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The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) recommends that the CAISO undertake a competitive transmission procurement initiative that would, at minimum, remove or lower the voltage thresholds that currently exempt many transmission projects from competitive procurement. That initiative should also consider other changes that would enhance transmission competition. The benefits of these reforms would be twofold: 1) research has shown that competitive procurement can lower the capital cost of transmission projects, and 2) it could help alleviate the backlog of transmission projects at the three investor-owned utilities (IOUs), allowing for more expedient integration of much needed renewable energy.
FERC Order No. 1000 required transmission providers to remove their exclusive right to construct projects within their service territory (thereby allowing other developers to bid on and construct those projects) but allowed for certain exemptions. The CAISO’s Tariff, which complies with FERC Order No. 1000, states that facilities under 200 kilovolts (kV) and facilities that are additions, upgrades, or improvements to existing facilities are exempt from competitive transmission procurement.
Cal Advocates concurs with the California Public Utilities Commission Energy Division in stating that these exemptions – the 200 kV voltage threshold in particular - are arbitrary and have unnecessarily harmed ratepayers. Not only do these restrictions deprive ratepayers of potential cost savings, but research shows that such restrictions can inhibit the “price discovery” and transparency that a competitive process can provide.,  In a competitive process, regulators and stakeholders would have more visibility into how much a transmission project should cost; stakeholders can see the range of bids.
FERC Order 1000 does not preclude the lowering or removal of voltage thresholds, and policies at other Independent System Operators illustrate that such changes can be beneficial. For example, the New York Independent System Operator (NYISO), does not have voltage restrictions and has seen a more robust competitive procurement process as a result. The ISOs in New England (ISO-NE) and in the Southwest (SPP) only exempt projects below 100 kV.
Expanding competitive solicitation eligibility for more projects would also help ameliorate the backlog of transmission projects at the California IOUs. According to the CAISO’s Transmission Development Forum (TDF), there are well over 100 transmission projects that are in some phase of development or construction at the three IOUs. The TDF also indicates that the average difference between when a project is approved by the CAISO and the project has or is projected to even begin construction is over 7 years. This situation is likely to worsen as the CAISO continues to approve more policy-driven transmission projects to access the resources needed to meet California’s renewable energy goals.
Some stakeholders may argue that increased competition will be an undue burden on the CAISO and that an incumbent utility’s intimate knowledge of its system allows it to construct projects more efficiently. However, there should be a CAISO initiative process to further explore and debate the benefits and constraints of a competitive transmission procurement process.
The CAISO has seen success with competitive procurement and has been recognized for its leadership in this area. The CAISO should continue its leadership by launching an initiative focused on expanding competitive transmission procurement, which could significantly lower ratepayer costs while advancing California’s renewable energy goals.
 A 2019 Report found that competitive procurement led to cost savings of 29% between 2013 and 2019 in CAISO territory. (Cost Savings Offered by Competition in Electric Transmission. The Brattle Group. April 2019. Figure 18. Available at https://www.brattle.com/wp-content/uploads/2021/05/16726_cost_savings_offered_by_competition_in_electric_transmission.pdf.)
 See paragraph 6 for description of this backlog.
 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, 136 FERC ¶ 61,051 (2011) at 102. Available at https://www.ferc.gov/electric-transmission/order-no-1000-transmission-planning-and-cost-allocation.
 Section 24.4.10 of the CAISO Tariff. states that “A Participating Transmission Owner will have the responsibility to construct, own, finance and maintain any Local Transmission Facility.” Appendix A of the CAISO Tariff defines local transmission projects as those that operate at a voltage below 200 kilovolts (kV) and are located entirely within the footprint of a Participating Transmission Owner’s footprint or service territory. (See http://www.caiso.com/rules/Pages/Regulatory/Default.aspx.)
 See the Energy Division’s Initial Comments in the Federal Energy Regulation Commissions Advanced Notice of Proposed Rulemaking (ANOPR) RM21-17, October 2021. P. 25. Available at https://elibrary.ferc.gov/eLibrary/docinfo?accession_number=20211012-5697.
 Joskow, Paul. Competition for Electric Transmission Projects in the U.S.: FERC Order 1000. March 2019. Available at https://ceepr.mit.edu/wp-content/uploads/2021/09/2019-004.pdf. P. 49.
 In this initiative, the CAISO should also consider actions taken by the Southwest Power Pool to provide oversight over transmission costs. More information is available at https://www.spp.org/documents/15479/cost%20estimation.ppt.
 FERC Order 1000 allowed competitive procurement exemptions for “local” facilities but did not define a voltage threshold for local. (FERC Order 1000, Section 318).
 "For example, in New York, the competitive process for the “AC Transmission Public Policy Project” provided for the possibility of non-incumbent developers’ utilizing existing utility rights-of-way, thereby enabling broader participation in the process." (Cost Savings Offered by Competition in Electric Transmission. The Brattle Group. April 2019. P. 21.)
 Cost Savings Offered by Competition in Electric Transmission. The Brattle Group. April 2019. Figure 7.
 These figures – which are limited to projects within the service area of the three IOUs – are drawn from the Transmission Development Forum update in January 2023. More information is available at http://www.caiso.com/Documents/CAISOPresentation-TransmissionDevelopmentForum-Jan25-2023.pdf.
 The CAISO dramatically increased the number and scale of policy-driven transmission projects it approves, going from zero policy-driven projects between 2014 and 2021, to 6 projects at $1.5 billion (B) in 2022, to a proposed 22 projects at $7.5B in 2023. (The CAISO’s annual transmission plans are available at http://www.caiso.com/planning/Pages/TransmissionPlanning/Default.aspx.)
 “Proportionally, CAISO and NYISO have made a significantly higher share of total transmission investments available to competitive solicitations than the other FERC-jurisdictional planning regions.” (Cost Savings Offered by Competition in Electric Transmission. The Brattle Group. April 2019. P. 21.)