(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
Transmission is Bubbling
A billion-dollar ‘gold rush’ could send grid rates through the roof.
multiple competing development proposals, “rather than a ‘gold rush’ approach in which individual proposals are examined in isolation on a first-come, first-served basis.”
Lastly, the ISO never has recommended the MPC project as a system expansion, and has not yet agreed to include the project as a qualifying METU within its current Regional System Plan, so that it appears the project cannot qualify under EPAct and FERC Order 679 as having “resulted” from a fair and open regional process for transmission planning that evaluates energy pricing and line congestion. Rather, the RTO so far has treated the MPC project only as an “elective” upgrade, proposed by the utilities on a “volunteer” basis.
There’s much more to it than this, but suffice to say that as the first-ever METU project proposed for New England, the MPC raises so many novel questions that the RTO has formed a new working group, the Economic Studies Process Stakeholder Group, to reconsider how it will integrate market-based generation resource development with ISO-sponsored and rate-regulated transmission planning. That’s where Massachusetts DPU chairman Hibbard steps in, with no shortage of forthright advice.
Hibbard’s 5,000-word talk is available in full on the ISO-NE website . And while the draft is marked “not for citation,” the Maine PUC and the Maine Office of the Public Adovcate already have filed a copy at FERC as evidence in the MPC grid-incentives case.
On one hand, Hibbard believes the science of climate change “is clear and unequivocal,” and swears that “we would be fools” to ignore the “vast, wind, hydro, biomass and other low-carbon resource options within and just beyond the borders” of the New England region—resources that Hibbard says “are counted in gigawatts, not megawatts.”
Yet Hibbard claims also that the wind industry “is no longer one that needs to be pampered,” since wind resource development is driven no longer by wildcatters, “but by institutions with extremely deep pockets and sophisticated development strategies, including FPL …Boone Pickens … and Iberdrola, a company that has a market capitalization of more than $60 billion.”
Thus, Hibbard warns at length that utility industry resource planning must acknowledge these truths, but must avoid allowing the process to be co-opted by ISO engineers with slide-rules, who owe no financial accountability to ratepayers:
“Opinions on whether we will or will not meet renewable or environmental standards, or whether or not specific generating development options will depress market prices, or lower the marginal price of a carbon allowance, are valuable judgments that should be considered in the development of state law and policy, but they cannot and must not be used as any formal justification for infrastructure development or the allocation of transmission or any other system costs, where those determinations are made in a forum that is driven only by stakeholder committees and subject only the jurisdiction of FERC.
“And that is where I fear we are headed.”
Citing what it alleges as significant cost overruns for electric transmission projects now underway, the New England Conference of State Public Utility Commissions (NECPUC) filed a complaint earlier this