Price-Responsive demand, EPA regulations, and merger policy will be on the agenda for the coming year as the Federal Energy Regulatory Commission works its way through the list of key cases that...
East Vs. West: Growing the Grid
The models and motives behind tomorrow’s transmission expansion.
here in the West.”
Some puzzling questions remain however. Who will conduct the final review of the economic merits of these western projects? What factors might control such a review?
Project Goals and Review. One key uncertainty arises because the regional reliability council for the Intermountain West, the Western Electricity Coordinating Council, finds itself right in the middle of reforming its standards for review of transmission expansion projects. According to WECC spokesman Jay Loock, the council is phasing out its SSGWI protocol (Seams Steering Group Western Interconnection) at the request of Western region governors. In its place, WECC is developing a transmission expansion planning policy (TEPP). WECC held a TEPP workshop in mid February in Salt Lake City, and its Web site offers a look at presentations from the workshop on what “products” and factors should play a role in project review.
When asked about reviewing the Frontier Line, Loock responded, “We don’t perform analyses per se, but provide a forum for resolution of problems and for rating the line and determining seasonal capability. We would not conduct a system impact study.”
A second problem stems from the very nature of project sponsorship in the West. For example, the Wyoming Infrastructure Authority, the key Frontier Line sponsor, was created by legislation in Wyoming 13 to “diversify and expand the Wyoming economy through improvements in the state’s electric transmission infrastructure.” The WIA even enjoys authority to provide financing by issuing bonds for grid projects. In Wyoming Executive Order 2003-4, issued by Gov. Steve Freudenthal, sets out strict guidelines for WIA in leading project development efforts. Among other things, it orders the WIA and state utility commission to a include a governor’s appointee in any project team formed to coordinate project reviews.
Other states can be seen moving in the same direction. The Western Governors’ Association last summer recognized formation of similar governmental agencies in several Great Plains states, and that New Mexico might follow suit. 14
Consider North Dakota, another state rich in wind power resources (and also lignite), but poor in consumer load. Lawmakers there created a state transmission authority patterned after the WIA. 15
Among other things, the North Dakota legislation declares it “an essential governmental function and public purpose” to remove transmission export constraints to help facilitate development of the state’s natural resources. With this sort of mandate, how should western regulators balance consumer benefits in California and downstream markets, against job creation and development upstream in the production areas?
Climate Change Policy. Six weeks ago, the California PUC announced its intention to adopt ceilings on emissions of greenhouse gases from electric generation. The emissions caps would be keyed to delivery of power to load, rather than operation of power plants; thus, the caps would apply to electricity imported into the state via long-haul transmission lines, as well as to in-state power generation. 16
Clearly, these new emissions caps will impose severe resource constraints on any proposed grid project, as the PUC already had required that investor-owned utilities (IOUs) employ a carbon dioxide adder of an initial $8 per ton