On May 15, 2014, the Federal Energy Regulatory Commission (“FERC”) granted rehearing of its earlier order requiring the Midcontinent Independent System Operator, Inc. (“MISO”) to remove tariff language that would allow it to take state and local laws and regulations into consideration when selecting a transmission developer to build a transmission project under MISO’s Order No. 1000-compliant regional planning process. ¹In its earlier order, FERC rejected language proposed by MISO that would have allowed MISO to consider state and local laws and regulations granting construction rights or rights of way when determining whether a new transmission project is eligible for MISO’s Order No. 1000 competitive selection process.  The Commission’s reversal means that MISO may consider these relevant state and local laws when determining the developer for a new transmission project.

The MISO Transmission Owners and other parties sought rehearing of the 2013 Order, arguing that FERC’s rejection of MISO’s proposed tariff language is contrary to FERC’s express statements that Order No. 1000 is not intended to preempt, limit, or infringe on state jurisdiction over matters such as siting, permitting, and construction. ²The MISO Transmission Owners and others argued that the subject language does not create a federal right of first refusal, but rather recognizes that a right of first refusal might exist under state or local law, and that any failure to take such limitations into account at an earlier stage of the regional transmission planning process will create conflicts and make the regional transmission planning process less efficient and more costly, contrary to Order No. 1000’s goal of promoting more efficient or cost-effective transmission development.

On rehearing, FERC agreed that precluding MISO from taking into consideration state or local laws that provide rights of first refusal would be “counterproductive and inefficient” and could “unnecessarily delay the development of needed transmission facilities.” ³FERC held that it was inappropriate to prohibit MISO from considering such laws in deciding whether to use a competitive solicitation process for new transmission because doing so “would result in a regional transmission planning process that does not efficiently account for the existing of state or local laws or regulations that impact the siting, permitting, and construction of transmission facilities.”⁴

On the same day, FERC issued orders granting requests for rehearing of similar issues involving Order No. 1000 compliance filings submitted by PJM Interconnection, L.L.C. and South Carolina Electric & Gas Company.  Along with the MISO Rehearing Order, these orders also generally approved the compliance filings submitted in those proceedings and rejected the rehearing requests on other issues.  Commissioner Norris dissented in all three orders, expressing concern that FERC’s orders will give incumbent transmission owners an advantage over nonincumbents in the planning process.

Wright & Talisman, P.C. represented the MISO Transmission Owners in all stages of this proceeding, including both the compliance and rehearing phases, as well as in the Order No. 1000 rulemaking proceeding and related appeals.  Please contact us via email or call (202) 393-1200 if you have any questions or would like further information regarding this proceeding or other electric industry matters.

1. Midwest Indep. Transmission Sys. Operator, Inc., 147 FERC ¶ 61,127 (2014) (“Rehearing Order”).  FERC’s initial order in this proceeding was issued March 22, 2013, and is reported at 142 FERC ¶ 61,215 (2013) (“2013 Order”). ↩︎
2. The other parties that sought rehearing of this issue include MISO, the Organization of MISO States, the National Association of Regulatory Utility Commissioners, the Indiana Utility Regulatory Commission, and a group of Midwestern transmission-dependent utilities. ↩︎
3. Rehearing Order at P 150. ↩︎
4. Id. ↩︎