2. The Immediate Need Exemption is Unduly Discriminatory because its Eligibility Criteria Unnecessarily Restricts Nonincumbent Transmission Developers From Participating in Competitive Project Solicitations without Demonstrable Reliability Benefits
To ensure that the Immediate Need Exemption was used only in limited circumstances, the Commission established criteria limiting a RTO’s discretion to grant the exemption; the most important of which required the project to be needed within three years to resolve the reliability concern. The Commission subsequently determined that the appropriate date to calculate whether a transmission project qualifies for the Immediate Need Exemption is the date that the reliability need must be addressed rather than the date when the project is actually in-service. When narrowly construed to be satisfied only when a project is truly needed in-service within three years of its approval, this criteria could serve a valuable function in ensuring grid reliability. As implemented, however, the three-year time sensitive need criteria has acted as a rubber stamp, allowing incumbent transmission developers to circumvent competitive project solicitations.
This dynamic is most prevalent in ISO-NE, where projects qualifying for the Immediate Need Exemption have been “plagued by significant delays.” Since implementation of Order No. 1000, all thirty of ISO-NE’s completed and ongoing transmission projects were designated as needed for grid reliability within the next three years. Accordingly, each qualified for the Immediate Need Exemption and was awarded to incumbent transmission developers without a competitive solicitation. However, of these thirty projects, twenty-four (80 percent) were not in-service within three years, while half are expected to take at least five years to complete. Similarly, SPP designated a project for the Immediate Need Exemption in 2018 based on its determination that the project was “needed” by 2020, but has an expected in-service date in 2023. Meanwhile, none of SPP’s other Immediate Need Exemption projects have gone in to service, including those with “need-by” dates in the past. Finally, of the thirty-nine transmission projects designated by PJM for the Immediate Need Exemption in 2014, only 72 percent have gone into service within three years of their “need-by” dates.
The fact that so many transmission projects in these regions qualify as time-sensitive yet are not sensitive enough to actually be built on time, suggests that incumbent transmission developers are not actually using the Immediate Need Exemption to ensure grid reliability, but rather as an anticompetitive measure to erect barriers to the participation of nonincumbent transmission resources. The urgency of these projects is further undermined by the RTOs’ repeated assertions that their grids continue to operate reliably with existing transmission infrastructure.