A Pricey Peninsula

Deck: 

Michigan chafes over regional grid planning, providing a policy lesson for the feds.

Fortnightly Magazine - October 2012
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This month the nation’s utilities will report back to the U.S. Federal Energy Regulatory Commission on how they will comply with FERC Order 1000, the rule issued last summer that requires all transmission providers to participate in regional grid planning, and forces grid planners to take account of state and federal policy governing renewable energy.

And with this landmark step, the industry turns back full circle to the days of vertically integrated resource planning, before everything broke loose in electric restructuring.

With Order 888, issued in 1996, the feds unbundled transmission from generation. That led directly to the formation of regional transmission organizations (RTOs), ensuring that grid management and centralized unit dispatch and would be overseen by agencies with no financial interest in energy markets or the generation revenue stream.

Now, however, with Order 1000, the commission has engineered a virtual rebundling of these two sectors—power plants and wires—by requiring regional planners, when they study where to lay down the lines, to consider not only what power flows are needed to keep the lights on, but also the motives, mandates, and economics of various portfolios of generation resources, and their effects on wholesale prices and retail rates.

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