(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.
ELCON, representing the industrial consumer sector, suggests that any attempt to award points for the imagined but inchoate benefits of renewable energy without a green light from Congress represents no less than a perversion of rate-making principles and a violation of FERC’s statutory charge:
“FERC must resist the temptation to socialize the costs of new transmission.
“Political pressure for interregional transmission projects such as may be considered in conjunction with the development of renewable projects is not a reason to depart from the long-standing doctrine of just and reasonable rates.” (Comments, filed Nov. 23, 2009.)
But others, such as ITC Holdings, the nation’s largest independent transmission company, see this initiative as a natural extension of FERC’s present jurisdiction over interstate transmission rates and services, and lawful even without any formal guidance from Congress, as ITC noted in comments filed November 13:
“Regional planning,” writes ITC, “has too often been nothing more than the assembly of local projects proposed by individual transmission owners.
“ITC understands that FERC cannot enact climate legislation or a national renewable portfolio standard, but the commission can and should require transmission planning processes to achieve objectives beyond reliability and to look forward, rather than merely reacting.”
In testimony on the Kerry-Boxer climate legislation (S. 1733) presented October 27 before the Senate Committee on Environment and Public Works, Wellinghoff stated that Congress could “help clarify” FERC authority to allocate green-grid construction costs among project beneficiaries, but warned against any “unduly restrictive language” that would require FERC to calculate “the precise monetary benefits” of any new project.
Hoecker and his WIRES coalition concur on the point, and cite as an example a clause found in section 121 of the draft Bingaman bill (S. 1462, American Clean Energy Leadership Act) , which would mandate cost sharing proportionate to the “measurable benefits” of any grid project. “This restriction,” writes WIRES President Paul McCoy (also Trans-Elect’s president), “is impractical and a detriment to investment.”
This notion of benefits is key for those in the power industry who want FERC to mandate a comprehensive, top-down, and wide-area grid-planning protocol that looks at the big picture, instead of just stapling together a roll-up collection of local proposals under a bottom-up analysis and calling it a regional or super-regional plan.
“Regional planning has too often been nothing more than the assembly of local projects proposed by individual transmission owners,” writes ITC.
Thus, as Mid-American Energy explains, multi-state EHV projects suffer under ISO and RTO planning regimes, which it calls “footprint-specific,” and too driven by reliability concerns and “near-term economic planning horizons.” (Comments, filed Nov. 23, 2009.)
Old Dominion Electric Co-op., a full-fledged PJM member, says what’s missing is a “feedback loop,” where the smaller, local planning agencies submit plans to a super-regional authority, and then have them returned with input and recommendations on how they can upgrade their project plans to better mesh with macro-scale projects.
But more important, green-grid proponents want FERC to consider factors such as those listed by the DOE’s Electricity Advisory Committee in its January 2009 white paper, Keeping the