * * *'' 
Similarly, section 219(b)(3) encourages the ``deployment of 
transmission technologies and other measures to increase the capacity 
and efficiency of existing transmission facilities and improve the 
operation of the facilities.'' The Commission stated that the 
``reliability benefits of operation and maintenance capital spending 
are obvious, and we expect applicants incurring this type of capital 
spending will be able to demonstrate reliability benefits and thereby 
be eligible for incentive treatment.'' \20\
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    \20\ Id. P 56.
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    19. To date, the vast majority of applications for transmission 
incentives filed with the Commission have focused on the enlargement of 
facilities, including construction of new transmission facilities. Few 
applications have focused on the improvement, maintenance, and 
operations of transmission facilities or on increasing their capacity 
or efficiency.\21\
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    \21\ For example, this could include software improvements that 
enhance scheduling and dispatch or investment in tools to enhance 
self-healing grid capabilities or improved situational awareness.

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[[Page 30872]]

    20. The Commission requests comment on whether there is a need for 
the Commission to promote the other goals set forth in the statute, 
such as greater efficiency, including economic efficiency, and improved 
operations in transmission assets through specifically tailored 
incentives. The use of advanced transmission technologies to bring 
about efficiencies and/or improved operations is discussed further and 
separately below. Specifically, the Commission poses the following 
questions.
    (Q15) Pursuant to section 219(b)(1), what steps could the 
Commission take to ``promote reliable and economically efficient 
transmission and generation of electricity by promoting capital 
investment in the enlargement, improvement, maintenance, and operation 
of all facilities for the transmission of electric energy in interstate 
commerce''?
    (Q16) How would these steps affect other aspects of the 
Commission's rate-making policy?
    (Q17) Pursuant to section 219(b)(3), what steps could the 
Commission take to ``increase the capacity and efficiency of existing 
transmission facilities and improve the operation of the facilities''?
    (Q18) As indicated above, applicants must show that their project 
meets the threshold under section 219(a). What showing should the 
Commission require to support a request for incentives under section 
219(b)(1) and (b)(3)?

C. Order No. 679 Nexus Test

    21. Once a proposed project satisfies the section 219(a) statutory 
threshold, the applicant must demonstrate that there is a nexus between 
the incentive sought and the investment being made--i.e., that the 
incentives being requested are ``rationally tailored to the risks and 
challenges faced'' by a project.\22\ In evaluating whether an applicant 
for incentives has satisfied the nexus test, the Commission stated that 
it will examine the total package of incentives being sought, the 
inter-relationship between any incentives, and how any requested 
incentives address the risks and challenges faced by a project.\23\ The 
nexus test is not prescriptive by design and the Commission did not 
specify criteria for measuring the nexus. The Commission did emphasize 
that the ``most compelling'' candidates for incentives are ``new 
projects that present special risks or challenges, not routine 
investments made in the ordinary course of expanding the system to 
provide safe and reliable transmission service.'' \24\
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    \22\ Id. P 26.
    \23\ Order No. 679-A, FERC Stats. & Regs. ] 31,236 at P 21.
    \24\ Id. P 23, 60.
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    22. As the Commission has reached case-by-case determinations on 
incentive applications, and faced new facts and circumstances in each 
case, the Commission's application of the nexus test has evolved.
    23. One development with respect to the nexus test is the 
Commission's finding that the question of whether a project is routine 
or non-routine is particularly probative in evaluating whether there is 
a nexus between a project and the incentives sought.\25\ The Commission 
has offered guidance on the factors that will be considered in 
evaluating whether a project is routine or non-routine, including: (1) 
The scope of a project, e.g., investment dollars, increase in transfer 
capability, and size of a project; 2) the effect of a project, e.g., 
improving reliability or reducing congestion costs; and 3) the 
challenges or risks faced by a project, e.g., siting, long lead times, 
regulatory and political risks, and financing challenges.\26\
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    \25\ Baltimore Gas and Electric Company, 120 FERC ] 61,084 
(2007).
    \26\ Id. P 43.
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    24. Another development with respect to the nexus test involves 
whether that test applies to each individual project for which an 
applicant requests incentives, or instead applies to groups of 
projects. The Commission has stated that an applicant may demonstrate 
that several individual projects are appropriately considered as a 
single overall project based on their characteristics or combined 
purpose, and seek incentives for that single overall project.\27\ The 
Commission has also stated that if the applicant is unable to satisfy 
that criterion, then the applicant may still file a single application 
for incentives, but the Commission will consider each individual 
project separately in applying the nexus test and determining whether 
each project is routine or non-routine.\28\
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    \27\ See PJM Interconnection, L.L.C., 133 FERC ] 61,273 at 45 
(2010) (citing PacifiCorp, 125 FERC ] 61,076 (2008)).
    \28\ Id.
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    25. Thus, the nexus test has been fundamental to the Commission's 
implementation of Order No. 679, and the required demonstration for 
satisfying the nexus test has evolved over time on a case-by-case 
basis. The Commission is interested in comments on the following:
    (Q19) Does the focus of the nexus test on the risks and challenges 
of a given transmission project remain appropriate for the purpose of 
justifying incentives? Is that focus more appropriate for some 
incentives than others? What other factors should the Commission 
consider?
    (Q20) Would focusing on project characteristics or effects be a 
more effective means than focusing on a project's risks and challenges 
as the basis for granting incentives? What characteristics or effects 
would be appropriate for the Commission to consider for that purpose, 
consistent with section 219? \29\
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    \29\ For example, this could include transmission projects that 
are multi-state or high voltage in nature.
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    (Q21) What risks and challenges are transmission developers facing 
today? Have such risks and challenges evolved since the issuance of 
Order No. 679, and if so how?
    (Q22) Is the distinction between a routine and non-routine project 
in analyzing ``risks and challenges'' useful in providing guidance to 
the industry on how to apply the nexus test? Does this distinction 
appropriately differentiate between the level of difficulty in 
constructing various transmission projects?
    (Q23) What types of criteria should the Commission consider when 
evaluating the ``scope of a project'' or the ``effect of a project,'' 
in determining whether a project is routine or non-routine? Should the 
Commission establish bright line criteria, such that a project meeting 
those criteria is non-routine regardless of the applicant, or should 
this evaluation depend on the circumstances of the applicant, e.g. the 
estimated cost of the project relative to the applicant's transmission 
rate base?
    (Q24) Are there aspects of the Commission's accounting and 
ratemaking policies, including the use of formula rates, that reduce or 
increase the risks and challenges of a transmission project? If so, how 
should the Commission take into account the effect of its accounting 
and ratemaking policies in evaluating incentive applications?
    (Q25) In Order No. 679-A, the Commission stated that ``[i]n 
general, we do not consider that contractual commitments or mandatory 
projects, such as section 215 reliability projects, disqualify a 
request for incentive-based rate treatment. Provided applicants are 
able to demonstrate they meet the requirements of section 219, 
including establishing the required nexus between the requested 
incentive and the investment, they may qualify for incentive-based rate 
treatments. A prior

[[Page 30873]]

contractual commitment or statute may have a bearing on our nexus 
evaluation of individual applications.'' \30\ Is the existence of a 
contractual commitment to build a relevant factor in considering 
applications for rate incentives?
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    \30\ Order No. 679-A, FERC Stats. & Regs. ] 31,236 at P 122.
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    (Q26) The Commission has encouraged the joint ownership of 
transmission facilities but declined in Order No. 679 to make it a 
requirement for receiving incentives.\31\ Does this approach adequately 
account for the benefits of joint ownership? Are there other approaches 
to providing incentives that encourage joint ownership of transmission 
facilities?
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    \31\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 356, 357; 
Order No. 679-A, FERC Stats. & Regs. ] 31,236 at 102.
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D. Interrelationship of Incentives

    26. In determining whether an applicant has satisfied the nexus 
test, the Commission evaluates the interrelationship between the 
requested incentives.\32\ However, the Commission has stated that 
receiving a particular incentive does not preclude receiving other 
incentives.\33\ The Commission seeks comment regarding whether and/or 
how the Commission should consider the effects of granting certain 
incentives in evaluating whether to grant other incentives, and at what 
level. The Commission seeks comment on the following:
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    \32\ Order No. 679-A, FERC Stats. & Regs. ] 31,236 at P 21.
    \33\ Id.
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    (Q27) Are there specific criteria the Commission should use in 
evaluating whether and how to adjust certain incentives to account for 
the impacts of other incentives?
    (Q28) Do certain incentives sufficiently mitigate the risks and 
challenges of a transmission project so as to obviate the need for 
granting other incentives, or warrant adjustment in the level of those 
incentives? For example, should granting 100 percent CWIP and recovery 
of the costs of abandoned plant affect the evaluation of a request for 
an incentive ROE adder based on a project's risks and challenges?

E. The Role of Cost Estimates

    27. The Commission has generally denied proposals to limit 
incentives to budgeted amounts.\34\ Intervenors in various transmission 
incentive proceedings have asserted that the Commission's incentive 
policies may have the unintended effect of discouraging cost 
containment. However, others have responded that changes in cost 
estimates are not due to any failure of the applicant to contain costs 
but are due to changes imposed on the applicant in the state siting 
process or other factors beyond the applicant's control that cause 
costs to change.
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    \34\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 121, n. 
81; P 166. See also Virginia Electric and Power Co., 124 FERC ] 
61,207 at P 53 (2008).
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    28. As noted above, the Commission created a rebuttable presumption 
that a project is eligible under FPA section 219 for incentive rate 
treatments if that project results from a fair and open regional 
planning process that evaluates projects for reliability and/or 
congestion. The submission of an estimate of project costs is part of 
some regional planning processes. These estimates may be used to select 
certain projects for development. Because the estimated and actual 
costs of a project may change significantly through the development and 
construction process, and there can be significant unknowns at the time 
a project is selected for development in a regional transmission 
planning process, the Commission seeks comment on the following:
    (Q29) Should the Commission limit the application of incentives to 
the cost estimate utilized for including or retaining the project in 
the plan submitted through the regional planning process? If so, which 
incentives should be applied to the cost estimate, and which should be 
applied to all prudently incurred costs?
    (Q30) How could such an approach be implemented? Would this 
approach work in all regions of the country? What processes for 
developing, evaluating, and updating cost estimates must be in place 
within regional transmission planning processes to facilitate such an 
approach?
    (Q31) If a change in cost estimate is not due to the failure to 
contain costs but instead reflects the real cost in building the 
proposed transmission line, should the Commission take that 
consideration into account, and if so, how?
    (Q32) Should new reporting requirements be in place to allow the 
Commission to audit compliance with a requirement to limit incentives 
to some project cost estimate?

F. Individual Incentives

    29. Order No. 679 identified specific incentives that the 
Commission may grant to qualifying applicants, including: Incentive ROE 
adders, opportunity to recover 100 percent of prudently incurred costs 
of transmission facilities that are cancelled or abandoned for reasons 
beyond the control of the public utility, inclusion of 100 percent of 
prudently incurred CWIP in rate base, recovery of pre-commercial 
operations costs, hypothetical capital structures, accelerated 
depreciation, and deferred cost recovery. Below the Commission briefly 
explains each incentive and seeks comment on a number of questions. The 
Commission also poses questions immediately below on two more general 
matters:
    (Q33) The Commission has general ratemaking policies with respect 
to CWIP and recovery of abandoned plant costs, as discussed below. 
Pursuant to Order No. 679, incentives above and beyond those general 
ratemaking policies may be requested on a case-by-case basis. Would it 
be appropriate to remove these issues from the case-by-case analysis of 
incentive requests, in favor of exploring changes to the Commission's 
general ratemaking policies? What would be the impact on ratepayers of 
revising these ratemaking policies, rather than authorizing higher 
levels of CWIP or recovery of costs of abandoned plant on a case-by-
case basis?
    (Q34) The Commission stated in Order No. 679 that it had not 
established specific eligibility criteria or conditions for incentives 
because it would limit the Commission's flexibility with respect to its 
application of the Rule. The Commission is interested in receiving 
comments regarding whether the establishment of criteria for 
eligibility for particular incentives would enhance regulatory 
certainty and predictability and serve to further encourage appropriate 
investment in transmission infrastructure. Should the Commission 
establish specific criteria or conditions that applicants must meet in 
order to be eligible for these individual incentives?
i. Incentive ROE Adder for Project Risks and Challenges
    30. Under Order No. 679, the Commission allows for an incentive ROE 
based on a project's risks and challenges that was intended to make 
transmission investment more attractive where the ``risks of a 
particular project exceed the normal risks undertaken by a utility (and 
hence are not reflected in a traditional discounted cash flow (DCF) 
analysis).'' \35\ An applicant's overall ROE, inclusive of any 
incentive ROE adder, is capped at the top end of the zone of 
reasonableness for the applicable proxy group under the Commission's 
traditional DCF analysis.
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    \35\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 27.
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    31. The Commission seeks comment on the application of this 
incentive, and whether the Commission considers the appropriate factors 
in evaluating

[[Page 30874]]

whether a project is entitled to an incentive ROE adder based on a 
project's risks and challenges. Specifically:
    (Q35) What risks and challenges are appropriately addressed by the 
incentive ROE adder? Is it appropriate for the Commission to evaluate 
these risks and challenges on a project-by-project basis or on an 
aggregate basis for the applicant?
    (Q36) Are there other considerations that the Commission should 
focus on when awarding an incentive ROE adder?
    (Q37) Does the base ROE adequately compensate investors for the 
financial risk of the company, including risks associated with the 
particular transmission project for which incentives are sought?
    (Q38) In determining the incentive ROE adder, and the requisite 
risks and challenges that support such an adder, should the Commission 
identify with specificity the types of risks and challenges that most 
warrant an incentive ROE adder?
    (Q39) In determining the incentive ROE adder, should the Commission 
make a distinction between financial barriers to transmission 
development such as the ability to attract capital, and regulatory 
barriers, such as siting or environmental challenges? If so, how?
    (Q40) In determining the incentive ROE adder, how should the 
Commission balance the impact of other risk-reducing incentives (such 
as CWIP and abandoned plant recovery)?
    (Q41) Does regulatory assurance of cost recovery, either at the 
state or regional levels, mitigate the risks and challenges facing a 
transmission project? If so, how should the Commission give 
consideration to this mitigation in evaluating a request for incentive 
ROE adder based on a project's risks and challenges?
ii. Other Incentive ROE Adders
    32. In Order No. 679, the Commission offered incentive ROE adders 
for the creation of a Transco or participation in a regional 
transmission organization (RTO) or independent system operator (ISO). 
Those incentive ROE adders are discussed below.
(1) Transcos
    33. In Order No. 679, the Commission addressed incentives to 
encourage the development of transmission only companies (i.e., 
Transcos),\36\ and in particular, found it appropriate to ``provide to 
Transcos a ROE that both encourages Transco formation and is sufficient 
to attract investment after the Transco is formed.'' \37\ The 
Commission seeks comment regarding the following questions:
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    \36\ Order No. 679 defines a Transco broadly. Order No. 679, 
FERC Stats. & Regs. ] 31,222 at P 201.
    \37\ See Id. P 221.
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    (Q42) Is it appropriate to promote voluntary formation of Transcos, 
as defined in Order No. 679, through an ROE adder? Would other 
incentives promote Transco formation more effectively?
    (Q43) Order No. 679 does not distinguish between Transcos that are 
independent of generation-owning market participants and Transcos that 
are affiliated with such market participants. Would such a distinction 
be appropriate in terms of eligibility for, or the amount of, a Transco 
adder?
    (Q44) Further, Order No. 679 did not distinguish between Transcos 
that result from divestiture of a vertically-integrated utility's 
existing transmission system and Transcos that are created for the 
purpose of developing a particular new transmission facility. Would 
such a distinction be appropriate in terms of eligibility for, or the 
amount of, a Transco adder?
(2) Transmission Organizations (RTO/ISO)
    34. Section 219(c) directs that the Commission ``shall to the 
extent within its jurisdiction, provide for incentives to each 
transmission utility or electric utility that joins a Transmission 
Organization.'' In pre- as well as post-Order No. 679 cases, the 
Commission typically has awarded a 50 basis-point ROE adder to 
utilities that either join or already are members of an RTO or ISO.\38\
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    \38\ See Proposed Pricing Policy for Efficient Operation and 
Expansion of Transmission Grid, 102 FERC ] 61,032 (2003).
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    35. While section 219 requires an incentive for membership in a 
Transmission Organization, the Commission invites comments on what 
level of the RTO/ISO ROE adder is appropriate. In particular, the 
Commission seeks comment on the following:
    (Q45) Is it appropriate to offer a standard ROE adder for all 
utilities that join or remain members of an RTO/ISO?
    (Q46) In the alternative, are there other incentives that the 
Commission should consider to encourage joining or remaining in an RTO/
ISO?
    (Q47) Should the existing 50 basis point adder be increased to 
better encourage the formation and continuance of RTO/ISO arrangements?
    (Q48) Is the existing 50 basis point adder appropriately scaled to 
encourage the formation and continuance of RTO/ISO arrangements?
iii. Abandonment
    36. Order No. 679 stated that transmission developers may be 
entitled to recover 100 percent of the prudently incurred costs related 
to certain transmission facilities if such facilities are later 
abandoned or cancelled. The genesis of the Commission's abandoned plant 
policy can be found in Opinion No. 295,\39\ where the Commission stated 
that ratepayers and shareholders should equally share the costs of 
prudently incurred investments in abandoned or cancelled generation 
facilities. Thus, it was originally Commission policy that 50 percent 
of the prudently incurred costs would be amortized over the life of the 
plant as an expense, and the remaining 50 percent would be written off 
as a loss. This policy was later extended and made applicable to 
transmission projects.\40\ In Southern California Edison (SCE),\41\ the 
Commission granted the recovery of 100 percent of the prudently 
incurred costs related to certain proposed transmission facilities in 
the event those facilities were later cancelled or abandoned. The 
Commission's determination in SCE served as the foundation for the 
abandoned plant policy articulated in Order No. 679.
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    \39\ New England Power Company, 42 FERC ] 61,016 (1988).
    \40\ Public Service Company of New Mexico, 75 FERC ] 61,266, at 
61,859 (1996).
    \41\ Southern California Edison Company, 112 FERC ] 61,014 
(2005).
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    (Q49) How does the current incentive allowing recovery of 100 
percent of prudently incurred abandoned plant costs affect the sharing 
of risks between investors and customers? Are there reasonable 
conditions or safeguards that could be imposed to ensure risks are 
appropriately allocated? For example, should recovery of abandoned 
plant costs be exclusive of carrying charges? Should carrying charges 
exclude any ROE incentive?
    (Q50) Should abandoned plant costs be prohibited in instances where 
an affiliated project eliminates the need for a transmission project?
    (Q51) Are there additional measures that can be taken to either 
limit the risk of abandonment, or mitigate the impact of allowing 
recovery of 100 percent of abandoned plant costs on customers?
    (Q52) Some intervenors in various transmission incentives 
proceedings have raised concerns that the incentive of allowing 100 
percent recovery of prudently-incurred abandoned plant costs could 
encourage applicants to pursue projects of greater risk. How

[[Page 30875]]

should the Commission consider and address this factor?
    (Q53) Should the Commission allow recovery for partial abandonment 
of projects? If so, how should partial abandonment be defined? What 
criteria should the Commission consider when deciding whether a project 
has been partially abandoned? What would be the consequences of the 
Commission allowing recovery of abandoned plant cost for a portion of a 
project and later denying recovery of abandoned plant costs for the 
entire project (e.g., finding that abandonment of the full project was 
under the control of the project developer)?
    (Q54) If the recovery of abandoned plant costs were made contingent 
on the abandonment or cancellation of all or a substantial portion of a 
transmission project, how should the Commission define a ``project'' 
for the purpose of applying the abandoned plant incentive? The 
Commission has stated that several individual transmission projects may 
be characterized as a single project, or as several individual 
projects, depending on the showing made by the applicant. Should this 
characterization limit how an applicant may recover abandoned plant 
costs?
    (Q55) If a project developer is granted the incentive for 100 
percent recovery of abandoned plant costs, but is denied a request to 
recover abandoned plant costs under this incentive, then is it 
appropriate to recover those costs through other accounting treatments 
in a subsequent section 205 filing? If so, what accounting treatments 
would be appropriate?
    (Q56) If a utility receives recovery of abandoned plant costs 
incentives and subsequently abandons its project, what rate of return 
(including incentive ROE adders), if any, should be applied to the 
abandoned plant costs until the costs are ultimately recovered in 
rates?
iv. Construction Work in Progress (CWIP) in Rate Base
    37. Order No. 679 provides the opportunity for public utilities, 
where appropriate, to include 100 percent of prudently incurred 
transmission-related CWIP in rate base.\42\ The Commission's general 
policy has been to allow only 50 percent of the non-pollution control/
fuel conversion construction costs as CWIP in rate base. The remaining 
construction costs, including allowance for funds used during 
construction (AFUDC), generally would have been capitalized and 
included in rate base only when the plant went into commercial 
operation, i.e., when the plant became used and useful.\43\ The 
Commission's policy set forth in Order No. 679 authorizes 100 percent 
of CWIP to be included in rate base prior to commercial operation 
provides utilities with additional cash flow in the form of an 
immediate earned return.\44\ Order No. 679 also eliminated the 
requirement that utilities provide forward-looking cost allocation 
ratios based on the customers' average usage of the transmission line.
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    \42\ See Order No. 679, FERC Stats. & Regs. ] 31,222 at P 29.
    \43\ There are two mutually exclusive ratemaking methodologies 
by which public utilities may recover financing costs (also referred 
to as ``carrying charges'') on construction capital in rates: accrue 
carrying charges on CWIP in the form AFUDC or earn a return on CWIP 
included in rate base. Under AFUDC, carrying charges are capitalized 
as a component of construction and recovered from ratepayers when 
the completed construction project goes into service. Under CWIP in 
rate base, carrying charges are recovered through its return on rate 
base while construction is underway unlike AFUDC. CWIP in rate base 
increases the regulated utility's cash flow during the construction 
period. This in turn decreases the amount of capital the regulated 
utility must raise to finance construction projects, and thus may 
reduce the cost of capital. When a regulated utility is permitted to 
include CWIP in rate base, it is not allowed to also accrue AFUDC on 
the same construction project costs.
    \44\ See Order No. 679, FERC Stats. & Regs. ] 31,222 at P 103 
n.70 (citing 18 CFR 35.25(c)(3)).
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    (Q57) What are the appropriate bases for evaluating a request to 
recover 100 percent of CWIP? Does including 100 percent of CWIP in rate 
base more appropriately address project specific risks and challenges 
or the aggregate risks and challenges associated with all projects an 
applicant is undertaking in a certain time period? If the aggregate 
risks and challenges are more appropriately addressed by including 100 
percent of CWIP in rate base, how should the risks be reconciled with a 
Commission policy to evaluate risks and challenges on a project 
specific basis?
    (Q58) What is the impact on ratepayers of allowing 100 percent CWIP 
in rate base prior to commercial operation? What kind of information 
should an applicant submit to make a showing that granting 100 percent 
CWIP will benefit consumers?
    (Q59) In addition to the rate impact data required under 18 CFR 
35.13(h)(31) and (32), what rate impacts tests could be considered in 
evaluating a request for including 100 percent of CWIP in rate base?
    (Q60) Should the CWIP incentive not apply or be suspended in 
circumstances where an incentives project has been suspended for an 
indefinite period of time and there is no additional construction 
activity on the project?
    (Q61) In the past, the Commission implemented a phasing-in of rate 
treatments to limit their rate impact to consumers.\45\ Should the 
Commission consider such limits for certain incentives such as CWIP?
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    \45\ Construction Work In Progress for Public Utilities; 
Inclusion of Costs in Rate Base, Order No. 298, 48 Fed. Reg. 24,323 
(June 1, 1983), FERC Stats. & Regs. ] 30,455 (1983), clarification 
on order on reh'g, Order No. 298-B, 48 Fed. Reg. 55,281 (December 
12, 1983), FERC Stats. & Regs. ] 30,524 (1983). (Where the 
Commission limited the rate increase due to CWIP in rate base to 6 
percent in the first year and an additional 6 percent in the second 
year, stating that ``[t]his initial limitation on CWIP in rate base 
ensures that, in those instances in which utilities have 
disproportionately large construction programs, the initial impacts 
of the final rule on consumers will not be severe.'').
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    (Q62) If the applicant is granted an incentive ROE adder and 100 
percent CWIP in rate base, should the incentive ROE adder be applied to 
100 percent of CWIP included in rate base?
v. Other Incentives
1. Hypothetical Capital Structure
    38. A hypothetical capital structure allows an applicant to 
determine its overall rate of return for revenue requirement and 
ratemaking purposes based on a capital structure that is usually more 
heavily weighted towards equity financing compared to its actual 
capital structure. The relatively higher cost of equity compared to the 
cost of debt and the heavier weighting of equity may serve to increase 
the overall return, enhance cash flows, lower financing costs, and 
improve credit ratings. In practice, the Commission has placed 
limitations on this incentive by requiring that the actual capital 
structure match the hypothetical capital structure at some point over 
time, such as when a project commences operations. The Commission seeks 
comment on the following:
    (Q63) Is there a reasonable debt to equity split, or a procedure 
for determining such, that should be applied generally to future 
applications, or that can be applied generally to classifications, such 
as a general split for publicly owned projects and a general split for 
investor owned projects? Or is this best suited for case by case 
determination? What kind of information should an applicant provide in 
order to support an application for a hypothetical capital structure?
    (Q64) Is there a reasonable point in time at which the actual 
capital structure should be required to match the hypothetical capital 
structure and that should be applicable generally to future 
applications?

2. Pre-Commercial Cost Recovery

    39. In Order No. 679, the Commission permitted, as an incentive, 
applicants to

[[Page 30876]]

expense pre-commercial costs and to recover them in current rates.\46\ 
Absent this incentive, pre-commercial costs would generally be 
capitalized as part of CWIP, and subsequently earn a return on equity 
as well as a return of equity through depreciation, once a project goes 
into service. The incentive aspect of pre-commercial cost recovery 
allows applicants to expense and recover the costs through rates during 
the construction period which improves project cash flows and financial 
metrics, and mitigates the uncertainty over cost recovery of 
expenditures incurred prior to a project's regulatory approval and 
commercial operation. Further, for new market entrants with no 
established rate mechanism, the Commission has allowed the deferral of 
pre-commercial costs as a regulatory asset.\47\ Where deferred recovery 
and regulatory asset treatment are provided, utilities defer the pre-
commercial costs until they have an established rate structure in 
place, at which time they may file to recover the costs, including 
carrying charges,\48\ generally over the construction period, or five 
years. The Commission seeks comment on the following questions:
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    \46\ The Commission explained that pre-commercial costs 
generally include, for example, expenditures for preliminary 
surveys, plans and investigations, made for the purpose of 
determining the feasibility of utility projects, and the costs of 
studies and analyses mandated by regulatory bodies related to plant 
in service which are included in Account 183. The Commission also 
stated that it would entertain proposals by public utilities to 
expense other types of costs on a case-by-case basis. Order No. 679, 
FERC Stats. & Regs. ] 31,222 at P 122.
    \47\ The Commission has allowed legal fees and company formation 
and start-up costs to be expensed and recovered, with recovery 
contingent on the entity having a rate in place to recover such 
costs. The grant of the incentive does not create the mechanism by 
which to recover the costs.
    \48\ Applicants seeking deferred recovery of pre-commercial 
costs as a regulatory asset have typically requested carrying 
charges on the regulatory asset from the time it is established 
until it is fully amortized. The Commission, in practice, permits 
carrying charges on pre-commercial costs at the overall cost of 
capital, including the incentive ROE adder.
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    (Q65) CWIP related costs should not be recorded as pre-commercial 
costs. What additional measures could be considered to prevent the 
inclusion of costs as pre-commercial that should appropriately be 
recorded as CWIP and recovered over the useful life of a project? In 
the case of deferred recovery, would limiting the period of time that 
carrying charges will be allowed help to ensure timely development of a 
project and guard against unreasonable delays?
    (Q66) If incentives for both pre-commercial cost recovery on a 
deferred basis and 100 percent recovery of abandoned plant costs are 
granted, is there a relationship between the two incentives such that 
the Commission should review the types of costs that are included in 
the regulatory asset, the allowance of carrying charges, or the time 
period over which a regulatory asset is recovered in rates for pre-
commercial cost recovery?
    (Q67) Does the current practice of allowing carrying charges on 
deferred recovery of pre-commercial costs at the overall cost of 
capital, including incentive ROE adders, appropriately balance the 
sharing of risks of transmission project development between utility 
applicants and customers and affect the overall level of pre-commercial 
costs? How should this practice be changed to better allocate the risks 
between applicants and customers and to ensure that pre-commercial 
costs are reasonable?
3. Accelerated Depreciation
    40. Accelerated depreciation is a regulatory incentive that allows 
an applicant to recover its return of capital costs more rapidly than 
under traditional regulatory treatment, e.g., 15 years or less. As a 
non-cash expense, accelerated depreciation may serve to enhance the 
applicant's cash flows and credit ratings. There have been very few 
incentive requests for accelerated depreciation as a transmission 
incentive. The Commission seeks comment on whether there are issues 
that the Commission should consider in reviewing this incentive.
4. Advanced Technology
    41. In Order No. 679, the Commission required each applicant 
seeking incentives under the rule to submit a Technology Statement that 
describes the advanced technologies it considered for the subject 
project and, if those technologies are not to be employed in a project, 
an explanation for that decision.\49\ The Commission recognized that in 
enacting FPA section 219 as part of EPAct 2005, Congress envisioned a 
connection to section 1223 of EPAct 2005, which required the Commission 
to ``encourage, as appropriate, the deployment of advanced transmission 
technologies.'' \50\ The Commission observed that section 1223 lists 18 
specific advanced transmission technologies, but also stated that this 
list of technologies was not intended to be exclusive and that the 
Commission ``expect[s] new technologies to continually evolve.'' \51\
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    \49\ Order No. 679, FERC Stats. & Regs. ] 31,222 at P 302.
    \50\ Id. P 290, 302.
    \51\ Id. P 290.
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    42. The Commission's consideration of the required Technology 
Statements has evolved with experience in processing applications under 
Order No. 679. For example, the Commission has clarified that an 
applicant's proposal to use a technology listed in section 1223 does 
not compel the Commission to grant that applicant any particular 
incentives. The Commission has stated that it retains discretion to 
make such determinations on a case-by-case basis, noting that the 
Congressional directive in section 1223 requires the Commission to 
encourage the deployment of such technologies ``as appropriate.'' \52\
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    \52\ The Nevada Hydro Co., Inc., 122 FERC ] 61,272, at P 84 
(2008); NSTAR Electric Co., 127 FERC ] 61,052, at P 27 (2009) 
(NSTAR).
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    43. The Commission has also explained that an applicant's proposal 
to use advanced technologies may be relevant both as part of the 
Commission's nexus analysis for an incentive ROE adder based on a 
project's risks and challenges and as a possible basis for a separate 
advanced technology incentive ROE adder. In the former context, the 
Commission has observed that advanced technologies present 
``technology-related'' risks and challenges that are appropriately 
considered under the Order No. 679 nexus test together with other types 
of risks and challenges associated with a project.\53\ In the latter 
context, the Commission has stated it reviews record evidence to decide 
if the proposed technology warrants a separate adder because it 
reflects a new or innovative domestic use of the technology that will 
improve reliability, reduce congestion, or improve efficiency.\54\ The 
Commission has explained the relationship between these issues, noting 
that consideration of an applicant's proposal to use advanced 
technologies as part of the nexus analysis does not necessarily mean 
that the applicant qualifies for a separate advanced technology 
incentive ROE adder.\55\ As discussed above, the use of advanced 
technology may be relevant to achieving the goals of section 219, 
including increasing the efficiency of new and existing transmission 
facilities.
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    \53\ PacifiCorp, 125 FERC ] 61,076, at P 51 (2008); Tallgrass 
Transmission, LLC, 125 FERC ] 61,248, at P 55 (2008) (Tallgrass).
    \54\ The United Illuminating Co., 126 FERC ] 61,043, at P 14 
(2009); NSTAR, 127 FERC ] 61,052 at P 27.
    \55\ Tallgrass, 125 FERC ] 61,248 at P