(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...
FERC fights for the green-grid superhighway—even if Congress won’t.
in Reliable and Economic Electric Systems) has filed a formal petition asking FERC to show its hand—to come clean and issue a formal rulemaking on cost allocation for grid expansion (see Petition for Rulemaking, FERC Docket RM10-4, filed Nov. 12, 2009).
Yet, FERC might be walking into a minefield. Even as it ponders new rules, it must deal with the recent remand order handed down last August by the U.S. 7th Circuit Court of Appeals in Illinois Commerce Comm’n. v. FERC . That case struck down PJM’s FERC-approved policy for socializing costs through a “postage-stamp” rate across the entire RTO footprint for building new backbone EHV transmission lines of 500 kV or larger, explaining that FERC hadn’t provided enough evidence to justify its ruling. Now, in answering the court on remand, FERC will be called on prematurely to articulate policy on questions that will overlap or pre-empt its planned rulemaking case.
And DOE also muddied the water last June when it issued its funding opportunity announcement FOA0000068, providing some $80 million in stimulus bill grant money under the American Reinvestment and Recovery Act of 2009 (ARRA), for the study of experimental models and best practices for super-regional transmission planning processes at ERCOT and the Eastern and Western Interconnections. The Western Electricity Coordinating Council has applied for a grant, as has the Eastern Interconnection Planning Collaborative, a group of 23 NERC-certified planning entities representing about 95 percent of load in the Eastern Interconnection.
The DOE hadn’t yet announced the grant winners as this issue went to press, but Edison Electric Institute wrote in late November that DOE selections “should be made very soon.” FERC might end up setting its final rule on interconnection-wide, super-regional planning before DOE’s ARRA grant projects are completed and evaluated, thereby putting the cart before the horse.
It’s no surprise, then, why many question FERC’s audacity in jumping the gun before Congress decides on a national renewable portfolio standard, or passes a cap-and-trade or carbon tax bill granting authority to FERC to consider climate-change factors in regulating the transmission grid. Ohio stands as a prime example, where state utility regulators responded to FERC’s October inquiry with questions of their own:
“The Ohio commission is confused as to whether it is FERC’s goal to create a robust low-cost high-voltage grid to serve the country’s expanding needs, or whether FERC has separate societal goals such as the reduction of carbon emissions.” (Comments, FERC Docket AD09-8, filed Nov. 20, 2009.)
“This lack of clarity,” the Ohio commission added, “makes it problematic to arrive at specific responses to FERC’s inquiries … FERC should issue a policy statement clearly delineating its objectives … Such Policy Statement should also cite FERC’s statutory authority.”
The PSEG companies, headquartered in New Jersey, and which have benefited from PJM’s socialized cost-sharing for high-voltage (500 kV or higher) transmission lines located along the Mid-Atlantic Seaboard (see Figure 1) , agree that FERC shouldn’t upstage Congress:
“Transmission planning,” writes Vilna Waldron Gaston, associate general regulatory counsel for PSEG Services, “cannot substitute for a national energy policy.” (Comments, filed Nov. 23,