Order 1000 Narrows the “Right of First Refusal”: Will Regional Processes be Cost-Effective and Nondiscriminatory?

Orders 888, 889, 2000, 890, 719, 745 and 755 share a common theme:  Alternatives to incumbent-controlled transmission and generation should have opportunities to provide and receive FERC-jurisdictional services (unbundled transmission service and wholesale sales service) under conditions comparable to those enjoyed by incumbent utilities.  The latest version of this theme is Order 1000's narrowing of transmission owners' "right of first refusal" (ROFR)," i.e., their tariff right to develop and own transmission facilities deemed necessary to serve the incumbent's customers, even if non-incumbents are willing and able to develop those facilities or substitutes for them.  Order 1000 eliminates the ROFR for projects selected for regional cost allocation.

With the ROFR thus narrowed, the regions must use comparability and competition to identify cost-effective solutions, both transmission and non-transmission.  But there remain gaps.  Order 1000 eliminates the right of first refusal, but not  necessarily the possibility of first refusal.  This paper describes the gaps and offers possible solutions.