[BETA] Fortnightly

How FERC Order 1000 gives short shrift to NTAs (non-transmission alternatives) in regional system planning—while consumers pay the price.

With no single entity in charge, transmission planning has plagued projects that span multiple regions. A new framework offers a solution.

The electric utility industry offers up a wealth of ideas on how the Federal Energy Regulatory Commission might reform its policy, adopted under FERC Order 679 in 2006, of granting financial incentives for investments in transmission line projects that ensure reliability or mitigate line congestion so as to reduce the cost of delivered power. Fortnightly’s Bruce W. Radford reports.

Allocating the costs of new transmission investments requires accurately assessing the value of those new lines, and identifying the primary beneficiaries. But formulaic approaches rely too much on the most easily quantified cost savings, and reject benefits that are dispersed across service areas—or that might change over the course of time. Brattle Group analysts J.P. Pfeifenberger and D. Hou explain that comprehensive valuation produces a more accurate picture.

Where wind integration has been most successful, state authorities developed and adopted basic transmission planning and cost allocation principles before FERC issued Order 1000. Experiences in Texas, California, and Hawaii demonstrate what it takes to overcome permitting and cost allocation barriers—namely, a coherent policy framework and close coordination among stakeholders.

Among all of the investment priorities in the U.S. electric power industry, one stands out as having the greatest momentum: transmission. This is interesting because transmission is perhaps the most difficult type of power infrastructure to develop, and has been for decades. Editor Michael T. Burr talks with executives at Xcel Energy and Great River Energy to learn how the CAPX2020 consortium has managed to succeed where others failed.

Price-Responsive demand, EPA regulations, and merger policy will be on the agenda for the coming year as the Federal Energy Regulatory Commission works its way through the list of key cases that were pending at FERC as of January 2011.

A pair of myths is driving many investments today—i.e., America’s T&D system is falling apart, but the smart grid will save the day. A new MIT study reveals a more nuanced truth about reliability, efficiency, and plans for new technologies. The most effective policies and investments will focus on solving real problems and delivering tangible benefits.

To encourage billions of dollars of investment into America’s transmission grid over the next several decades, the Federal Energy Regulatory Commission (FERC) is restructuring its regulatory policies to bring market-based solutions into the framework for planning, construction, and operation of new transmission lines. The recent Order 1000 is the most dramatic example of this effort. But as FERC has learned before, one set of rules doesn’t serve the financial and commercial needs of all market participants.

Six years after Congress granted FERC “backstop” siting authority for electric transmission projects in the Energy Policy Act of 2005, the regulatory landscape is still evolving as a result of federal court decisions and new FERC orders. But despite a lack of certainty at the federal level, project sponsors have filed numerous applications at the state level for new transmission projects. Can these projects proceed without greater certainty at FERC?