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Cross-Sound Blues

Legal challenges continue for the undersea transmission line.

Fortnightly Magazine - February 2004

saga depicts a project embroiled in several disputes- environmental, economic, political, and technical. At the heart of the matter, however, is the age-old question of states' rights versus regional and national interests.

What Ashley Brown of the Harvard Electricity Policy Group calls state and local "parochialism" has stood in the way of more than one electric power facility. In a presentation on transmission siting, Brown cited three other cases in which the courts rejected inter-state electricity needs in favor of in-state interests ().

In this legal context, the Cross-Sound dispute has raised a chorus of outrage from the utility industry and from pro-business interests in general.

"Across the country, the zoning and permit process for new construction has stretched to an expensive, years-long ordeal," said Fred L. Smith, president of the Competitive Enterprise Institute in Washington, D.C. "A nation that permits officials like [Connecticut Attorney General Richard] Blumenthal to continually delay vital new energy projects is not a nation that is going to respond well to future electrical crises."

With rising grid-reliability concerns and slow progress to create liquid regional power markets, transmission-siting issues have gained political traction on Capitol Hill. The omnibus energy bill that failed in late 2003 included a section granting eminent-domain authority to the Federal Energy Regulatory Commission (FERC). The section did not pose a major arguing point in the 2003 legislation, and it is expected to remain in a revived energy bill in 2004.

If enacted, the legislation would streamline transmission siting, especially for merchant transmission projects. But it won't be a silver-bullet solution. First, the legislation itself sets a significant threshold for granting a permit. The project must be located in one of the "congestion areas" to be identified in a commission study, and it must be facing onerous regulatory treatment at the state level. Second, a FERC permit won't represent immunity from other types of challenges.

"Before a utility can make an investment, they will have to face the question of how it will be treated by regulators," says Peter Rigby, a director with Standard & Poor's. "Are they at risk for cost-recovery? Eminent domain authority will reduce one barrier, but few utilities will get a blanket go-ahead to make transmission investments." -Michael T. Burr




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