FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.

RTO practice creates less risk and uncertainty over the nominal short-term wholesale price of power, but more risk and uncertainty over the long-term cost of transmission. That spells trouble for the coal-fired plant, sited far off at the mine mouth, needing long-haul transmission over a long-enough term to pay back the capital costs.

A proposal to remove the bottlenecks on grid investment.

Investments in the U.S. transmission grid have been declining since the early 1970s.¹ Reasons include: 1) regulatory uncertainty; 2) onerous and multiple regulatory jurisdictions; 3) an extremely complex and time-consuming siting and permitting process; 4) uncertainty in the basic "who pays" vs. "who benefits" equation; and 5) shortcomings in the regional-planning processes.

Commission Watch

Power System Planning:

Who gets paid (and how much) for backing up the system?

Ed Krapels-the electric industry consultant from Boston who helped dream up the initial idea of a monster, undersea direct-current cable (the Neptune project) to bring cheap Canadian power south to the Eastern Seaboard of the United States-thinks he knows now why the merchant transmission business is in the toilet.

Commission Watch

ISO New England dares to dream, again.

ISO New England (ISO-NE) wants to become a regional transmission organization (RTO). But just the idea-prior to any official filing at the Federal Energy Regulatory Commission (FERC)-has come under attack. ISO-NE is going to find rough waters ahead, despite a three-year effort aimed at a smooth transition to becoming an RTO. And now with the Oct. 31 filing of the 2,000-plus-page RTO proposal at FERC, the stage is set for these battles to be fought, again.

PJM would dictate grid expansion, even if not needed for reliability, and then push the cost of the upgrades on those who use them the most.

Chairman Pat Wood and his Federal Energy Regulatory Commission (FERC) may well have given up on attempts to impose a standard market design (SMD) on the electric utility industry, but that doesn't mean the nation's grid system operators won't try the same thing.