OG&E 2013 Annual Report Download - page 79

OGE Energy Corp. 73
Pending Regulatory Matters
FERC Order No. 1000, Final Rule on
Transmission Planning and Cost Allocation
On July 21, 2011, the FERC issued Order No. 1000, which revised
the FERC’s existing regulations governing the process for planning
enhancements and expansions of the electric transmission grid in a
particular region, along with the corresponding process for allocating
the costs of such expansions. Order No. 1000 leaves to individual
regions to determine whether a previously-approved project is subject
to reevaluation and is therefore governed by the new rule.
Order No. 1000 requires, among other things, public utility
transmission providers, such as the SPP, to participate in a process
that produces a regional transmission plan satisfying certain standards,
and requires that each such regional process consider transmission
needs driven by public policy requirements (such as state or Federal
policies favoring increased use of renewable energy resources). Order
No. 1000 also directs public utility transmission providers to coordinate
with neighboring transmission planning regions. In addition, Order No.
1000 establishes specific regional cost allocation principles and directs
public utility transmission providers to participate in regional and inter-
regional transmission planning processes that satisfy these principles.
On the issue of determining how entities are to be selected to
develop and construct the specific transmission projects, Order No.
1000 directs public utility transmission providers to remove from the
FERC-jurisdictional tariffs and agreements provisions that establish
any Federal “right of first refusal” for the incumbent transmission owner
(such as OG&E) regarding transmission facilities selected in a regional
transmission planning process, subject to certain limitations. However,
Order No. 1000 is not intended to affect the right of an incumbent
transmission owner (such as OG&E) to build, own and recover costs for
upgrades to its own transmission facilities, and Order No. 1000 does
not alter an incumbent transmission owner’s use and control of existing
rights of way. Order No. 1000 also clarifies that incumbent transmission
owners may rely on regional transmission facilities to meet their reliabil-
ity needs or service obligations. The SPP currently has a “right of first
refusal” for incumbent transmission owners and this provision has played
a role in OG&E being selected by the SPP to build various transmission
projects in Oklahoma. These changes to the “right of first refusal” apply
only to “new transmission facilities,” which are described as those sub-
ject to evaluation or reevaluation (under the applicable local or regional
transmission planning process) subsequent to the effective date of the
regulatory compliance filings required by the rule, which were filed on
November 13, 2012. On May 29, 2013, the Governor signed House Bill
1932 into law which establishes a right of first refusal for Oklahoma
incumbent transmission owners, including OG&E, to build new trans-
mission projects with voltages under 300 kilovolts that interconnect to
those incumbent entities’ existing facilities. OG&E believes this law is
consistent with the language of Order No. 1000.
On July 18, 2013, the FERC issued an order on the SPP’s Order No.
1000 compliance filing. This order accepted in part and rejected in part
the SPP’s plan for complying with Order No. 1000. The FERC rejected
the SPP’s plan to retain the right of first refusal for projects that would
operate between 100 kilovolts and 300 kilovolts. However, the FERC
clarified that a right of first refusal was appropriate in certain circum-
stances. It is not clear how the FERC’s order will relate to the recently
enacted Oklahoma law addressing a right of first refusal for lower volt-
ages. On November 15, 2013, SPP made its FERC compliance filing, as
required by the July 18, 2013 order. The SPP changes to its tariff and
Membership Agreement included provisions that (i) clarify that facilities
between 100 kilovolts and 300 kilovolts would be subject to the com-
petitive selection process, (ii) only allow certain evidence, such as state
laws (like House Bill 1932) and the holders of existing rights of way, to
be considered during the competitive selection process and not earlier
in the process; (iii) apply a right of first refusal to transmission projects
needed for reliability within three years in certain situations; and (iv)
revise the tariff’s competitive selection process, including changes to
the criteria for identifying qualifying transmission owners, the require-
ments for submission of information by transmission owners seeking
to participate in competitive selections, and the procedures that govern
the competitive selection process.
OGE Energy cannot, at this time, determine the precise impact of
Order No. 1000 on OG&E. OG&E has filed a petition for review in the
D.C. Circuit relating to the same matter. Nevertheless, at the present
time, OGE Energy has no reason to believe that the implementation
of Order No. 1000 will impact OG&E’s transmission projects currently
under development and construction for which OG&E has received a
notice to proceed from the SPP.
Fuel Adjustment Clause Review for Calendar Year 2012
On July 31, 2013, the OCC Staff filed an application to review OG&E’s
fuel adjustment clause for calendar year 2012, including the prudence
of OG&E’s electric generation, purchased power and fuel procurement
costs. OG&E filed the necessary information and documents needed to
satisfy the OCC’s minimum filing requirement rules on October 9, 2013.
A hearing on this matter is scheduled for April 24, 2014.