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Transmission Line-Siting Under EPACT: Shortcut or Short Circuit?

The 2005 Act, designed to streamline projects, may fall short of that goal.

Fortnightly Magazine - August 2007

definition. 38 However, eminent-domain power is conferred under the Pennsylvania Business Corporation Law, which applies to “public utility corporations” that may well include ITCs and gencos. To exercise the power of eminent domain, however, these entities must first go to the Pennsylvania PUC for approval. As long as condemnation is required, the PUC would have initial siting authority. This situation is reflected in the recent Trans-Allegheny Interstate Line Co. application for a certificate of public convenience for transmission facilities at the PUC. 39 Trans-Allegheny requested to be deemed a public utility in furtherance of its intention to engage in the interstate transmission of electricity. As it explains in the application, Trans-Allegheny needs the certificate to exercise eminent-domain authority.

Even if a state PUC has general siting authority, FERC can still step in if the state PUC does not have the ability to consider the transmission facility’s interstate benefits or if the project does not serve end-use customers within the state. Regarding the consideration of interstate benefits, state PUCs have jurisdiction only over intrastate utility service. Hence, the notion of these regulatory entities considering interstate benefits is problematic and a difficult legal issue. The state PUC may wish to consider these benefits, but the question remains whether it really has any jurisdiction to do so. The EPACT provision giving FERC jurisdiction when the entity will not serve end-use customers within a state also raises questions. Gencos and ITCs almost by definition will never serve end-use customers directly. Does this mean they can simply bypass the state process altogether? The answer is simply not clear.

The nature of the service provided by the transmission facility still may require sending the permitting applications directly to FERC if the proposed project would not serve end-use customers within the effected state, or if the state regulator cannot consider the interstate benefits of a proposed facility. An example of these jurisdictional complexities again can be found in Pennsylvania. Arguments concerning the interstate benefits of transmission projects, absent the issue of service to end-use costumers, have been raised in recent Pennsylvania cases, but these matters were settled without specifically resolving the role of interstate benefits. More generally, however, the Pennsylvania PUC requires a showing that there is a present and future need for a proposed line. 40 Whether the PUC can make a finding as to need based solely on interstate factors is unclear. In the 1960s, the Pennsylvania courts did consider the need to integrate the transmission system when weighing the applicability of eminent domain to proposed transmission projects, but that precedent may not apply if the local jurisdictions do not receive any benefits. 41 Elsewhere, prospects for state consideration of interstate benefits are mixed. Some states have considered interstate factors when approving transmission projects, while others require that a project benefit their citizens. 42 The best approach may be to argue that local customers indirectly benefit from interstate projects that reinforce the overall reliability of the transmission grid. In the absence of clear state-level authority concerning ITCs or gencos, the consideration of interstate benefits, and how service