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Transmission Tug-of-War

From EPAct to Order 1000, siting authority continues evolving.

Fortnightly Magazine - November 2011

to construct transmission facilities and regarding the qualifications for facility developers. The type of entity proposing to build the transmission facility might be critical in determining whether FERC or a particular state (or states) has jurisdiction over a transmission project in a NIETC, once any NIETC is properly established consistent with the Ninth Circuit’s determination in California Wilderness Coalition .

In the past, states approved the siting of interstate transmission facilities constructed by public utilities which were subject to state jurisdiction because the utilities served state retail customers. Order No. 1000 changes this framework and permits a non-incumbent transmission developer 43 as well as an incumbent transmission developer or provider to seek authority to construct a transmission project. 44 Order No. 1000 therefore increases the odds that incumbent public utilities will not be the only potential builders of interstate transmission facilities. For example, an independent transmission company providing only interstate transmission service or a generating company connecting new generation to the grid also might seek to build transmission lines to deliver power to congested areas.

Non-incumbent transmission developers would not necessarily meet the definition of “public utilities” under state law and, therefore, state public utility commissions may or may not have authority over the transmission projects proposed by non-incumbent entities. The legal analysis of a state’s authority depends on the specific laws of each jurisdiction. Pennsylvania, which had several counties (52 of 67) included in the 2007 Mid-Atlantic Area NIETC, illustrates the complexity, because state commission transmission-line siting regulations apply only to “public utilities,” as defined under the state public utility code. 45 A non-incumbent transmission developer might not fit within that definition. 46 On the other hand, eminent-domain authority is conferred under the Pennsylvania Business Corporation Law , which applies to “public utility corporations” that may include a non-incumbent transmission developer. The power of eminent domain, however, could only be exercised once these entities received state approval; therefore, as long as condemnation is required, the state would have initial siting authority. 47

The interplay between these issues is illustrated by the efforts to site the Maryland portion of the Potomac-Appalachian Transmission Highline (PATH) project, a proposed multistate 275-mile transmission project within the geographic area of the 2007 Mid-Atlantic Area NIETC. 48 Most of the counties in Maryland (22 of 24 counties and Baltimore City) were included in the 2007 Mid-Atlantic Area NIETC. In September 2009, the Public Service Commission of Maryland (Maryland PSC) issued an order stating that Potomac Edison dba Allegheny Power could not seek authorization to construct a transmission line “on behalf” of its non-electric company affiliate, PATH Allegheny Transmission. 49 The Maryland PSC held that § 7-207(b)(3) of its regulations 50 authorizes it only to issue a certificate of public convenience and necessity to an “electric company”— i.e., “a person who physically transmits or distributes electricity in the State to a retail electric customer” 51—and that PATH–Allegheny lacked that status. This issue was not in dispute, because Potomac Edison acknowledged that none of the various entities created to construct the multistate transmission line qualified as an

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