(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...
Titans of Transmission
ITC and AEP jockey for the lead in building the grid of tomorrow.
utility regulators at the Kansas State Corporation Commission. Also, the KETA and V-Plan segments had won inclusion as economic upgrades within SPP’s 2008-2017 regional TEP, with the expectation that KETA and V-Plan segments would be included in SPP’s balanced portfolio of projects and qualify for region-wide cost recovery through postage-stamp rates.
ITC, Sunflower, and the Kansas commission raised these and other points before FERC, arguing unsuccessfully that granting an incentive would be premature, because the Tallgrass and Prairie Wind partnerships weren’t certified yet as transmission utilities in Oklahoma or Kansas.
The winning of incentives by Tallgrass and Prairie Wind in FERC’s order dated December 2 represents a victory of sorts for American Electric Power and its vision of a top-down nationwide overlay of 765-kV extra-high-voltage lines, as opposed to a bottoms-up, node-by-node or flowgate-by-flowgate approach to modernizing the grid.
However, ITC might have gotten the jump on American Electric Power, at least at FERC, with the February filing of its incentive application for the massive Green Power Express.
For on December 2, AEP issued a news release stating it was “evaluating the feasibility” of building a multi-state, extra-high voltage transmission project across the Upper Midwest to support the development of renewable energy:
AEP proposes building the first 765-kilovolt (kV) extra-high voltage transmission lines to connect major wind developments in the Dakotas and surrounding states to the existing 765-kV network that ends near Chicago … The transmission proposal is in the conceptual stage, but it is anticipated that linking Upper Midwest wind resources with the existing extra-high voltage transmission infrastructure in the Chicago region will likely require more than 1,000 miles of new extra-high voltage transmission lines at a cost of between $5 billion and $10 billion.
And bruised from its battle with the Tallgrass and Prairie Wind projects, ITC Great Plains filed its own application in January, seeking financial incentives from FERC for its KETA and V-Plan projects (see FERC Dkt. ER09-48, filed Jan. 15, 2009) .
Last summer, in hearings before the U.S. Senate Committee on Energy and Natural Resources, the president of AEP Transmission, Susan Tomasky, threw down the gauntlet by telling Congress that it should take the next step beyond the Energy Policy Act of 2005, and pass new legislation giving the FERC full siting authority over interstate transmission lines.
“The plea in this testimony is quite simple,” said Tomasky. “We urge you and Congress to recognize that we must take action, possibly very difficult action.”
Such a radical step would go far beyond the remedial “backstop” transmission-siting authority that Congress granted to FERC in EPAct 2005, in cases where state-siting efforts are delayed or break down. Such a drastic step also would place the regional independent grid-system operators (ISOs) and regional transmission organizations (RTOs) in limbo. That’s because FERC’s Order 2000 regime (which created today’s RTOs) and Order 888/889/890 regime (governing the pro forma Open Access Transmission Tariff, or OATT) assume that regional transmission planning remains a key function for the RTOs and ISOs.
RTOs study the topology of the regional transmission network, with its nodes,