As the debate over restructuring the U.S. electricity industry moves forward, there comes a host of new theoretical models. Two proposals in particular serve well to frame the debate.
Looking Beyond Transmission
FERC Order 1000 and the case for alternative solutions.
- Authorize transmission providers or third parties to recover the costs of cost-effective NTAs and cooperate with other states to allocate the costs of NTAs in a manner comparable to transmission solutions.
- Require or encourage utilities or third parties to participate in regional transmission planning processes and to propose non-transmission solutions.
- Participate in regional planning processes—through public utilities commissions, air and water quality regulators, state energy offices, land use managers, and other agencies—to ensure that all costs and benefits to citizens are included for any alternative considered. A state also could require that its transmission providers represent the state’s interests in regional transmission planning processes.
Regardless of the methods used, competitive barriers to NTAs must be removed expeditiously. If they remain in place, ratepayers will be compelled to fund a transmission system that imposes unnecessarily high costs and lacks the multiple benefits offered by NTAs. Or, in the alternative, transmission providers could face litigation and possible disallowance of recovery in rates that can’t be considered just and reasonable.
1. There are actually three levels of transmission planning: local, which is what each utility would do for itself; regional, which requires the utilities to plan together; and interregional, among the transmission planning regions. Only the regional transmission planning process is required by Order 1000 to consider NTAs.
2. Gazze, C. and Madlen, M. (August 2011). Planning for Efficiency . Public Utilities Fortnightly .
3. Neme, C. and Sedano, R. (February 2012). US Experience with Efficiency As a Transmission and Distribution System Resource. The Regulatory Assistance Project.
4. Van Welie, Gordon. (January 2013). Evolution of an Energy-Efficiency Forecast . Public Utilities Fortnightly.
5. Order No. 1000, Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, 136 FERC ¶ 61,051 (July 21, 2011) at p.148.
6. Order No. 1000-A, Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, 139 FERC ¶ 61,132 (May 17, 2012) at p.745.