Document ID: FERC-2009-0459-0002
Agency: ferc
Document Type: Proposed Rule
Title: Smart Grid Policy; Notice Requesting Supplemental Comments
Posted Date: 2009-05-21T04:00Z

[Federal Register: May 21, 2009 (Volume 74, Number 97)]
[Proposed Rules]               
[Page 23810-23811]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21my09-8]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Chapter I

[Docket No. PL09-4-000]

 
Smart Grid Policy; Notice Requesting Supplemental Comments

Issued May 19, 2009.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Request for supplemental comments.

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SUMMARY: On March 19, 2009, the Federal Energy Regulatory Commission 
(Commission) issued a Proposed Policy Statement and Action Plan 
(Proposed Policy Statement) that, among other things, proposed an 
interim rate policy to encourage the development of smart grid systems. 
In this notice, the Commission seeks supplemental comments regarding 
rate recovery for certain smart grid investments.

DATES: Comments are due May 28, 2009.

FOR FURTHER INFORMATION CONTACT:

Ray Palmer (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426, (202) 502-6569.
Elizabeth Arnold (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 502-8818.

SUPPLEMENTARY INFORMATION:
    1. On March 19, 2009, the Federal Energy Regulatory Commission 
(Commission) issued a Proposed Policy Statement and Action Plan 
(Proposed Policy Statement) that, among other things, proposed an 
interim rate policy to encourage the development of Smart Grid 
systems.\1\ Subsequent to the Commission's issuance of the Proposed 
Policy Statement, the U.S. Department of Energy (Department) announced 
two Smart Grid funding opportunities to be offered by the Department 
that may supply up to 50 percent of the funding for certain Smart Grid 
projects. In addition, the Department plans to require applicants to 
identify the source of non-Department funds, along with some evidence 
as to the certainty of these funds. Given that applicants for these 
programs might include jurisdictional public utilities that seek rate 
recovery through FERC-jurisdictional rates for the non-Department 
portion of funds for transmission-related projects, the Commission 
seeks supplemental comments on this matter.
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    \1\ Smart Grid Policy, 126 FERC ] 61,253 (2009). As the Proposed 
Policy Statement described, Smart Grid advancements will apply 
digital technologies to the electric transmission system and enable 
real-time coordination of information from various resources to 
bring new efficiencies to the grid. Id. P 1.
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 I. Background

    2. In the Energy Independence and Security Act of 2007 (EISA),\2\ 
Congress enacted a number of provisions related to Smart Grid. Section 
1301 of the EISA states that it is the policy of the United States to 
support the modernization of the Nation's electricity transmission and 
distribution system to maintain a reliable and secure electricity 
infrastructure that can meet future demand growth and to achieve each 
of several goals and characteristics, which together characterize a 
Smart Grid.\3\ EISA authorizes the Department to carry out two separate 
funding programs for Smart Grid projects: (1) Providing up to 50 
percent of the cost of certain demonstration projects, as described in 
section 1304; \4\ and (2) providing federal matching funds for Smart 
Grid investment costs, as described in section 1306.\5\ EISA also 
directed the development of a framework of protocols and standards to 
achieve interoperability of Smart Grid devices and systems, which was 
described in detail in the Proposed Policy Statement, and in which the 
Commission plays a role.\6\
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    \2\ Public Law No. 110-140, 121 Stat. 1492 (2007).
    \3\ EISA sec. 1301, to be codified at 15 U.S.C. 17381.
    \4\ To be codified at 42 U.S.C. 17384, as amended by the 
American Recovery and Reinvestment Act of 2009, Public Law No. 111-
5, Title IV, Subpart A (ARRA).
    \5\ To be codified at 42 U.S.C. 17386, as amended by the ARRA.
    \6\ See Proposed Policy Statement, 126 FERC ] 61,253 at P 7-8.
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    3. In the Proposed Policy Statement, the Commission proposed an 
interim rate policy for Smart Grid investments, intended to encourage 
investment in technologies that advance efficiency, security, 
reliability and interoperability. Specifically, the Commission proposed 
to accept single-issue rate filings submitted by public utilities under 
section 205 of the Federal Power Act \7\ to recover the costs of Smart 
Grid projects involving jurisdictional facilities, provided that 
certain showings are made.\8\ The Commission specifically noted that, 
``[w]e would also consider applying these rate treatments to the 
portion of a smart grid pilot or demonstration project's cost that is 
not already paid for by Department of Energy funds, such as those 
authorized by EISA sections 1304 and 1306.'' \9\
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    \7\ 16 U.S.C. 824d.
    \8\ Proposed Policy Statement, 126 FERC ] 61,253 at P 46. The 
Commission also discussed other rate treatments. Id. P 51-52.
    \9\ Id. P 52 (footnote omitted).
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    4. Subsequent to the Commission's issuance of the Proposed Policy 
Statement, the Department released two documents relative to 
forthcoming solicitations for applications for Smart Grid funding; one 
of these solicitations was authorized by EISA section 1304, and one 
authorized by EISA section 1306.\10\
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    \10\ For the section 1304 program, the Department's National 
Energy Technology Laboratory issued a Draft Funding Opportunity 
Announcement numbered DE-FOA-0000036 on April 16, 2009 (Draft 
Funding Opportunity Announcement). For the section 1306 program, the 
Department's Office of Energy Delivery and Electric Reliability 
issued a Notice of Intent to Issue a Funding Opportunity 
Announcement numbered DE-FOA-0000058A on April 16, 2009 (Notice of 
Intent).
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    5. In the Notice of Intent, electric utilities are specifically 
identified as a category of eligible bidders. While the Notice of 
Intent does not specifically require that an applying electric utility 
get approval from a regulatory commission for non-Federal funds, the 
document could be read as indicating a preference for such 
approval.\11\
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    \11\ The Notice of Intent states that the evaluation of 
proposals will include ``* * * the likelihood that the proposed work 
can be accomplished * * * with additional merit given to 
applications that * * * [o]ffer the greatest extent of institutional 
and organizational commitment with consideration given to: * * * 
[r]equired approvals from regulatory organizations.'' Notice of 
Intent at 12-13.
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    6. The Draft Funding Opportunity Announcement does not explicitly 
address regulatory approvals, but does instruct applicants to submit a 
funding plan that identifies all sources of project funds, and directs 
applicants to include a commitment letter from third parties providing 
a specific minimum dollar amount of cost sharing.\12\ For public 
utilities that plan to match the Federal funds with charges to 
ratepayers, it is possible that public utilities may seek to obtain an 
order addressing rate recovery from this Commission for charges subject 
to this Commission's jurisdiction.
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    \12\ Draft Funding Opportunity Announcement at 32-33.
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II. Request for Comments

    7. Given the requirements for potential applications by public 
utilities

[[Page 23811]]

to the two Department programs referenced above, the Commission seeks 
comments on how it should address requests for rate recovery that may 
be necessary for public utilities to qualify for awards under these 
programs. We also seek comment on whether some form of conditional 
approval could be useful to public utility applicants with respect to 
jurisdictional Smart Grid facilities. The Commission invites comments 
on whether the Commission, consistent with its obligations to ensure 
just and reasonable rates under the Federal Power Act (FPA), should 
adopt processes for public utilities that may apply for funding for 
jurisdictional Smart Grid facilities through the Department's Smart 
Grid funding opportunities.

III. Document Availability

    8. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    9. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    10. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

    By the Commission.
Kimberly D. Bose,
Secretary.
 [FR Doc. E9-12029 Filed 5-20-09; 8:45 am]

BILLING CODE 6717-01-P