New Transmission Lines: Coming to an Area Near You?




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The Federal Electricity Regulatory Commission (FERC) passed a rule last week, Order No. 1000, that aims to facilitate the building of transmission infrastructure, the wires that bring us electricity from the power plant or other generation device. The rule, coming in at around 580 pages, reforms the commission’s electric transmission planning and cost allocation methods for public utility transmission providers.

Transmission building has stalled for the last few decades. That’s partly because securing right of way for transmission lines is expensive — and often political: nobody wants one in their backyard. But some energy analysts, such as Jason Makansi, author of Lights Out (an excellent — if opinionated — primer on how our electricity systems works and doesn’t work), say deregulation played a role. In some cases, the transmission operator is not the same entity that builds or maintains the infrastructure, so investing in transmission was a murky proposition because it was unclear how an investor might earn a return on investment.

FERC’s new rule attempts to overcome these hurdles, making cooperation among regions easier and pricing more competitive, said FERC Chairman Jon Wellinghoff.

New transmission facilities are needed to ensure reliability of the electric system, provide relief to congestion on the lines, and to meet public policy requirements established by state or federal laws or regulations; for example, 28 states and the District of Columbia have renewable portfolio standards, requiring that a certain percentage of their electricity come from renewable energy.

“While these state policy choices will necessarily shape future energy supply, existing planning rules do not always allow for these policy choices to be considered as drivers of transmission needs,” said FERC Commissioner Cheryl A. LaFleur.

New transmission could hopefully eliminate redundancies, leading to greater efficiency as well, said LaFleur. “Inadequate planning and cost allocation procedures can allow inadequate, inefficient or overlapping transmission development. These missed opportunities and inefficiencies can contribute to congestion costs and impede access to low-cost supply.”

The rule requires public utility transmission providers to participate in a regional transmission planning process and coordinate to determine if there are more efficient or cost-effective solutions to their mutual transmission needs. It also requires that local and regional transmission planning processes consider transmission needs driven by public policy requirements.

“[North American Electric Reliability Corporation] projects in its 2010 Long-Term Reliability Assessment that approximately 60 percent of all new resources expected to be added to the bulk power system by 2019 will be new wind and solar resources,” said Wellinghoff. “Strengthening and expanding the system for the reliable integration of these resources will require significant investment in transmission.”

He also stressed that the enhanced planning is technology neutral, meaning planners should consider alternatives to building transmission lines, including energy storage technologies and distributed generation, where energy generating devices are placed close to demand.

It’s unclear to what extent these new planning rules will actually encourage planners to think differently than they have for the last 100 years and give equal weight to alternatives like storage or distributed generation. But the sheer cost of transmission lines will likely provide an impetus to consider alternatives.

The rule also established reforms for cost allocation, most notably that costs allocated to a transmission facility must be roughly commensurate with estimated benefits. It also calls for transparency in determining allocation.

But the rule won’t address the basic difficulty of siting transmission said Commissioner Philip D. Moeller, in voting for the measure while voicing partial dissent.

“It takes too long and is way too expensive to site transmission,” he said during the session. “The rule doesn’t address state laws that may inhibit the building of transmission or delays caused by other federal agencies,” adding that “the commission lacks the legal authority to require other federal agencies to act.”

He summed up his concerns: “This rule largely addresses planning for long-distance transmission lines, which is only a subset of the critical issues that are inhibiting needed investment.”

However, this rule on transmission is just one of several new rules that FERC is working on to facilitate a dramatic shift to modernize our electricity system.

“This rule is an important step forward,” Wellinghoff said. “Our action … promotes efficient and cost-effective transmission planning and the fair allocation of costs for new transmission facilities. These changes will provide consumers with greater access to efficient, low-cost electricity.”

Commissioner Marc Spitzer agreed, saying, “The grid should no longer be plagued by ad hoc, facility-by-facility decisions.”

Order No. 1000 takes effect within 60 days of publication in the Federal Register.