UPDATE 1-U.S. court upholds FERC rules on electric grid planning

Fri Aug 15, 2014 2:19pm EDT

(Adds additional detail, comment from plaintiff, environmental group)

By Ros Krasny

WASHINGTON Aug 15 (Reuters) - A U.S. court on Friday upheld rules from the Federal Energy Regulatory Commission calling on utilities to take various actions, including increased planning of large transmission projects.

The U.S. Court of Appeals for the District of Columbia Circuit affirmed FERC's "Order 1000," a series of measures from 2011 that requires large-scale regional planning of the nation's electric grid designed in part to create greater access to renewable energy.

The case addressed whether states could be forced to coordinate on transmission planning, carbon standards and paying for actions to create new transmission capacity.

"The Commission reasonably determined that regional planning must include consideration of transmission needs driven by public policy requirements," the three-judge panel wrote in a 97-page unanimous ruling.

Among those challenging FERC's July 2011 order were dozens of state regulatory agencies, public and private utilities, regional transmission organizations and electric industry trade associations.

Opponents bristled at being forced to coordinate on transmission planning, arguing that Congress had "expressly" allowed such coordination among utilities to be voluntary.

They also opposed the costs involved, which would be a departure from the usual process of passing costs onto consumers.

"Petitioners raise three challenges to the orders' requirement that regions establish procedures that account for the impact that federal, state, and local laws and regulations (i.e., public policy requirements) will have on transmission systems. None is persuasive," the court said in its ruling.

One of groups that opposed FERC 1000, the Coalition for Fair Transmission Policy, said it was considering whether to pursue further legal action and also called on lawmakers to respond.

"This decision provides added impetus for Congress to assist energy consumers by addressing national transmission policy and the future of the nation's electricity grid," the coalition, whose members include Southern Co. and DTE Energy said in an emailed statement.

Environmental groups praise the outcome as a win for clean energy.

"FERC 1000 is the key to unlocking efficiencies that have the potential to incorporate more clean energy solutions in the planning process, which will result in low-cost electricity and clean air," said John Finnigan, lead counsel with the Environmental Defense Fund.

Order 1000 is especially important for regions without regional electricity markets, like the Southeast and most of the West, said John Moore of the National Resources Defense Council.

"Until recently, these regions had very little in the way of meaningful regional planning, with little transparency or stakeholder involvement. Each utility mostly did its own local planning," Moore wrote in a blog post lauding FERC'S "commonsense approach" to transmission planning.

The case is South Carolina Public Service Authority, et al, v FERC, U.S. Court of Appeals for the District of Columbia Circuit, No. 12-1232. (Reporting by Ros Krasny; Editing by Susan Heavey and Sandra Maler)