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End the Gridlock: Why Transmission is Ripe for New Technology

Recent advances in materials science promise a new, truly competitive paradigm for grid investment without land-use headaches or "big-iron" solutions.
Fortnightly Magazine - January 15 2001
  • investment in innovative, low-impact technologies. Benefits of ETF status, therefore, should be accorded to projects whose impacts fall below a specified environmental impact threshold. This determination might turn, for example, on whether the facilities
    • are placed largely or entirely underground;
    • are placed within existing utility corridors;
    • satisfactorily address concerns about electromagnetic fields;
    • occupy rights-of-way that do not exceed specific width limits; and/or
    • forsake rights to exercise eminent domain authority.
  • To avoid the difficult problem of uncompensated impacts on third parties, ETF status could be limited to projects that use strictly controllable transmission technologies, such as direct current or flexible AC transmission systems (FACTS).
  • Ownership of ETFs by utility distributors and generators serving the region in which the facility is located could be restricted or barred altogether.

Exemption from Rate Regulation. Just as EWGs are eligible for market-based rate treatment, ETFs should be exempt from rate regulation under the Federal Power Act. Such projects would be structured on an at-risk basis; investment returns would be neither supported nor capped by traditional ratemaking formulas.

Exemption from Open-Access Mandate. Lacking market power and operating in many respects like independent power producers, ETFs should not be regarded as "essential facilities." They should be free to contract with entities wishing to ship power over these lines in a manner that meets their business objectives. They may choose to offer service on a tariffed basis, by auction, or alternatively, they might use their lines to move power purchased on their own account for sale to others on a merchant basis.

Streamlined Siting. The definitions governing ETF status would be established so as to mitigate or largely eliminate the local environmental impacts usually associated with transmission facilities. In exchange for accepting these restrictions, ETFs should be made eligible for a streamlined, federalized siting process modeled, perhaps, on the siting process for interstate gas pipelines. State concerns would be given weight and deference, but ultimate siting authority should rest with FERC to ensure an effective process with a broad regional perspective and closure.

The nation's grid will remain the indispensable energy lifeline for the vast majority of customers for the foreseeable future. Yet it is threadbare from overuse and underinvestment. It's time we take to heart the lessons of other industries: The key to robust competition lies in a strong network, and a market-based framework is the key to attracting the necessary investment. New technologies offer the pathway to renew the grid, and restore its full value, in harmony with today's environmental and land-use values.

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