Study Shows Order No. 1000 Transmission Solicitations Have Not Yielded Customer Savings or Improved Transmission Development Timelines

Rhea-AI Summary

ITC Holdings Corp. and the DATA Coalition highlight a study by Concentric Energy Advisors revealing issues with the Federal Energy Regulatory Commission's (FERC) Order No. 1000. The report indicates that competitive transmission projects face an average of 12 months in delays and cost increases of 27%. Specific examples include a project in New York with a 67% cost increase and another in the MISO region that met planning-level costs, showing no benefits from competitive bid processes. ITC calls for a return to collaborative planning to effectively address transmission needs.

Positive

• ITC's involvement with the DATA Coalition indicates proactive engagement in addressing regulatory challenges.
• The report provides clear data that could influence policy changes favorably for ITC's operational model.

Negative

• The study highlights significant cost overruns and delays in projects, which could undermine investor confidence.
• There is a potential risk of regulatory reforms moving away from competitive bidding, impacting future project opportunities.

Concentric Energy Advisors report reveals significant shortcomings accompany 'competitive' solicitations for regional transmission projects  

NOVI, Mich., Aug. 16, 2022 /PRNewswire/ -- ITC Holdings Corp. (ITC) and other members of the Developers Advocating Transmission Advancements (DATA) Coalition are calling attention to a new study showing that unintended consequences of the Federal Energy Regulatory Commission's (FERC) Order No. 1000 include project cost increases and schedule delays.

The study titled "Competitive Transmission: Experience to Date Shows Order 1000 Solicitations Fail to Show Benefits" prepared by Concentric Energy Advisors, reveals that completed and active competitive transmission projects awarded to non-incumbent developers experienced an average of 12 months in schedule delays and 27% in cost increases, contrary to promises made by competitive developers in winning bids.

Ten years ago, FERC issued Order No. 1000 in response to the growing challenge of planning and constructing new transmission to keep pace with national and state energy policy priorities. The order allows for public utility transmission providers to use competitive bidding to solicit transmission projects or project developers. Now a decade later, new emerging data of so-called "competitive projects" now in service, or in advanced stages of development, show significant shortcomings.

Using six projects awarded to developers through competitive solicitations, the study investigated claims that Order No. 1000 solicitations contribute to cost savings and the timely development of transmission infrastructure.

• One project from New York Independent System Operator's service territory experienced a 67% cost increase above the developer's promised cost cap, which is now attempting to be recovered from customers. This calls to question whether competitive processes create incentives for outside developers to submit overly aggressive bids to win projects.
• Another example from the Midcontinent Independent System Operator (MISO) region found that the final cost for a competitive project was approximately equal to MISO's planning-level cost estimate and the average of all the submitted bids, indicating no benefit from the solicitation.

For the first time, these case studies provide policymakers the most accurate assessment of the Order No. 1000 competitive process.

"These results add to the growing case that it is time to move in a new direction," said Nina Plaushin, Vice President of Regulatory and Federal Affairs at ITC and DATA Coalition member. "As FERC considers new reforms to regional transmission planning processes, it is clear we must return to a collaborative planning model that has been proven to result in cost effective transmission infrastructure. At a time when transmission investment is sorely needed to power our transition to a clean energy economy and achieve the nation's climate goals, there is no time to waste."

The study was prepared on behalf of the DATA Coalition, a group of transmission-owning utilities consisting of Ameren, Eversource Energy, Exelon Corporation, ITC Holdings Corp., National Grid USA, Public Service Electric and Gas Company and Xcel Energy.

ABOUT ITC HOLDINGS CORP.

ITC Holdings Corp. is the largest independent electricity transmission company in the United States. ITC provides transmission grid solutions to improve reliability, expand access to markets, allow new generating resources to interconnect to its systems and lower the overall cost of delivered energy. Through its regulated operating subsidiaries ITCTransmission, Michigan Electric Transmission Company, ITC Midwest and ITC Great Plains, ITC owns and operates high-voltage transmission infrastructure in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, and in development in Wisconsin. These systems serve a combined peak load exceeding 26,000 megawatts along 16,000 circuit miles of transmission line, supported by 700 employees and 1,000 contractors. ITC is based in Novi, Michigan. For further information visit WWW.ITC-HOLDINGS.COM. ITC is a subsidiary of Fortis Inc., a leader in the North American regulated electric and gas utility industry. For further information visit WWW.FORTISINC.COM.

About Concentric Energy Advisors

Concentric Energy Advisors specializes in management consulting and financial advisory services focusing on the North American energy and water industries. Through its subsidiaries, CE Capital Advisors and Concentric Advisors ULC, Concentric provides capital market advisory support and consulting services in Canada.

View original content:https://www.prnewswire.com/news-releases/study-shows-order-no-1000-transmission-solicitations-have-not-yielded-customer-savings-or-improved-transmission-development-timelines-301606888.html

SOURCE ITC Holdings Corp.

FAQ

What does the Concentric Energy Advisors report reveal about ITC?

The report shows that competitive transmission projects under FERC's Order No. 1000 are facing average delays of 12 months and cost increases of 27%.

How has FERC's Order No. 1000 affected ITC's projects?

ITC's projects have experienced significant cost overruns and delays, calling into question the effectiveness of competitive solicitations.

What are the implications of the Concentric Energy Advisors study for ITC?

The implications include potential regulatory changes that may favor a collaborative planning approach over competitive bidding.

What specific examples of cost increases did the study highlight for ITC?

One project from New York had a 67% cost increase above the promised cost cap, and another project saw costs equal to planning-level estimates.

How is ITC responding to the findings of the report?

ITC is advocating for a return to a collaborative planning model to improve transmission infrastructure development.