Our annual survey of rates of return on common equity authorized by state public utility commissions in recent rate cases for electric and gas retail distribution utilities.
Federalizing the Grid
Renewable mandates will shift power to FERC but pose problems for RTOs.
no problem. “The West is doing it now,” he said, “through the Western Governor’s Initiative.”
Any move toward interconnection-wide planning not only erodes the turf of RTOs, but raises questions about what to do with the alphabet soup of ad hoc regional grid study groups that have sprung up recently, such as UMTDI (Upper Midwest Transmission Development Initiative), RGOS (MISO Regional Generation Outlet Study), and CAPX2020, shorthand for Transmission Capacity Expansion Initiative by year 2020.
How would these groups mesh with a new super-regional or interconnection-wide planning regime, imposed by Congress?
CAPX2020 group members, Great River Energy and Minnesota Power, for example, already have proposed a trio of 345-kV grid projects in the Upper Midwest as part of the group’s approved portfolio of Phase I projects, and have won a recommendation for a certificate of need from an administrative law judge at the Minnesota PUC. (See, Recommended Order, Minn. PUC Dkt. E002/CN-06-1115, Feb. 27, 2009.)
These three CAPX2020 projects might well compete or overlap with GPX. Moreover, UMTDI reportedly is considering the development of offshore wind turbines in the Great Lakes, closer to load centers in Chicago, Milwaukee and the Twin Cities than the Dakotas, which could trump the GPX plan.
Then comes CARP, the “Cost Allocation and Regional Planning Initiative,” formed by the state PUCs that make up the Organization of MISO States. Testifying at FERC’s March 2 technical conference, Wisconsin utility commissioner and OMS President Lauren Azar reported that CARP soon would hold its fourth meeting on trying to resolve who benefits from green-power development, and how to allocate the grid-expansion costs incurred to reap those benefits.
As Azar explained, MISO’s current cost-sharing method, as provided for under the RECB regime (“Regional Expansion Criteria and Benefits,” pronounced “Wreck-Bee”—yes, that’s right), has proven unworkable.
Consider that Otter Tail Power, a small-sized utility, reportedly is faced with more than 10,500 MW in new interconnection requests for wind energy gen projects, with implications of costly transmission expansions for Otter Tail ratepayers. That prospect reportedly prompted Otter Tail’s JoAnn Thompson to raise questions about the impact of regional grid-cost allocations in a presentation she gave to MISO’s RECB Task Force on February 27. Otter Tail Power confirmed that, to preserve its options, it filed notice with MISO on Dec. 31, 2008, of its possible intention to withdraw its membership from the RTO.
Searching for Certainty
Otter Tail’s story reveals a fundamental truth: The difficulty lies not so much in the planning, which can be made objective and has been made mandatory by FERC in Order 890. Rather, the problem rests with the region-wide allocation of costs for all those miles of new grid—a job that by default has fallen to the RTOs, who then must find a rationale to assign those costs to transmission-owning members whose allegiance to the regional grid organization, as measured under FERC Order 2000, remains purely voluntary.
ITC’s Joseph Welch said as much in written comments he submitted at FERC’s March 2 technical conference, helping explain why his company’s GPX project seeks a new paradigm for planning and siting.