(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
Bridging the Regulatory Divide
Regional committees may improve collaboration between federal and state regulators.
federal agency. That’s where the “regional regulatory framework,” pragmatically embodied by the workings of an RSC, can be used to attempt to bridge the state vs. federal divide. It isn’t black and white—it’s gray at its very best—but it is the most pragmatic and reasonable solution to the untenable alternative of “either/or” litigation or federal pre-emption.
As a matter of fact, at a recent meeting of the National Council on Electricity Policy, a representative of the Department of Energy assured me that DOE would love to have RSCs, or a regional group of states, be the ones to determine the “national interest transmission corridors” in their regions, based on a democratic regional transmission planning process and consensus position of the affected states and stakeholders. This gives me great hope that the concept of a “regional regulatory framework,” with well-functioning and democratic RSCs at the heart, can work to stave off a show-down between state and federal authorities over issues that are critically important to both sides.
On a going-forward basis, there is no doubt that there will be numerous challenges for both state and federal regulators, particularly as we try to harmonize existing state statutory authority with many of the new federal authorities outlined in EPACT. The bill suggests that it preserves many areas of traditional state jurisdiction, and one will find many savings-clause provisions sprinkled throughout the legislation in an attempt to do that, such as in the reliability section and native-load protection language.
Several suggested mechanisms are intended to provide states with a presumed partnership role with their federal counterparts on some issues, and a strong advisory role on others. There is FERC-state joint board language in the area of economic dispatch investigations, regional advisory board language in the reliability title, and regional compact language with respect to the siting of new transmission infrastructure.
However, when viewed in totality, the new energy legislation provides the federal government with substantial new authority over generation and transmission that can, and might well be, used to alter the outcome of what a state would have decided under its previously exclusive jurisdictional domain. Whether we can avoid unhappy and rancorous confrontations with the use of joint boards, regional compacts, or regional state committees is yet to be seen, but it is my sincere hope that we can do so.