Financial traders believe PJM’s proposal discriminates since they are more likely to hold counter-flow FTRs.
Transmission Line-Siting Under EPACT: Shortcut or Short Circuit?
The 2005 Act, designed to streamline projects, may fall short of that goal.
The Energy Policy Act of 2005 (EPACT) 1 established a new regulatory framework for the siting of electric transmission projects. Under EPACT, the Federal Energy Regulatory Commission (FERC), in certain circumstances, has the authority to site transmission projects in National Interest Electric Transmission Corridors designated by the Department of Energy (DOE). The political debate continues as to whether federal or state regulators should have the final authority to site electric transmission, but for now, EPACT is the law of the land.
However, the scope and application of this statute are unresolved, leaving many unanswered questions and potential pitfalls for those who must site new transmission projects.
The goals of EPACT were to streamline the siting process and to provide a federal “trump card” for projects delayed at the local level. The statute clearly is a compromise solution, however, and it is far from clear whether these goals have been achieved.
The Oversimplification Problem
The principal problem presented by EPACT is its failure to provide a clear delineation of federal and state authority. The standard “sound bite” summary of EPACT is that FERC now has “backstop” siting authority for transmission projects when the state regulatory authority does not act within one year to approve a project. Like most sound bites, this is a gross oversimplification.
Under EPACT, FERC will have siting authority over transmission projects located in national corridors if:
• The state does not have the authority to approve the siting of the facility or to consider the facility’s interstate benefits;
• The applicant does not serve end-use customers in the state; or
• A state has siting authority and it withholds approval for more than one year, or conditions approval in such a manner that does not significantly reduce transmission congestion or is not economically feasible. 2
Where these criteria are met, EPACT shifts the jurisdiction over permitting and siting of electric transmission projects from state and local authorities to FERC. Pursuant to EPACT, FERC issued Order 689, implementing regulations for filing permit applications to site transmission facilities. FERC’s authority, however, is limited and dependent on: (1) the DOE national-corridor designations; (2) who will be served by the proposed transmission facility; (3) the entity proposing the transmission project and the state’s ability to regulate such entities; (4) the authority of the specific state public utility commission (PUC) to consider the interstate benefits of a project; and (5) the timing of state regulatory review. Only the right combination of these elements will vest FERC with transmission-siting authority.
Prior to EPACT, the siting of electric transmission projects was a local process involving approvals from the state or local government. State PUCs reviewed the permit applications pursuant to their statutory authority. For example, the Pennsylvania PUC has jurisdiction to approve siting of all high-voltage transmission lines