NERC Panel Mulls Transmission Expansion Report

A North American Electric Reliability Council (NERC) committee this week will be asked to sign off on a draft report that lays out a myriad of actions NERC can take in the areas of transmission planning, cost recovery and siting. The draft report calls on NERC to oversee the strict enforcement of planning standards, as well as see to it that regulators use new cost recovery mechanisms to encourage investment in transmission facilities.

The report, "Transmission Expansion: Issues and Recommendations," was produced for NERC's planning committee by a transmission adequacy issues task force comprised primarily of committee members. The task force said that NERC should consider the expansion of its system adequacy definition to incorporate economic uses of transmission systems beyond the requirements imposed by its reliability planning standards. The task force also recommended that NERC and those responsible for the reliability of transmission systems should survey the generation developers, load-serving entities and electricity marketers as to their information needs related to future transmission capacity and other market requirements.

On cost recovery, the report said that NERC should encourage regulators to determine new cost recovery mechanisms that encourage investment in transmission facilities. These mechanisms include, but are not limited to, reduced amortization periods, accelerated depreciation or the allowance of negotiated arrangements. The task force noted that this recommendation is consistent with the Bush administration's May 2001 national energy policy report, which recommends that the secretary of energy work with FERC to relieve transmission constraints by encouraging the use of incentive rate-making proposals. NERC should also encourage regulators to adopt "clear and consistent" rules for the recovery of transmission investments.

As for siting issues, the report said that NERC should sponsor a forum, in conjunction with the National Association of Regulatory Utility Commissioners, other appropriate state agencies, the Federal Energy Regulatory Commission and applicable Canadian regulatory bodies. The forum would work to develop generalized siting and routing guidelines for transmission projects that cross state, provincial and international borders.

NERC's planning committee will review and take action on whether to approve the transmission draft report at a committee meeting scheduled for this week in Indianapolis.

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