Green Power Transmission: “Congress can change the laws of the land, but not the laws of physics” Go

Posted on 5/1/2009 with 1 comment

FERC Chairman Wellinghoff

Yesterday, the Energy & Natural Resources Committee heard from FERC, NARUC (National Association of Regulated Utility Commissioners) and major transmission stakeholders on issues and potential for new extra high voltage (EHV) transmission lines (as proposed by legislation put forth by Reid and separately Bingaman) that would be used to bring renewable electricity generation from distant regions to demand centers.  Reid’s bill proposes that upwards of 75% of the capacity of these new EHV lines be set aside for renewable electricity.

Importantly and in contrast to the the Energy Policy Act of 2005, the proposed increase in FERC’s jurisdiction over interstate transmission lines (as proposed by Reid) is for the sole reason to bring renewable electricity from distant (typically low population density) to major load centers in order to achieve proposed RPS standard levels.  It is not to increase the reliability of grid as identified in the EPACT 2005. Many senators and witnesses made the point that dedicating the lines for renewables would violate the laws of physics since other generation (nuclear, coal, natural gas) would flow if the renewable resources were not operating and that these typically operate at lower power factors.

It was also stressed that while FERC was tasked with trying to determine ways to increase realibility that little has been done since EPACT 2005.  Now the priorities are changing, where it would seem that getting green power to market is more important than grid reliability.  The grid operators and power companies who gave testimony were concerned about this appearance of a major shift.

There is no doubt that to achieve an RPS as has been proposed will mean bringing more renewable energy from distant markets to load centers.  However, efforts to increase the efficiency and reliability of the current grid should not become secondary as a more robust and better operated grid will mean that less real power needs to be generated.

The majority of participants, including the state-minded NARUC agreed that there is need for improvement in the planning and siting of new transmission lines.  The current process is not effective as evidenced by the 6000+ miles of new gas pipelines (where FERC has jurisdiction) that have been built in the last decade as compared to ~600 miles of transmission.

In addition to the concerns of planning and siting was the issue of cost allocation.  Who pays for these new lines?  It was estimated that $80 billion are required to upgrade the transmission system for reliability ($50b) and to bring “location-constrained” renewables ($30b) to market.  The CEO for ITC made the point that if the proposed transmission line from Michigan to the eastern midwest had been built then the blackout of 2003 would have been avoided and power would not have been disrupted to 50 million people– but this would have been paid for exclusively by Michigan ratepayers.  Allocated costs and benefits do not add up in the current regime.

Since a good portion of planned renewable generation could come from western states, effective siting of transmission lines will be critical to ensure least cost and avoid extensive delays.  However, as brought up by the Wyoming Senator, his and other western states have strong property laws.  The proposed legislation would expand on FERC’s ability to use imminent domain as a basis for siting.  Ultimately, developing specific transmission corridors and using Federal lands where appropriate could lessen this problem.

NARUC had a number of critical points that it members had put forth regarding the proposed increase in FERC jurisdiction.

• States shall still be the primary authority in siting of interstate transmission with FERC serving as a backstop
• FERC shall have no intrastate authority on transmission or distribution
• FERC shall not override regional transmission plans
• Cost allocation methodology needs to be in place before any approvals are given
• FERC shall not override retail rate making authority, generation siting and/or distribution interconnections
• FERC shall not override bundled retail transmission schemes.

The proposed RPS is very ambitious and widely believed that either the House or Senate version will make it into law.  In order to meet the RPS levels will require substantially enhanced transmission capabilities.  At the same time, it will be important that grid reliability and congestion management objectives are not secondary to gettting green power to market.  Multiple objectives from EPACT 2005 and the latest proposals can be achieved.  However, the challenges are tough and the number of (perhaps unaligned) stakeholders are large.