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erator B were operating smoothly.Thus,a regional transmission Shaheen(D-NH)was a strong advocate of this change via corn- grid is like an ecosystem;everyone who uses it is affected by munications to FERC prior to release of its policy statement. everyone else's actions(or lack of actions). In 2013,however,investor-owned utilities and advocacy groups To make matters even more complicated,electricity must supporting them commenced a new effort to get FERC to be produced and consumed in"real time."Electricity currently keep transmission rates of return on equity(ROEs) at pre-2008 cannot be stored economically in significant amounts(although levels,despite a substantial drop in interest rates and investor advanced storage technologies are being developed),and for returns since that time.In June 2014,however,FERC revised practical purposes most electricity generation and consumption its method for determining base ROES in Opinion No. 531 and must be balanced continuously. Otherwise,blackouts can result. began to establish hearings to determine new and likely lower FERC is the regulatory agency tasked with overseeing the ROEs in a substantial number of pending and newly filed trans- interstate transmission grid,using its authority under the mission rate cases.Many of these cases are still pending before FPA.Because the ERGOT interconnection in Texas is wholly the agency,and the few petitions for judicial review of FERC's intrastate,FERC does not regulate the bulk transmission lines orders that have been filed have yet to be decided,although the in ERGOT;rather,the Public Utility Commission of Texas first of these appeals should be decided in the first half of 2017. provides that oversight. EPAct05 also amended the FPA to give FERC authority to Consumers do not receive power directly from the transmis- ensure that entities like public power utilities,which are not sion system. Bulk power transmission facilities transmit electrici- directly subject to FERC rate oversight(because public power ty to local electric distribution systems.Just as cars traveling utilities generally are regulated at the state and local government on our interstate highway system need to exit and travel on a level),that own or operate bulk transmission facilities provide system of smaller roads to reach their destinations,lower voltage transmission service on those facilities in a non-preferential electric distribution systems interconnect with the bulk power manner—under rates and conditions comparable to those they transmission systems in their regions to deliver electricity to would provide to themselves.FERC in its Order No. 1000 end-use consumers—industry,homes,and businesses.The rulemaking declined to use its authority under this new section wires at the very top of wooden utility poles in a residential of the FPA to directly impose that order's transmission planning neighborhood are distributing electricity to customers. In many and cost-allocation requirements on public power utilities,and cities and suburbs,electric distribution wires are buried in the U.S.Court of Appeals for the D.C. Circuit upheld that underground conduits.Utility workers gain access to these wires decision.But in December 2011,FERC used this new FPA through maintenance holes that dot a typical city street.And in- authority to order the Bonneville Power Administration(BPA), creasingly,electricity is being generated at the distribution level, whose transmission grid FERC does not generally regulate, increasing"two-way"flows on distribution wires.As mentioned to provide"comparable"transmission service to certain wind above,these distribution systems are regulated by state and local generators on the BPA transmission system.APPA and other governments. parties sought rehearing of this order on the grounds that it is an inappropriate use of FERC's statutory authority in this area, but FERC denied the rehearing requests in an order at the end Congressional and FERC Action of 2012.The Association joined a Ninth Circuit petition for The last time Congress enacted any major changes to the FPA review of FERC's orders in the BPA proceeding,but on August was in EPAct05.Several changes to the law were made,includ- 10,2015,the court denied those petitions. ing provisions for the granting of additional transmission rate In August 2016,the U.S. Court of Appeals for the Fifth incentives,beyond the basic rate of return granted by FERC Circuit issued a decision on El Paso Electric Company's peti- to all owners of bulk transmission lines.These incentives were tions for review of FERC orders addressing compliance with the to be granted for lines that presented higher levels of risk— requirements of Order No. 1000 in the WestConnect planning for example,because they were unusually difficult to site or region.The decision vacated and remanded as arbitrary and finance—but they became the rule rather than the exception. capricious FERC's decision to allow non-jurisdictional utilities, FERC in 2011 started a proceeding to examine its transmission including several transmission-owning public power utilities,to rate incentive policy,and released a policy statement revamping participate in the WestConnect region as Coordinating Trans- its policy in 2012,which APPA supported. Under this policy, mission Owners("CTOs")that are not subject to binding cost FERC appears to be more carefully scrutinizing requests for allocation for certain regional transmission projects,thereby transmission rate incentives,thereby reducing the potential for creating uncertainty about the future of joint transmission the unnecessary granting of such incentives,and the resulting planning in this region.How FERC acts on remand could be unnecessary additional costs to electric consumers. Senator Jean significant from the perspective of its precedent on the reciproc- ity principle. 8 PubUcPower.org 190