Carrying Out Public Policy

 

 
  June 4, 2007
 
Angry citizens have been giving the U.S. Department of Energy an earful, saying that they don't want high voltage power lines built near their properties. While those consumers are worried about obtrusive construction and environmental damages, federal regulators have to consider what is in the national interest.

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

The Energy Policy Act gives the Federal Energy Regulatory Commission (FERC) backstop permitting authority as a way to get important transmission built. Specifically, the U.S. Secretary of Energy can designate national interest electric corridors in those areas that have capacity constraints or congestion. The states still have first crack at the process. But the feds will step in if state law precludes consideration of interstate benefits and if the state takes longer than one year to act after an application is filed.

The issue has been coming to a boil as regulators seek public comment on those areas that it says are in dire need of new transmission. That includes large swaths from the Northeast to Virginia as well as from Arizona to Southern California. The object is to add reliability to a network that is overworked, particularly in the summers.

Many state utility regulators are sympathetic to the concerns of those citizens who would be affected. But that support is oftentimes political, say utilities. That's why the feds must be given final say. The Edison Electric Institute points to a 90-mile line owned by American Electric Power that took 16 years to get approved by both state and federal regulators -- a line of vital interest to areas in West Virginia and Virginia.

"There is a real risk of blackout here, in these systems, that cannot be ignored, that cannot be wished away," says David Meyer, senior policy advisor for the Energy Department, who testified in New York City regarding the so-called New York Regional Interconnect. Advocates of the line also say that the purpose of the national corridors - and the subsequent line now under consideration -- is to keep the economy humming along.

Transmission investment has declined in real terms -- adjusted for inflation -- from 1975 to 1998. While there have been increases since 1998, FERC says that the level is still less than what was invested in 1975. Over the same time period, however, the demand for electricity has doubled. That has resulted in a significant decrease in transmission capacity, requiring new lines get built.

In the short run, things will be okay. Electricity capacity margins are expected to be adequate to ensure reliable electric service throughout North America this summer, under normal weather conditions, says Rick Sergel, president of the North American Electric Reliability Corporation (NERC). However, widespread and sustained hot and humid weather could threaten that reliability.

Taking Positions

NERC is most concerned about Southern California, which depends on significant amounts of imported power that is transported across heavily burdened transmission lines. That congestion is behind San Diego Gas & Electric's intensive lobbying efforts to get its Sunrise Powerlink transmission up and running.

The California Public Utilities Commission "must act now before it is too late," says Barbara Warden, chair of a business coalition seeking to get the line built. The region must furthermore prepare to construct new lines to accommodate ever-escalating power needs, she adds. Modern wires would ease that burden as well as ensure that the local utility can meet its obligation to provide more renewable power.

It's all part of the public hearings that the Energy Department is holding on National Transmission Corridors. Critics at the meeting to discuss Powerlink said that the proposed line would be used to transport fossil-fired electricity on the Mexican side of the border. They also said that the sheer size of the wire is much greater than what the authors of the law had intended, adding that is why state regulations should prevail here.

"This is a serious and problematic overreach from what Congress authorized," says Laurence Chaset, an attorney for the state public utility commission. "We oppose the designation that you are proposing." State utility commissioners say that they will make their decision by January 2008 as to whether to allow the Powerlink project, which would be a $1.4 billion, 150 million high voltage transmission line.

At a separate meeting held by the Energy Department in Arlington, Virginia, officials heard arguments by Dominion Virginia Power and others. The utility wants to build a 65-mile line in Northern Virginia that is also an area declared to be of vital economic interests. It supports its case by noting that the region has experienced 40 percent electricity growth in the last decade and it expects to expand another 8 percent by 2011.

Meanwhile, Allegheny Energy is proposing a power line that will cross West Virginia, Virginia and Pennsylvania and is part of the Mid Atlantic region that has been designated by the Energy Department as "critical." That line, which would stretch 240 miles and cost $1.3 billion to build, would be operational by June 2011. That project coincides with one being proposed by American Electric Power that will go from West Virginia to New Jersey.

"Additional high-voltage transmission highways are absolutely necessary to relieve congestion within the eastern grid," says Michael Morris, CEO of AEP. He adds that congestion costs in the eastern region that AEP operates total in the hundreds of millions -- an amount that will only get bigger unless more wires are built.

The transmission permitting process remains among the most arduous. The process is meant to be inclusive and to elicit the views of all stakeholders. Regulators should strive for reasonable compromises. But if such deals cannot be reached, then they must seek to achieve the greatest good for the greatest number. Transmission planning requires it. And so does the federal law.

More information on this topic is available from Energy Central:

 

New Sheriff on Grid: Utilities Brace for New Standards, EnergyBiz, March/April 2007

 

Cracking the Bottlenecks - Act Spurs Buildup of Transmission Corridors, EnergyBiz, Nov/Dec 2006

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