Dive Brief:
- ISO New England will review utility-planned “asset condition” projects — local transmission refurbishment projects that have generally received little regulatory oversight — under a process approved Friday by the Federal Energy Regulatory Commission.
- While already acting as an interim reviewer for some projects this year, ISO-NE plans to take on the formal advisory role in January. Under the plan, ISO-NE will review and report its conclusions on asset condition projects, including a project’s need, its cost-effectiveness and potential alternatives.
- In separate concurring statements, FERC commissioners David Rosner and Judy Chang urged other grid operators to adopt similar review processes. “In the context of growing demand and an aging electric grid, building trust and confidence in the need for infrastructure will only serve to expedite permitting and improve the likelihood that projects are ultimately constructed,” Rosner said.
Dive Insight:
Asset condition projects are typically utility-planned projects aimed at repairing or replacing aging transmission infrastructure. Often, they can be built with little regulatory oversight compared to other types of projects.
Because of that, they have drawn criticism in New England and other regions as well (in the PJM Interconnection, they are called “local” projects).
Ohio’s ratepayer advocate in August urged FERC to address its pending complaint over local transmission projects, saying that since it was filed Ohio utilities have planned more than $4.3 billion in local transmission with inadequate oversight.
In New England, transmission owners expect to add about $5 billion in asset condition projects by 2034, including about $1.3 billion next year, according to a June ISO-NE presentation.
In May, New England ratepayer advocates filed a complaint at FERC over a roughly $360 million asset condition project planned by Eversource Energy in New Hampshire.
The increased transparency offered by ISO-NE’s asset condition reviewer plan, which was backed by stakeholders, including states, may provide increased confidence in the utilities’ projects, according to FERC.
“Taken together, we find that the proposed functions of the Asset Condition Reviewer will help bring greater visibility into the need for and planning of Asset Condition Projects in ISO-NE,” the agency said.
The review process will give states and stakeholders the ability to provide more input at earlier stages of asset condition project development and help make sure that planned projects and utility asset condition programs are cost-effective, FERC said.
In her concurring statement, Chang called on other regions to create similar arrangements, saying it would benefit consumers and stakeholders.
ISO-NE and other regions should also consider extending the expert review and assessment role to “other types of local transmission projects, beyond what New England categorizes as asset condition projects,” Chang said.
New Hampshire Consumer Advocate Donald Kreis, who represents the state’s residential ratepayers, said he is “cautiously optimistic that the asset condition reviewer paradigm will make a meaningful difference.”
Eversource withdrew one of the two projects considered by ISO-NE as an interim asset condition reviewer, an “outcome we deem noteworthy,” Kreis said in an email to Utility Dive on Monday. “I hope this heralds the end of unconstrained asset condition spending in New England.”
In its decision last month to pause its plans for an $82.4 million project near Boston, Eversource pushed back on a finding by an ISO-NE consultant that the utility failed to show its project was needed in the near-term. The utility said the point of proactive planning is to carry out such projects before grid reliability is threatened.
“Requiring evidence of physical deterioration or impending failure before replacing a facility that cannot be effectively inspected establishes a threshold that a utility cannot meet without experiencing the very failure the replacement program is intended to prevent,” Eversource said.
The utility company said it is “troubled” by ISO-NE’s apparent position that an asset condition project should proceed only when a transmission owner shows “specific, concrete evidence” that its equipment is deteriorating.
