USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner and Dennis W. Elsenbeck, Phillips Lytle LLP
5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities
4.7 Open-Access and Non- Discriminatory Transmission
Pursuant to a series of FERC Orders first prom- ulgated in 1996, transmission services must be provided on a non-discriminatory and open- access basis. FERC issued three key orders to require open access to transmission facilities. • Order No 888, issued in April 1996, required all public utilities that own, control or oper- ate facilities used for transmitting electrical energy in interstate commerce to file OATTs. Order No 888 permitted public utilities and transmitting utilities to seek recovery of legiti- mate, prudent and verifiable stranded costs associated with providing such open access. • Order No 889 required all public utilities that own, control or operate facilities used for transmitting electrical energy in interstate commerce to participate in an OASIS to provide actual and potential open access transmission customers with information that would enable them to obtain open-access non-discriminatory service. • Order No 890 was issued in February 2007 to strengthen the OATT, reduce opportunities for undue discrimination, facilitate FERC’s enforcement and increase overall transpar- ency. Issued in July 2011, Order No 1000 amended Order 890 by requiring public utility transmission providers to participate in a regional transmission planning process that produces a regional transmission plan.
The distribution system – which can include storage and microgrids – is primarily governed and regulated at the state level. State law and state utility commission regulations govern the methods and standards by which prudent dis- tribution system investments are recovered in a utility’s rate base or through other appropriate mechanisms. Construction, siting, zoning and other land use considerations and approvals generally fall within the purview of relevant city, county and municipal authorities, which vary sig- nificantly by state. 5.2 Regulatory Process for Obtaining Approvals to Construct and Operate Electricity Distribution Facilities While the substantive and procedural regula- tory process for constructing and operating distribution facilities varies by state, state utility commission regulations generally focus on com- pliance with reliability, operational and safety standards. While some state utility commissions have authority over the siting and approval of permits for the construction of distribution infra- structure, most states require the involvement and/or approval of multiple agencies, beyond the state utility commission, to review environ- mental, cultural, historical, technical and eco- nomic impacts. Generally, FERC plays a limited role in distribu- tion infrastructure development, only becoming involved to the extent that there is a jurisdictional question regarding the facility’s status as a dis- tribution or transmission facility, or if the facility implicates a federal law under the purview of FERC’s jurisdiction.
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