In July 2011, the Federal Energy Regulatory Commission (FERC) issued Order 1000 titled Transition Planning and Cost Allocation. The Order was designed to address four issues observed in the electricity marketplace:
- Existing rules did not require regional transmission planning, so each transmission provider tended to develop plans that created local benefits but did not consider greater regional good. This tended to favor smaller, low-voltage transmission projects.
- Existing rules did not require planning to consider public policy requirements such as renewable power portfolio requirements. This tended to hold back development of renewable energy in transmission-short areas.
- Independent transmission owners were discouraged from building projects by rules that gave incumbent transmission owners the right of first refusal on new projects. This meant that a developer could spend time and money getting a project conceptualized and included in a transmission plan only to see it built by the incumbent transmission owner.
- Cost allocation methodologies did not provide for regional consideration of costs and benefits. This meant that a local project that would have regional benefits might not be able to collect revenue from those benefitting, thus making it much less likely that the project would get built.
Order 1000 established minimum criteria for the transmission planning process including development of regional plants, consideration of transmission needs driven by public policy requirements, and coordination between neighboring regions. The order also required regional and interregional cost allocation methods that are "roughly commensurate" with estimated benefits and that protect entities who don’t benefit from having to pay. And lastly, the order encouraged non-incumbent transmission owners to build new transmission by removing the right of first refusal given to incumbent transmission owners.