[Federal Register Volume 78, Number 17 (Friday, January 25, 2013)]
[Rules and Regulations]
[Pages 5268-5276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01507]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 2 and 35

[Docket Nos. AD12-9-000 and AD11-11-000]


Allocation of Capacity on New Merchant Transmission Projects and 
New Cost-Based, Participant-Funded Transmission Projects; Priority 
Rights to New Participant-Funded Transmission

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final Policy Statement.

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SUMMARY: The Commission issues this final policy statement to clarify 
and refine its policies governing the allocation of capacity for new 
merchant transmission projects and new nonincumbent, cost-based, 
participant-funded transmission projects. Under this policy statement, 
the Commission will allow developers of such projects to select a 
subset of customers, based on not unduly discriminatory or preferential 
criteria, and negotiate directly with those customers to reach 
agreement on the key rates, terms, and conditions for procuring up to 
the full amount of transmission capacity, when the developers broadly 
solicit interest in the project from potential customers, and 
demonstrate to the Commission that the developer has satisfied the 
solicitation, selection and negotiation process criteria set forth 
herein. The Commission is making these clarifications and refinements 
to fulfill its statutory responsibility of preventing undue 
discrimination and undue preference while providing developers the 
ability to bilaterally negotiate rates, terms, and conditions for the 
full amount of transmission capacity with potential customers. These 
clarifications and refinements will be implemented within the 
Commission's existing four-factor analysis used to evaluate requests 
for negotiated rate authority for transmission service. The Commission 
will apply this policy statement on a prospective basis to filings 
received after this issuance.

DATES: These policies became effective January 17, 2013.

FOR FURTHER INFORMATION CONTACT:

Becky Robinson, Office of Energy Policy and Innovation, Federal Energy 
Regulatory Commission, 888 First Street NE., Washington, DC 20426, 
(202) 502-8868, [email protected];
Andrew Weinstein, Office of General Counsel, Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6230, 
[email protected];
Brian Bak, Office of Energy Policy and Innovation, Federal Energy 
Regulatory Commission, 888 First Street NE., Washington, DC 20426, 
(202) 502-6574, [email protected].

SUPPLEMENTARY INFORMATION: 
    Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, 
John R. Norris, Cheryl A. LaFleur, and Tony T. Clark.

Final Policy Statement

(Issued January 17, 2013)

I. Introduction

    1. The Commission issues this final policy statement to clarify and 
refine its policies governing the allocation of capacity for new 
merchant transmission projects and new nonincumbent, cost-based, 
participant-funded transmission projects. Under this policy statement, 
the Commission will allow developers of such projects to select a 
subset of customers, based on not unduly discriminatory or preferential 
criteria, and negotiate directly with those customers to reach 
agreement on the key rates, terms, and conditions for procuring up to 
the full amount of transmission capacity, when the developers (1) 
broadly solicit interest in the project from potential customers, and 
(2) demonstrate to the Commission that the developer has satisfied the 
solicitation, selection and negotiation process criteria set forth 
herein. The Commission is making these clarifications and refinements 
to fulfill its statutory responsibility of preventing undue 
discrimination and undue preference while providing developers the 
ability to bilaterally negotiate rates, terms, and conditions for the 
full amount of transmission capacity with potential customers. These 
clarifications and refinements will be implemented within the 
Commission's existing four-factor analysis used to evaluate requests 
for negotiated rate authority for transmission service.\1\ The 
Commission will apply this policy statement on a prospective basis to 
filings received after this issuance.
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    \1\ See infra note 6 and P 15.
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II. Background

    2. The Commission first granted negotiated rate authority to a 
merchant transmission project developer over a decade ago, finding that 
merchant transmission can play a useful role in expanding competitive 
generation alternatives for customers.\2\ Unlike traditional utilities 
recovering their costs-of-service from captive and wholesale customers, 
investors in merchant transmission projects assume the full market risk 
of development.\3\ Over the course of a number of early proceedings, 
the Commission developed ten criteria to guide its analysis in making a 
determination as to whether negotiated rate authority would be just and 
reasonable for a given merchant transmission project.\4\ Two of these 
criteria were that (1) an open season process should be employed to 
initially allocate all transmission capacity and (2) the results of the 
open season should be posted on an Open Access Same-Time Information 
System (OASIS) and filed in a report with the Commission.\5\
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    \2\ TransEnergie U.S., Ltd., 91 FERC ] 61,230, at 61,838 (2000) 
(TransEnergie).
    \3\ Id. at 61,836.
    \4\ Id.; Neptune Regional Transmission System, LLC, 96 FERC ] 
61,147, at 61,633 (2001) (Neptune); Northeast Utilities Service Co., 
97 FERC ] 61,026, at 61,075 (2001) (Northeast Utilities I); 
Northeast Utilities Service Co., 98 FERC ] 61,310, at 62,327 (2002) 
(Northeast Utilities II).
    \5\ The ten criteria were: (1) The merchant transmission 
facility must assume full market risk; (2) the service should be 
provided under the open access transmission tariff (OATT) of the 
Independent System Operator (ISO) or Regional Transmission 
Organization (RTO) that operates the merchant transmission facility 
and that operational control be given to that ISO or RTO; (3) the 
merchant transmission facility should create tradable firm secondary 
transmission rights; (4) an open season process should be employed 
to initially allocate transmission rights; (5) the results of the 
open season should be posted on the OASIS and filed in a report to 
the Commission; (6) affiliate concerns should be adequately 
addressed; (7) the merchant transmission facility not preclude 
access to essential facilities by competitors; (8) the merchant 
transmission facilities should be subject to market monitoring for 
market power abuse; (9) physical energy flows on merchant 
transmission facilities should be coordinated with, and subject to, 
reliability requirements of the relevant ISO or RTO; and (10) 
merchant transmission facilities should not impair pre-existing 
property rights to use the transmission grids of inter-connected 
RTOs or utilities. E.g., Northeast Utilities I, 97 FERC ] 61,026 at 
61,075.
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    3. In recent years, a number of merchant and nontraditional 
transmission developers have sought guidance from the Commission 
regarding application of open access principles to new transmission 
facilities through petitions for declaratory orders. As the Commission 
addressed these requests, its policies evolved over time to provide 
potential customers adequate opportunities to obtain service while also 
providing transmission developers adequate certainty to assist with 
financing transmission projects. As a result of these evolving 
policies,

[[Page 5269]]

different rules have been adopted regarding capacity allocation for 
merchant transmission projects and nonincumbent, cost-based, 
participant-funded transmission projects.
    4. In Chinook, the Commission refined its approach to evaluating 
merchant transmission by adopting a four-factor analysis.\6\ Under this 
analysis, the Commission continues to rely upon an open season and a 
post-open season report as a means to provide transparency in the 
allocation of initial transmission capacity and ensure against undue 
discrimination among potential customers in the award of transmission 
capacity. Specifically, the Commission evaluates the terms and 
conditions of the open season as part of ensuring no undue 
discrimination (second factor),\7\ and uses the open season as an added 
protection in overseeing any affiliate participation, to ensure no 
undue preference or affiliate concerns (third factor).
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    \6\ The four factors are: (1) The justness and reasonableness of 
rates; (2) the potential for undue discrimination; (3) the potential 
for undue preference, including affiliate preference; and (4) 
regional reliability and operational efficiency requirements. E.g., 
Chinook Power Transmission, LLC, 126 FERC ] 61,134, at P 37 (2009) 
(Chinook).
    \7\ Also, the Commission looks to a developer's own OATT 
commitments or its commitment to turn operational control over to an 
RTO or ISO. See id. P 40. Guidance given in this policy statement 
with regards to satisfying the second factor is directed at the open 
season requirement; the Commission will continue to require merchant 
and other transmission developers either to file an OATT or to turn 
over control to an RTO or ISO.
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    5. The Chinook order also marked a change in Commission policy on 
capacity allocation, as in that order the Commission for the first time 
authorized developers to allocate some portion of capacity through 
anchor customer presubscription, while requiring that the remaining 
portion be allocated in a subsequent open season. The Commission 
implemented this policy to achieve the dual goals of requiring an open 
season process that ensures capacity on a merchant transmission project 
is allocated transparently in an open, fair, and not unduly 
discriminatory manner, while permitting an anchor customer model that 
enables developers of merchant transmission projects to meet the 
financial challenges unique to merchant transmission development.\8\ 
Since the Chinook order, the Commission has issued orders on several 
new merchant and other nontraditional transmission development 
proposals, including granting requests to allocate up to 75 percent of 
a transmission project's capacity to anchor customers.\9\
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    \8\ See id. P 46.
    \9\ See, e.g., Champlain Hudson Power Express, Inc., 132 FERC ] 
61,006 (2010); Rock Island Clean Line LLC, 139 FERC ] 61,142 (2012); 
Southern Cross Transmission LLC, 137 FERC ] 61,207 (2011).
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    6. The Commission also has received proposals from transmission 
developers regarding the allocation of capacity on cost-based, 
participant-funded transmission projects. These proceedings involved 
incumbent transmission developers,\10\ while one involved a 
nonincumbent transmission developer.\11\ In NU/NSTAR, the Commission 
approved the structure of a transaction whereby a customer was granted 
usage rights to transmission capacity in exchange for funding the 
transmission expansion, under the reasoning that any potential 
transmission customer has the right to request transmission service 
expansion from a transmission owning utility, and that utility is 
obligated to make any necessary system expansions and offer service at 
the higher of an incremental cost or an embedded cost rate to the 
transmission customer. More recently, in National Grid, the Commission 
found again that participant funding of transmission projects by 
incumbent transmission providers is not inconsistent with the 
Commission's open access requirements.\12\ Cost-based participant-
funded projects are similar to merchant projects in that both involve 
willing customers assuming part of the risk of a transmission project 
in return for defined capacity rights; i.e., there is no direct 
assignment of costs to captive customers. Cost-based participant-funded 
projects differ between incumbents and nonincumbents, in that incumbent 
transmission providers have a clearly defined set of existing 
obligations under their tariffs for the expansion of their existing 
transmission facilities, whereas nonincumbents have no existing 
obligation to build any transmission facilities.
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    \10\ See, e.g., Northeast Utilities Service Company, NSTAR 
Electric Company, 127 FERC ] 61,179 (2009) (NU/NStar), order denying 
reh'g and clarification, 129 FERC ] 61,279 (2009); National Grid 
Transmission Services Corporation and Bangor Hydro Electric Company, 
139 FERC ] 61,129 (2012) (National Grid).
    \11\ See Grasslands Renewable Energy, LLC, 133 FERC ] 61,225 
(2010).
    \12\ National Grid, 139 FERC ] 61,129 at P 29.
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A. Technical Conference and Workshop

    7. To gain feedback regarding the Commission's capacity allocation 
policies, the Commission held a technical conference in March 2011 to 
discuss the extent to which nonincumbent developers of transmission 
should be provided flexibility in the allocation of rights to use 
transmission facilities developed on a cost-of-service or negotiated 
rate basis.\13\ Participants at that conference and subsequent 
commenters acknowledged the value in widely soliciting new customers, 
but they also expressed the desire to be able to allocate 100 percent 
of their projects' capacity through bilateral negotiations with 
identified customers.\14\ Based on these comments, the Commission held 
a follow up workshop in February 2012 to obtain input on potential 
reforms to the Commission's capacity allocation policies.\15\ Many 
participants at the 2012 workshop emphasized that a bilateral exchange 
of information is necessary to address the unique needs of developers 
and their potential customers, and that a rigid open season process 
does not allow for bilateral exchanges. However, other commenters at 
the 2012 workshop voiced concerns with the merchant transmission model 
in general, and discouraged the Commission from pursuing policies that 
enable anchor customers to exclude or burden generation competitors or 
engage in other abusive practices the Commission sought to eradicate in 
Order No. 888.
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    \13\ ``Priority Rights to New Participant-Funded Transmission,'' 
Docket No. AD11-11-000, March 15, 2011. This technical conference 
also addressed generator lead lines, but those facilities are not 
the subject of this proposed policy statement.
    \14\ See, e.g., Clean Line Energy Partners May 5, 2011 Comments 
at 7; LS Power Transmission, LLC May 5, 2011 Comments at 3-4; 
Transmission Developers, Inc. May 5, 2011 Comments at 4-5; Western 
Independent Transmission Group May 5, 2011 Comments at 6; and 
Tonbridge Power Inc. April 19, 2011 Comments at 2.
    \15\ ``Allocation of Capacity on New Merchant Transmission 
Projects and New Cost-Based, Participant-Funded Transmission 
Projects,'' Docket No. AD12-9-000 (February 28, 2012).
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B. Proposed Policy Statement

    8. Informed by the discussion at the workshop and technical 
conference and by comments filed afterwards, the Commission in July 
2012 issued a proposed policy statement on the allocation of capacity 
on new merchant transmission projects and new cost-based, participant-
funded transmission projects. The Commission proposed to allow 
developers of new merchant transmission projects and new nonincumbent 
cost-based, participant-funded transmission projects to select a subset 
of customers, based on not unduly discriminatory or preferential 
criteria, and negotiate directly with those customers to reach 
agreement on the rates, terms, and conditions for procuring capacity. 
The proposed policy would allow such direct negotiations

[[Page 5270]]

when the developers (1) broadly solicit interest in the project from 
potential customers, and (2) demonstrate to the Commission that the 
developer has satisfied the solicitation, selection, and negotiation 
process criteria set forth in the proposed policy statement. Such 
proposed policy would also allow the developer to allocate up to 100 
percent of the capacity on a transmission project to a single customer, 
including an affiliate, if the developer has satisfied the obligations 
set forth in the proposed policy statement.
    9. The Commission received comments on the proposed policy 
statement from 18 entities.\16\ As a general matter, the proposed 
policy statement received broad support in the comments received, 
albeit there were some comments in opposition. In addition, the 
Commission received requests to clarify the policies articulated in the 
proposed policy statement. We summarize here the general comments in 
support and in opposition to the proposed policy statement, with 
comments requesting clarification noted in the discussion of specific 
elements of this final policy statement.
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    \16\ American Antitrust Institute (AAI); American Electric Power 
Services Corporation (AEP); American Public Power Association 
(APPA); American Wind Energy Association (AWEA); Clean Line Energy 
Partners, LLC (Clean Line); Duke Energy Corporation (Duke); Edison 
Electric Institute (EEI); LSP Transmission Holdings, LLC (LSP 
Transmission); National Grid USA; National Rural Electric 
Cooperative Association (NRECA); New Jersey Division of Rate Counsel 
(NJ Rate Counsel); New York Transmission Owners (NYTO); Northeast 
Utilities Service Company (Northeast Utilities); Pattern 
Transmission, LP; Transmission Access Policy Study Group (TAPS); 
Transmission Developers, Inc. (TDI); TransWest Express, LLC; and 
Western Independent Transmission Group (WITG).
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    10. Many commenters broadly support the proposed policy 
statement.\17\ WITG asserts that the proposed policy statement will 
give new transmission development momentum by allowing transmission 
developers to discuss contractual arrangements, technical 
specifications and project timing with prospective customers.\18\ WITG 
asserts that, under the proposed policy statement, a transmission 
developer will be more able to ``right-size'' its project based on 
market interest for the project.\19\ AWEA and NYTO similarly suggest 
that the proposed policy statement will allow merchant transmission 
developments to be tailored to the needs of the market.\20\ EEI asserts 
that the proposed policy statement will allow transmission developers 
to identify viable transmission customers early in the process, and 
suggests that the flexibility allowed for in the proposed policy 
statement will aid funding and enable construction on a timely 
basis.\21\ Duke Energy also asserts that the bilateral negotiation 
process allowed for in the proposed policy statement will provide the 
most efficient and effective way of ensuring that commercial 
transmission projects are successfully completed.\22\
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    \17\ AEP; AWEA; Clean Line; Duke; EEI; LSP Transmission; NYTO; 
National Grid USA; Northeast Utilities; Pattern Transmission, LP; 
TDI; TransWest Express, LLC; and WITG.
    \18\ WITG at 3.
    \19\ WITG at 4.
    \20\ AWEA at 3; NYTO at 2.
    \21\ EEI at 5.
    \22\ Duke at 3.
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    11. AWEA emphasizes the importance of merchant transmission 
development in removing barriers to the development of renewable 
energy.\23\ AWEA notes that the proposed policy statement will allow 
transmission developers to provide incentives to first-movers, which 
should encourage potential transmission customers to negotiate with 
developers early in the development process. In contrast, AWEA asserts 
that, under current Commission policy, ``a prospective transmission 
customer has no economic incentive to commit to a capacity allocation 
early during the development process because that customer can obtain 
the same terms, and conditions during the open season auction without 
taking any development risk.'' \24\
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    \23\ AWEA at 6.
    \24\ AWEA at 6.
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    12. However, APPA, NRECA, NJ Rate Counsel and TAPS argue that 
changes to our capacity allocation policies are unnecessary, run 
counter to our open access principles, and are inconsistent with our 
obligations under the Federal Power Act (FPA). These commenters argue 
that the Commission's proposal to allow allocation of 100 percent of a 
merchant's capacity through bilateral negotiations is counter to the 
Commission's core obligation under sections 205, 206, and 217(b)(4) 
\25\ of the FPA, compromises the open access principles at the core of 
Order Nos. 888,\26\ 890 \27\ and 1000,\28\ and will result in an 
unjust, unreasonable, and unduly discriminatory paradigm.\29\ For 
example, TAPS argues that the Commission should not relax its merchant 
policies but should instead continue to require a substantial portion 
of the capacity to be made available to other customers, through an 
open season, on the same rates and terms as are applied to the anchor 
customer(s).\30\
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    \25\ APPA and NRECA argue the Commission has ignored its 
statutory obligation under FPA section 217(b)(4) that directs the 
Commission to facilitate the planning and expansion of transmission 
facilities to meet the reasonable needs of load-serving entities to 
satisfy their service obligations. APPA at 12; NRECA at 11-12.
    \26\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery 
of Stranded Costs by Public Utilities and Transmitting Utilities, 
Order No. 888, FERC Stats. & Regs. ] 31,036 (1996), order on reh'g, 
Order No. 888-A, FERC Stats. & Regs. ] 31,048, order on reh'g, Order 
No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C, 
82 FERC ] 61,046 (1998), aff'd in relevant part sub nom. 
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (DC 
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
    \27\ Preventing Undue Discrimination and Preference in 
Transmission Service, Order No. 890, FERC Stats. & Regs. ] 31,241, 
order on reh'g, Order No. 890-A, FERC Stats. & Regs. ] 31,261 
(2007), order on reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008), 
order on reh'g, Order No. 890-C, 126 FERC ] 61,228 (2009), order on 
clarification, Order No. 890-D, 129 FERC ] 61,126 (2009).
    \28\ Transmission Planning and Cost Allocation by Transmission 
Owning and Operating Public Utilities, Order No. 1000, FERC Stats. & 
Regs. ] 31,323 (2011), order on reh'g, Order No. 1000-A, 139 FERC ] 
61,132, order on reh'g, Order No. 1000-B, 141 FERC ] 61,044 (2012).
    \29\ APPA at 3; NJ Rate Counsel at 4-9; NRECA at 4-9, 12; and 
TAPS at 10. TAPS argues that the Commission's proposed policy 
statement will (1) result in undersized, single-purpose merchant 
transmission facilities with restricted access, (2) undermine 
regional transmission planning processes, (3) balkanize the grid and 
impair competitive wholesale markets, and (4) hamstring access to 
competitive generation and transmission development. TAPS at 1-5.
    \30\ TAPS at 10.
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    13. APPA and NRECA assert that our existing policies already 
provide substantial flexibility and have not prevented the development 
of merchant transmission projects.\31\ They argue that the incentives 
inherent in the Commission's proposed policy statement are poorly 
aligned with the Commission's goals. TAPS similarly refutes the claim 
that developers have an inherent incentive to widely solicit interest 
in merchant transmission projects, arguing that once a developer takes 
on an anchor customer, its opportunity and incentives align with that 
customer.\32\
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    \31\ APPA at 4; NRECA at 5.
    \32\ TAPS at 6-7, 9.
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    14. Further, NJ Rate Counsel argues that the proposed policy 
statement may have the unintended consequence of reducing competition 
in the long run and thus ultimately increasing the delivered cost of 
electricity.\33\ NJ Rate Counsel and TAPS both argue that the 
Commission has long recognized that

[[Page 5271]]

transmission is a natural monopoly and that ``the most likely route to 
market power in today's electric utility industry lies through 
ownership or control of transmission facilities.'' \34\ TAPS and NRECA 
underscore concerns over transmission siting fatigue \35\ and right-of-
way limitations, arguing that a small wind developer excluded from a 
merchant project is unlikely to be able to reach the market.\36\
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    \33\ NJ Rate Counsel at 4.
    \34\ TAPS at 6 (citing Promoting Wholesale Competition Through 
Open Access Non-Discriminatory Transmission Services by Public 
Utilities; Recovery of Stranded Costs by Public Utilities and 
Transmitting Utilities, Order No. 888, FERC Stats. & Regs. ] 31,036 
at 31,643). NJ Rate Counsel additionally posits that, in private 
negotiations, an anchor tenant that expects to gain market power by 
excluding other generators from access to the new transmission 
project could seek an allocation of 100 percent of project capacity 
in return for an offer to split the anticompetitive gains with the 
merchant developer. NJ Rate Counsel at 7.
    \35\ Transmission siting fatigue is the idea that, after a 
transmission line is sited and permitted in an area, it will be 
significantly more difficult to get an additional transmission line 
sited and permitted in that same area.
    \36\ TAPS at 6; NRECA at 10-11.
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III. Final Policy Statement

A. Need for Refined Policies Regarding Allocation of Capacity on 
Transmission Projects

    15. The fundamental concern underlying the second and third factor 
of the Commission's four-factor analysis for negotiated rate authority 
is that new transmission capacity should be allocated in a not unduly 
discriminatory or preferential manner. Based on the Commission's 
experience with new merchant transmission projects and on the comments 
received in this proceeding, the Commission believes that it can 
provide more flexibility in the capacity allocation process for 
customers and transmission developers, while still ensuring that the 
resulting allocation of new transmission capacity is not unduly 
discriminatory or preferential. By adopting the policies herein, the 
Commission seeks to encourage merchant transmission developers 
intending to seek negotiated rate authority to utilize the guidelines 
discussed herein. To the extent the Commission determines that a 
merchant transmission developer complies with such policies, the 
Commission will find that the developer has satisfied the second (undue 
discrimination) and third (undue preference) factors of the four-factor 
analysis.\37\
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    \37\ The remaining two Chinook factors, the justness and 
reasonableness of rates and regional reliability and operational 
efficiency requirements, remain elements of the Commission's 
analysis of merchant applications for negotiated rate authority.
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    16. The Commission therefore refines its capacity allocation 
policies to allow the developer of a new merchant transmission project 
to select a subset of customers, based on not unduly discriminatory or 
preferential criteria, and negotiate directly with those customers to 
reach agreement on the key rates, terms, and conditions for procuring 
up to the full amount of transmission capacity, when the developer (1) 
broadly solicits interest in the project from potential customers and 
(2) demonstrates to the Commission that the developer has satisfied the 
solicitation, selection and negotiation process criteria set forth 
herein. This capacity allocation process also will apply to the 
developer of a new nonincumbent, cost-based, participant-funded 
project.
    17. With regard to concerns raised by commenters that the policies 
described in the proposed policy statement may compromise open access, 
balkanize the grid, or otherwise impair competition, these comments 
were taken into account in our development of the capacity allocation 
policies set forth herein. We believe that the allocation process 
outlined herein will provide the same protections as a formal open 
season process, i.e., that a broad notice at the early stages of 
project development and rigorous demonstration after the selection of 
transmission customers will mirror our earlier requirements. Therefore, 
the Commission disagrees that the refinements to our capacity 
allocation policies reflected herein are a departure from the 
Commission's fundamental policies governing open access and encouraging 
competition. Retaining and refining the process by which capacity is 
allocated on such projects will increase, rather than impair, 
opportunities for customers in need of new transmission service.
    18. Specifically, under this final policy statement the Commission 
will allow merchant transmission developers to allocate up to 100 
percent of their projects' capacity through bilateral negotiations. The 
Commission will also allow capacity allocation to affiliates, when done 
in a transparent manner with the transparency protections adopted in 
this final policy statement, so that other interested parties can voice 
concern if they believe the affiliate was treated preferentially at the 
expense of another party.
    19. The flexibility we afford under the policy outlined below is 
complemented by the emphasis on additional detail the Commission will 
expect from transmission project developers concerning the process they 
utilize to allocate project capacity. The Commission agrees with 
commenters that each merchant transmission project has unique project-
specific characteristics that warrant providing such developers 
flexibility in negotiating risk-sharing and other details. The 
Commission likewise acknowledges that merchant transmission developers 
have inherent incentives to solicit interest widely in a potential 
project. However, the Commission also appreciates commenter concerns 
that counter-incentives may exist that could motivate a developer to 
unduly prefer one or more customers. To protect against undue 
discrimination and undue preference, the Commission will expect 
merchant transmission developers to engage in an open solicitation to 
identify potential transmission customers, and to demonstrate to the 
Commission that the processes leading to the identification of 
customers and execution of relevant capacity arrangements are 
consistent with our policies herein and our open access principles. The 
Commission believes that this approach, when coupled with the existing 
section 206 protections against undue discrimination and undue 
preference, serves the interest of customers and developers alike.\38\
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    \38\ See Chinook, 126 FERC ] 61,134 at P 41.
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    20. We recognize that a developer's incentives may change once it 
has contracted with a customer for a substantial portion of the 
transmission developer's capacity. Indeed, several participants at the 
February 2012 workshop noted that part of the reason developers need to 
be able to negotiate more freely with potential customers is that there 
are a number of details to coordinate between the generation and 
transmission projects, recognizing that once a transmission developer 
has secured customers, its business success depends on its customers' 
success. In this way, the relationship between transmission developer 
and transmission customer will inherently resemble that of a joint 
venture. We believe the policies described herein ensure that there is 
an open, transparent, and fair process to become a transmission 
customer, and in particular we believe that the Commission's review of 
the post-selection demonstration will help discipline the process. We 
further believe the flexibility allowed through bilateral negotiations 
is appropriate in light of the risk-sharing inherent in the 
relationship between the transmission developer and its customers.
    21. The Commission similarly appreciates concerns with respect to 
transmission siting fatigue and right-of-way limitations. Under the 
policies

[[Page 5272]]

adopted herein, the Commission will evaluate a developer's reasoning 
for the sizing of new transmission facilities to ensure that the sizing 
of such facilities was based on objective criteria, rather than the 
result of undue preference or undue discrimination. In doing so, the 
Commission will be cognizant of the potential for undersized 
transmission facilities that show an undue preference for one customer 
over another, involve undue discrimination against a potential 
customer, and/or that, as a result of the anticompetitive nature of the 
sizing, result in rates for transmission service that are not just and 
reasonable. If the Commission finds that a transmission project is 
undersized as the result of undue preference, undue discrimination or 
other anticompetitive behavior, the Commission has the authority to 
reject the proposed allocation of capacity on such project. Moreover, 
entities that believe that such biases resulted in a discriminatory 
allocation of capacity will have the opportunity to protest the 
transmission developer's post-selection demonstration.\39\ The 
Commission can, and has demonstrated that it will, reject unacceptable 
proposals for transmission capacity allocation when appropriate.\40\
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    \39\ Such entities remain entitled to exercise their statutory 
right to challenge such capacity allocations under section 206 of 
the FPA.
    \40\ See, e.g., Mountain States Transmission Intertie, LLC and 
NorthWestern Corp., 127 FERC ] 61,270 (2009).
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    22. We reaffirm here that all merchant transmission developers and 
nonincumbent cost-based, participant-funded transmission projects 
become public utilities at the time their projects are energized (and, 
depending on the circumstances, may become public utilities even 
earlier). Public utility transmission providers are subject to the 
Commission's OATT requirements, including the obligation to expand 
their transmission systems, if necessary, to provide transmission 
service.\41\ This should help to allay concerns about the potential for 
undue discrimination and preference with respect to the sizing of these 
types of projects.
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    \41\ See Pro Forma Open Access Transmission Tariff Sec.  
15.4(a). See also Tres Amigas LLC, 130 FERC ] 61,207, at PP 18, 76, 
80 (2010); SunZia Transmission LLC, 131 FERC ] 61,162, at P 43 
(2010); SunZia Transmission LLC, 135 FERC ] 61,169, at PP 10-11, 22 
(2011); Montana Alberta Tie, Ltd., 119 FERC ] 61,216, at P 7 (2007).
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B. Merchant Projects

1. Open Solicitation Process
    23. Based on the Commission's experience with prior cases and 
information received from the technical conference, the workshop, and 
in responses to the proposed policy statement, the Commission believes 
that bilateral negotiations, if conducted in a transparent manner, may 
serve the same purpose as an open season process to ensure against 
undue discrimination or preference in the provision of transmission 
service. Hence, under this final policy statement, merchant 
transmission developers seeking negotiated rate authority may instead 
engage in an open solicitation of interest in their projects from 
potential transmission customers in lieu of the previous requirement of 
a formal open season. Such open solicitation should include a broad 
notice issued in a manner that ensures that all potential and 
interested customers are informed of the proposed project. For example, 
such notice may be placed in trade magazines or regional energy 
publications, may include communications with regional transmission 
planning groups such as through the Order No. 1000 regional planning 
process,\42\ and may use email distribution lists addressing 
transmission-related matters. In response to commenters that asked that 
we clarify what constitutes broad notice,\43\ we note that these 
examples of broad notice are not intended to be exhaustive or 
prescriptive. A developer should make reasonable efforts to ensure that 
all potential transmission customers would be made aware of the 
intention to develop the project.
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    \42\ We note that NJ Rate Counsel suggested that a group's 
participation in the Order No. 1000 process could bear on the open 
solicitation requirements. NJ Rate Counsel at 12-13.
    \43\ See, e.g., Pattern Transmission, LP at 10; WITG at 4.
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    24. Such notice should include transmission developer points of 
contact and pertinent project dates, as well as sufficient technical 
specifications and contract information to inform interested customers 
of the nature of the project, including:
    [ssquf] Project size/capacity: MW and/or kV rating (specific value 
or range of values)
    [ssquf] End points of line (as specific as possible such as points 
of interconnection to existing lines and substations, although it may 
be potentially broad, such as Montana to Nevada, if the project is very 
early in development)
    [ssquf] Projected construction and/or in-service dates
    [ssquf] Type of line--for example, AC, DC, bi-directional
    [ssquf] Precedent agreement (if developed)
    [ssquf] Other capacity allocation arrangements (including how it 
will address potential oversubscription of capacity)
    25. The developer should also specify in the notice the criteria it 
plans to use to select transmission customers, such as credit rating; 
``first mover'' status (i.e., customers who respond early and take on 
greater project risk); and customers' willingness to incorporate 
project risk-sharing into their contracts. This will contribute to the 
transparency of the process and will help interested entities know at 
the outset the features of the project and how the merchant 
transmission developer will consider bids. This list of criteria is not 
prescriptive or exhaustive.
    26. Developers may also adopt a specific set of objective criteria 
that they will use to rank prospective customers, provided they can 
justify why such criteria are appropriate. Clean Line suggests the 
Commission should consider incorporating additional criteria as part of 
the capacity allocation process, including: Willingness to pay, length 
of term for transmission service, acceptance of proposed business 
terms, and the state of advancement in generation project 
development.\44\ The Commission believes that, while the additional 
criteria suggested by Clean Line appear reasonable on their face, we 
would need additional information to ensure the criteria proposed are 
indeed uniformly appropriate and are not discriminatory. Thus, we 
decline to incorporate at this time the additional criteria proposed by 
Clean Line, though we could consider these types of criteria in a 
specific case before the Commission.
---------------------------------------------------------------------------

    \44\ Clean Line at 6.
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    27. Finally, the Commission expects the merchant transmission 
developer to update its posting if there are any material changes to 
the nature of the project or the status of the capacity allocation 
process, in particular to ensure that interested entities are informed 
of remaining available capacity. As proposed by WITG,\45\ time-stamped 
updates on a developer's Web site is one reasonable approach for 
alerting interested parties to periodic changes in project information, 
provided that the developer's initial broad notice had alerted entities 
to the developer's Web site, and to the possibility that changes might 
occur and would be posted there.
---------------------------------------------------------------------------

    \45\ WITG at 2, 5.
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    28. Under the final policy statement, once a subset of customers 
has been identified by the developer through the open solicitation 
process, the Commission will allow developers to engage in bilateral 
negotiations with each potential customer on the specific rates, terms, 
and conditions for

[[Page 5273]]

procuring transmission capacity, as the Commission recognizes that 
developers and potential customers may need to negotiate individualized 
terms that meet their unique project-specific needs.\46\ In these 
negotiations, the Commission will allow for distinctions among 
prospective customers based on transparent and not unduly 
discriminatory or preferential criteria--so long as the differences in 
negotiated terms recognize material differences and do not result in 
undue discrimination or preference--with the potential result that a 
single customer, including an affiliate, may be awarded up to 100 
percent of capacity. For instance, developers might offer ``first 
mover'' customers more favorable rates, terms, and conditions than 
later customers. This represents a change from prior policy, under 
which the Commission required that a developer offer their ``anchor 
customer deal'' in the open season to any other customer willing to 
make the same commitment as the anchor customer, such that all 
customers had access to the same rates, terms, and conditions.\47\ For 
reasons discussed above, including the need to negotiate individualized 
terms and incent early movers, we conclude that this policy change is 
appropriate.
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    \46\ While negotiations for the allocation of initial 
transmission rights may address terms and conditions of the 
transmission service to be ultimately taken once the facilities are 
in service, the Commission will adhere to its policy, regardless of 
any negotiated agreement, that any deviations from the Commission's 
pro forma OATT must be justified as consistent with or superior to 
the pro forma OATT when the transmission developer files its OATT 
with the Commission. The Commission will evaluate any deviations on 
that basis when they are submitted. See Chinook, 126 FERC ] 61,134 
at PP 47, 63.
    \47\ See Chinook, 126 FERC ] 61,134 at P 61.
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2. Post-Selection Demonstration
    29. In the past, the Commission required that developers file a 
report, shortly after the close of the open season, on the results of 
the open season and any anchor customer presubscription, including 
information on the notice of the open season, the method used for 
evaluating bids, the identity of the parties that purchased capacity, 
and the amount, term, and price of that capacity.\48\ The Commission 
required this report to provide transparency to the allocation of 
initial transmission rights, and to enable unsuccessful bidders to 
determine if they were treated in an unduly discriminatory manner so 
that they may file a complaint if they believe they were.\49\ These 
reports were not noticed, and did not receive Commission action.
---------------------------------------------------------------------------

    \48\ Chinook, 126 FERC ] 61,134 at PP 41, 43.
    \49\ See Chinook, 126 FERC ] 61,134 at P 41; Montana Alberta 
Tie, Ltd., 116 FERC ] 61,071, at P 37 (2006).
---------------------------------------------------------------------------

    30. The Commission will continue to require merchant transmission 
developers to disclose the results of their capacity allocation 
process, though this disclosure will be part of the Commission's 
approval of such capacity allocation process, and thus noticed and 
acted upon under section 205 of the FPA. Specifically, to provide 
transparency, and to prevent against undue discrimination and undue 
preference by merchant transmission developers, this final policy 
statement expects developers to demonstrate that the processes that led 
to the identification of transmission customers and the execution of 
the relevant contractual arrangements are consistent with the policies 
described herein, and consistent with our open access principles. The 
merchant transmission developer should describe the criteria used to 
select customers, any price terms, and any risk-sharing terms and 
conditions that served as the basis for identifying transmission 
customers selected versus those that were not. To this end, and in 
response to comments suggesting additional transparency measures,\50\ 
the Commission will expect that the developer include, at a minimum, 
the following information in the demonstration to provide sufficient 
transparency to the Commission and interested parties:
---------------------------------------------------------------------------

    \50\ AAI at 6-7; TAPS at 13-14.
---------------------------------------------------------------------------

    (1) Steps the developer took to provide broad notice, including the 
project information and customer evaluation criteria that were relayed 
in the broad notice;
    (2) Identity of the parties that expressed interest in the project, 
placed bids for project capacity, and/or purchased capacity; and the 
capacity amounts, terms, and prices involved in that interest, bid, or 
purchase;
    (3) Basis for the developer's decision to prorate, or not to 
prorate, capacity, if a proposed project is oversubscribed;
    (4) Basis for the developer's decision not to increase capacity for 
a proposed project if it is oversubscribed (including the details of 
the economic, technical, or financial infeasibility that is the basis 
for declining to increase capacity);
    (5) Justification for offering more favorable rates, terms, and 
conditions to certain customers, such as ``first movers'' or those 
willing to take on greater project risk-sharing;
    (6) Criteria used for distinguishing customers and the method used 
for evaluating bids. This should include the details of how each 
potential transmission customer (including both those who were and 
those who were not allocated capacity) was evaluated and compared to 
other potential transmission customers, both at the early stage when 
the developer chooses with whom to enter into bilateral negotiations 
and subsequently when the developer chooses in the negotiation phase to 
whom to award transmission capacity;
    (7) Explanation of decisions used to select and reject specific 
customers. In particular, the report should identify the facts, 
including any rates, terms or conditions of agreements unique to 
individual customers that led to their selection, and relevant 
information about others that led to their rejection. If a selected 
customer is an affiliate, the Commission will look more carefully at 
the basis for reaching that determination.
    31. In response to requests that the Commission clarify when a 
transmission developer needs to request approval of its capacity 
allocation process,\51\ we will allow a developer discretion in timing 
its request that the Commission approve a capacity allocation process. 
For example, developers can seek approval of their capacity allocation 
approach after having completed the process of selecting customers in 
accordance with our policies. Alternatively, a developer can first seek 
approval of its capacity allocation approach, and then demonstrate in a 
compliance filing to the Commission order approving that approach that 
the developer's selection of customers was consistent with the approved 
selection process. Under either procedural framework, the Commission 
will notice the demonstration, allow protests, and reach a 
determination regarding whether the developer's selection of customers 
was consistent with our policies herein and our open access 
principles.\52\ However, we agree with some commenters that protests 
filed in response to the post-selection demonstration should be focused 
on the

[[Page 5274]]

matters at issue in the Commission's review.\53\
---------------------------------------------------------------------------

    \51\ See, e.g., Pattern Transmission, LP at 13.
    \52\ Under this policy statement, the Commission's policies for 
reviewing capacity allocation processes will apply equally to both 
new merchant transmission developers and new nonincumbent cost-based 
participant-funded transmission developers. With respect to new 
merchant transmission developers, the Commission's consideration of 
this capacity allocation process will be a part of the Commission's 
evaluation of the applicant's request for negotiated rate authority.
    \53\ See Pattern Transmission, LP at 14; WITG at 6.
---------------------------------------------------------------------------

    32. We emphasize that the information in the post-selection 
demonstration is an essential part of a merchant developer's request 
for approval of a capacity allocation process, and that the developer 
will have the burden to demonstrate that its process was in fact not 
unduly discriminatory or preferential, and resulted in rates, terms, 
and conditions that are just and reasonable. Thus, interested parties 
will have the opportunity to submit protests on the demonstration to 
ensure there is sufficient transparency. The Commission expects that 
interested parties who believe that the process used to select 
customers and allocate capacity on merchant transmission projects was 
unjust or preferential would file comments or protests on the 
demonstration. Interested parties also remain entitled to exercise 
their statutory right to challenge the process under section 206 of the 
FPA.
    33. In response to commenters that request that we recognize the 
commercially sensitive nature of the business arrangements associated 
with capacity allocation, we clarify that we will address whether to 
allow for protection of such information on a case-by-case basis.\54\ 
We believe transparency is essential to our allowing capacity to be 
allocated through bilateral negotiations rather than a more formally 
structured open season process. Thus, we do not agree that certain 
types of commercial information should be generically protected. To the 
extent developers believe they cannot file certain information 
publicly, they may make their case for confidential treatment to the 
Commission when they file their post-selection demonstrations.
---------------------------------------------------------------------------

    \54\ See AEP at 4; AAI at 10-11; Duke at 4; EEI at 5; Pattern 
Transmission, LP at 13; and WITG at 6.
---------------------------------------------------------------------------

    34. With respect to potential affiliate participation in the 
capacity allocation process, the Commission will continue to expect an 
affirmative showing that the affiliate is not afforded an undue 
preference.\55\ The developer will bear a high burden to demonstrate 
that the assignment of capacity to its affiliate and the corresponding 
treatment of non-affiliated potential customers is just, reasonable, 
and not unduly preferential or discriminatory. While the Commission 
will not require non-affiliates to receive the same rates, terms and 
conditions as affiliates as suggested by some commenters,\56\ the 
Commission will carefully scrutinize any differences in rates, terms 
and conditions for affiliates versus non-affiliates to ensure those 
differences are appropriately based on objective criteria.
---------------------------------------------------------------------------

    \55\ See Chinook, 126 FERC ] 61,134 at PP 49-50.
    \56\ See, e.g., TAPS at 26.
---------------------------------------------------------------------------

    35. Commenters are concerned that the reporting obligations 
described in the proposed policy statement provide inadequate 
protections for potential transmission customers. NRECA argues that 
discrimination can take place not only in the solicitation of a 
project, but also in the design of a project, and that the proposed 
reporting requirement would not remedy this flaw.\57\ APPA asserts that 
this ``after-the-fact'' reporting requirement is of particular concern, 
because the Commission will be under substantial pressure to 
rubberstamp an after-the-fact filing because the applicants will have 
already completed their contract negotiations and selected successful 
customers.\58\ APPA cautions that, if the Commission adopts this 
proposed policy despite commenters' concerns, it is critical that the 
associated reporting requirements not be eroded over time.\59\
---------------------------------------------------------------------------

    \57\ NRECA at 14.
    \58\ APPA at 9.
    \59\ APPA at 7.
---------------------------------------------------------------------------

    36. The Commission believes that the reporting obligations set 
forth in this final policy statement offer sufficient protections to 
ensure that a capacity allocation process protects against undue 
preference or discrimination. In response to commenters that questioned 
if any consequences attach to the report or if it is just 
informational,\60\ we reiterate that we will notice the demonstration 
and consider any protests submitted in reaching our determination on 
such demonstration.
---------------------------------------------------------------------------

    \60\ See, e.g., TAPS at 17-20.
---------------------------------------------------------------------------

    37. Certain commenters argue that the section 206 complaint process 
is an insufficient deterrent to undue preference or discrimination in 
the capacity allocation process, and that few section 206 complaints 
are likely to be filed particularly due to inadequate resources or time 
to mount effective section 206 challenges.\61\ In particular, NJ Rate 
Counsel is concerned that the filing of section 206 challenges will 
depend on the willingness of participants to assume a heavy burden 
without attendant discovery rights, and on the need for an expedited 
process with no assurance that the process will move quickly.\62\ 
Similarly, NRECA argues that complainants are unlikely to have access 
to some or all of the required information, and NRECA notes that the 
Commission has at times dismissed complaints alleging wrong-doing for 
lack of specificity.\63\ The NJ Rate Counsel asserts that reliance on 
the section 206 complaint process shifts the Commission's independent 
regulatory responsibility to third-party complainants, and argues that 
the Commission must exercise its independent responsibility to ensure 
that rates remain just and reasonable and not unduly 
discriminatory.\64\
---------------------------------------------------------------------------

    \61\ APPA at 8; AAI at 6; NJ Rate Counsel at 3; NRECA at 14-15. 
NRECA adds that the proposed Policy Statement is inconsistent with 
the Commission's statement in Order No. 1000-A that, ``individual 
complaints under section 206 of the FPA would not suffice to 
overcome the free rider problem because litigating complaints 
burdens and unduly delays the transmission planning process'' (or in 
this case, unduly delay open access to transmission service). NRECA 
at 15 (citing Transmission Planning and Cost Allocation by 
Transmission Owning and Operating Public Utilities Order No. 1000-A, 
139 FERC ] 61,132, at P 577 (2012)).
    \62\ NJ Rate Counsel at 3.
    \63\ NRECA at 14-15.
    \64\ NJ Rate Counsel at 10.
---------------------------------------------------------------------------

    38. In response to these comments, we clarify that, under the 
processes adopted in this final policy statement, entities will be able 
to protest a developer's proposed capacity allocation process (which we 
expect to be described in detail as part of the developer's post-
selection demonstration pursuant to section 205 of the FPA). Under this 
final policy statement, the Commission will evaluate the capacity 
allocation process to ensure that the process was not unduly 
discriminatory or preferential, and resulted in rates, terms, and 
conditions that are just and reasonable. Entities also remain entitled 
to challenge such capacity allocation processes by filing a complaint 
under section 206 of the FPA.

C. Nonincumbent, Cost-Based, Participant-Funded Projects

    39. The Commission will apply the policy clarifications and 
refinements in this final policy statement not only to new merchant 
transmission projects, but also to nonincumbent, cost-based, 
participant-funded transmission projects. The Commission has similar 
concerns regarding the capacity allocation process regardless of 
whether the project is a new merchant transmission project, or a 
nonincumbent, cost-based, participant-funded transmission project. That 
is, the Commission is concerned that access not be unduly 
discriminatory or preferential. We believe that the process outlined 
herein will address such concerns, however. Commenters and workshop 
participants, moreover, support the Commission's application of these 
policy clarifications and refinements to both new merchant transmission 
developers and

[[Page 5275]]

nonincumbent, cost-based, participant-funded transmission 
developers.\65\ Petitions regarding capacity allocation on 
nonincumbent, cost-based, participant-funded transmission projects will 
be evaluated by the Commission in accordance with the Commission's 
responsibilities under the FPA.
---------------------------------------------------------------------------

    \65\ TAPS March 29, 2012 Comments at 24; Pathfinder Renewable 
Wind Energy, LLC March 28, 2012 Comments at 3-4.
---------------------------------------------------------------------------

    40. However, use of this common process does not eliminate the 
distinction between these types of projects. In particular, although 
the negotiations between developers and potential customers could 
address a transmission rate, among other issues, the Commission's 
approach to reviewing such a rate would be different for a new merchant 
transmission project than for a new nonincumbent, cost-based, 
participant-funded transmission project. For a nonincumbent, cost-
based, participant-funded transmission project, the Commission will 
review the transmission rate, terms and conditions, including any 
agreed upon return on equity, more closely to ensure that they satisfy 
Commission precedent regarding cost-based transmission service.

D. Incumbent, Cost-Based, Participant-Funded Projects

    41. The Commission is not changing its case-by-case evaluation of 
requests for cost-based participant-funded transmission projects by 
incumbent transmission providers.\66\ This final policy statement thus 
does not affect incumbent transmission development for the purpose of 
serving native load. Incumbents differ from nonincumbents in that the 
former have a clearly defined set of existing obligations under their 
OATTs with regard to new transmission development, including 
participation in regional planning processes and the processing of 
transmission service request queues. Nonincumbent transmission 
developers do not yet own or operate transmission facilities in the 
region that they propose to develop transmission; thus, they are not 
yet subject to an OATT in that region.\67\ Thus, the Commission's final 
policy statement establishes the Commission's process for evaluating, 
going forward, the allocation of capacity only for merchant 
transmission developers and nonincumbent, cost-based, participant-
funded projects for new transmission facilities.
---------------------------------------------------------------------------

    \66\ See, e.g., NU/NSTAR, 127 FERC ] 61,179 (2009), order 
denying reh'g and clarification, 129 FERC ] 61,279 (2009); National 
Grid, 139 FERC ] 61,129 (2012).
    \67\ We clarify, in response to Clean Line, that, for purposes 
of this final policy statement, a nonincumbent transmission 
developer will not become an incumbent within a transmission 
planning region until such time as it energizes a transmission 
facility within that region. See Order No. 1000-A, 139 FERC ] 61,132 
at P 421.
---------------------------------------------------------------------------

    42. In contrast, in most instances, we would expect that an 
incumbent transmission provider will be able to use existing processes 
set forth in its OATT to allocate capacity on a new transmission 
facility. These existing OATT processes do not prohibit incumbent 
transmission owners from identifying projects that could be constructed 
on a participant-funded basis in conjunction with processing of 
transmission service requests or in addition to meeting transmission 
needs through participation in a regional transmission planning 
process.\68\ Furthermore, the Commission will continue to entertain on 
a case-by-case basis requests for waiver of any OATT requirements that 
may be needed for the incumbent transmission owner to pursue innovative 
transmission development that is just, reasonable, and not unduly 
discriminatory. For example, an incumbent may seek waiver of serial 
queue processing requirements so that it may cluster transmission 
service requests,\69\ or it may seek to ``ring fence'' a transmission 
project in order to ensure that new transmission facilities developed 
for a particular customer or set of customers do not adversely affect 
existing customers, including native load.\70\ Incumbent developers 
should address capacity allocation issues in a manner that does not 
constitute undue discrimination or preference and is consistent with 
applicable Commission-accepted tariffs.\71\
---------------------------------------------------------------------------

    \68\ See, e.g., Subscription Process for Proposed PacifiCorp 
Transmission Expansion Projects, available at http://www.oasis.pacificorp.com/oasis/ppw/SUBSCRIPTION_PROCESS.PDF (noting 
incumbent's solicitation of interest from third parties in the 
development of a cost-based transmission project in advance of 
receipt of transmission service requests from third parties under 
the incumbent's OATT).
    \69\ See, e.g., Portland General Electric Co., 139 FERC ] 61,133 
(2012) (granting waiver of serial queue processing requirements, 
allowing a general facilities study for a cluster of transmission 
and interconnection service requests).
    \70\ See, e.g., Mountain States Transmission Intertie, LLC and 
NorthWestern Corp., 127 FERC ] 61,270, at PP 2, 5 (2009) (incumbent 
developing an export-only transmission project through a separate 
stand-alone company so that their existing transmission customers 
will not be required to subsidize the cost of a new transmission 
facility to serve off-system markets; the Commission presented the 
option of this project proceeding on a cost-of-service basis).
    \71\ See National Grid, 139 FERC ] 61,129 at P 33.
---------------------------------------------------------------------------

E. Miscellaneous

    43. WITG requests that the Commission allow developers that have 
already been granted negotiated rate authority the ability to allocate 
any unsubscribed capacity according to the processes in this policy 
statement. We clarify here that such developers, if they want to 
utilize the capacity allocation process described in this final policy 
statement for any unsubscribed capacity, must seek Commission approval 
to deviate from their current capacity allocation process authority set 
forth in the Commission order granting them negotiated rate authority. 
This will ensure that all interested parties are fully aware of and 
have an opportunity to comment on the proposed capacity allocation.
    44. Several commenters raise concerns regarding the role of the 
merchant transmission developer in the Order No. 1000 regional planning 
processes. The policies set forth herein are intended only to be a 
roadmap for the capacity allocation process for new merchant and 
nonincumbent, cost-based, participant-funded transmission facilities. 
Thus, we believe that comments addressing the Order No. 1000 regional 
planning processes are outside the scope of this final policy 
statement. However, we note that Order No. 1000 requires a merchant 
transmission developer to provide adequate information and data to 
allow public utility transmission providers in the transmission 
planning region to assess the potential reliability and operational 
impacts of the merchant transmission developer's proposed transmission 
facilities on other systems in the region.\72\
---------------------------------------------------------------------------

    \72\ See Order No. 1000, FERC Stats. & Regs. ] 31,323 at PP 163-
164; Order No. 1000-A, 139 FERC ] 61,132 at P 297.
---------------------------------------------------------------------------

    45. Clean Line requests that the Commission ensure that all RTOs/
ISOs and transmission providers create interconnection queue processes 
that do not hinder high voltage direct current (HVDC) transmission 
development, and suggests that a standard interconnection procedure 
specifically for HVDC lines would solve this issue.\73\ The Commission 
believes that the matter of HVDC-specific interconnection procedures is 
similarly outside the scope of this final policy statement.
---------------------------------------------------------------------------

    \73\ Clean Line at 8.
---------------------------------------------------------------------------

IV. Document Availability

    46. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's

[[Page 5276]]

Public Reference Room during normal business hours (8:30 a.m. to 5:00 
p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 
20426.
    47. From Commission's Home Page on the Internet, this information 
is available on eLibrary. The full text of this document is available 
on eLibrary in PDF and Microsoft Word format for viewing, printing, 
and/or downloading. To access this document in eLibrary, type the 
docket number excluding the last three digits of this document in the 
docket number field.
    48. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2013-01507 Filed 1-24-13; 8:45 am]
BILLING CODE 6717-01-P