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Commissioner Tony Clark Statement
April 18, 2013
Docket Nos.: ER13-103-000, ER12-2709-000, ER13-87-000

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CAISO’s Order No. 1000 Compliance Filing

“While I support much of this order, I write separately on two matters from which I depart from the majority position.

“The Commission directs the California Independent System Operator (CAISO) to remove tariff language intended to ensure the policies CAISO considers for transmission planning are “not inconsistent with the Federal Power Act.” Contrary to the order’s determination, I find no harm in making explicit the ISO will only consider policies in its planning process that are consistent with the Federal Power Act.

“We had previously accepted this language in the tariff, but here, the Commission requires its removal. In this case the Commission is denying the ISO the ability to acknowledge the Federal Power Act, and insofar as a majority of the Commission has already indicated in separate Order No. 1000 compliance orders that certain state and local laws should not be acknowledged in tariffs,1 this call is consistent with that planning construct. Yet, this continues a trend I find unsettling whereby Order No. 1000 compliance orders prohibit planning entities from taking notice of existing local, state, and now, federal laws that may have an impact on transmission development.

“This construct provides that the Order No. 1000 planning process will proceed in a theoretical world where planning is bound by certain laws and policies that drive transmission needs, while at the same time hermetically sealed from other laws and policies that impact how, where and when lines get built. In my view, planning will be far more likely to result in actual infrastructure development if the public utilities that undertake planning processes are able to consider all inputs and constraints including governing local, state and federal laws.

“This is not to say CAISO should not be required to thoroughly explain why it chose to consider or not consider certain policies. I would have allowed the tariff language to remain, but clarified that CAISO must provide a detailed explanation of why it decided not to consider a public policy requirement on the basis that it was “inconsistent with the Federal Power Act.”

“On a separate matter, over the objection of Southern California Edison, the Commission allows CAISO to direct the applicable incumbent participating transmission owner to develop an abandoned economic or policy-driven transmission project that no other qualified transmission developer is willing to develop—leaving the incumbent responsible for a project that it does not want to build and that was rejected by its competitors.

“While under the CAISO planning process, economic and policy projects may have reliability components, there may also be policy and economic projects that do not include any reliability elements. Order No. 1000 contemplated the incumbent being directed to construct a reliability project, and I could support such a reliability backstop, but CAISO’s tariff exceeds that narrow intent. Although the incumbent transmission owner is ultimately responsible for resolving local reliability violations, it seems untenable to force an incumbent to build an economic or policy line that is almost certainly not the most efficient and cost-effective solution to the underlying reliability concerns, if any. As such, I cannot see how this mandate to build unwanted projects is consistent with the underlying goal of Order No. 1000 to create more efficient and cost effective regional transmission planning.

“Given the reconsideration process, it seems unlikely that CAISO will ever ultimately direct an unwilling incumbent transmission owner to build a policy or economic line, but the persistence of such an obligation demonstrates an inconsistency in Order No. 1000’s premise that it creates an equal playing field for all competitors, which is the basis for the removal of the right of first refusal for incumbent transmission owners. Here, the Commission demonstrates that there really is no such level playing field. In CAISO, incumbent transmission owners no longer have the right to build, but can be directed to build lines that competitors rejected even if the lines are not necessary for reliability.

“Finally, I reiterate here that in Order No. 1000 I would have preserved a federal right of first refusal for projects selected for cost allocation that are (1) determined by the regional planning coordinator as necessary to satisfy NERC reliability standards and (2) located entirely within the transmission provider’s franchised service territory.

“Accordingly, I respectfully dissent in part.”

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    1 See Midwest ISO, 142 FERC ¶ 61,215 (2013) (Clark, Comm’r, dissenting; Moeller, Comm’r, dissenting); PJM ISO, 142 FERC ¶ 61,214 (2013) (Clark, Comm’r, dissenting; Moeller, Comm’r, dissenting)