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Federalizing the Grid

Renewable mandates will shift power to FERC but pose problems for RTOs.

Fortnightly Magazine - April 2009

on President Obama’s campaign call to bring wind from the Dakotas to Chicago, to the tune of a monster grid construction plan thought to cost anywhere between $10 billion and $12 billion.

But project opponents call the GPX plan premature, since it has not been vetted by a grid-planning process in any affected region, and thus might never even win approval. Moreover, with GPX not fitting the mold of the typical grid addition, opponents chafe that ITC and Welch have asked FERC for recovery of startup and development costs, plus rate-of-return incentives and rate-base formula rates under applicable RTO tariffs, but have asked FERC also to fashion an entirely new super-regional planning procedure for the project (akin to the Reid proposal), which would bypass planning rules already in place in MISO, PJM, and MAPP, where GPX would lay down lines.

One project opponent finds all this too much to bear: “Here we are faced with an enormously expensive, speculative undertaking that seeks the right to recover, among other amounts, unquantified funds it has already expended in pursuit of something that might turn out to be unwise and dropped.” (See, Protest of American Mun. Pwr. – Ohio, p. 2, FERC Dkt. ER09-681, filed March 2, 2009.)

Others say it is not enough that ITC has modeled its project on Obama’s campaign rhetoric. According to Montana Consumer Counsel Robert A. Nelson, GPX is “as breathtaking in its audacity as it is in its scope.”

Build and They Will Come

Speaking at the technical conference held at FERC on March 2 to explore the integration of renewable resources into the wholesale electric grid, PJM’s senior vice president of operations, Michael J. Kormos, echoed the arguments of ITC’s Joseph Welch, and many others, that current regional grid-planning rules that focus only on system needs, such as load growth or actual requests for generation interconnection, don’t seem to work anymore for a “Build It and They Will Come” project, such as the GPX, and others in the works as well, such as AEP’s Pioneer Project (see, FERC Dkt. ER09-75) , sponsored by Electric Transmission America, AEP’s joint venture with Mid-American Energy.

Kormos wants FERC to open a rulemaking to consider a new “third-tier metric,” beyond reliability and congestion, with inputs to reflect the public-interest value of green power.

He advises against a purely interconnection-wide planning regime, as proposed in the Reid bill, preferring instead to rely on regional planning at the RTOs, in coordination with each other. So does ISO New England CEO Gordon van Welie, who urged at the technical conference that any transmission planning effort for the Eastern Interconnection as a whole should follow “an iterative process where regional plans serve as the basis and are coordinated and harmonized by a federal entity.”

RTOs, he said, should remain “as the primary planning authority for managing the integration of renewable within their footprint.”

Yet when Energy and Natural Resources Committee Chairman Bingaman (D-Ariz.) asked at the Senate hearing if grid planning should be conducted on a wider footprint, such as across the entire interconnection, Wellinghoff saw