National Transmission Corridors
Dec 27, 2006 - EnergyBiz Insider
Can new federal laws succeed in helping
the nation build a modern grid in tune with a digital
society? The Energy Policy Act of 2005 is now being
put to the test.
Transmission planning has long been
an onerous process. Intellectually, everyone understands
the need to carry electrons from one point to another
in the most physically and economically efficient
manner possible. But, disagreements abound over where
to put the poles and wires that will facilitate that
process. Problems therefore persist, namely tightly
constrained grids that may cause transmission operators
to curtail service.
The Energy Policy Act gives the Federal Energy Regulatory
Commission 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.
"It is important to note that our regulations are
intended to supplement the traditional state siting
process," says FERC Chairman Joseph Kelliher. "I would
expect that most transmission projects would continue
to be sited by states under state law. Our jurisdiction
to issue a construction permit applies only under
limited circumstances, and our proposed rules respect
The commission does not have a blank check. A proposal
to build or expand electric transmission facilities
brought before it must be used for interstate commerce,
be consistent with the public interest, significantly
reduce transmission congestion in interstate commerce
and maximize the use of existing towers and structures.
Under all circumstances, the review process is to
be extensive and the public is to remain involved.
Power purchasers need unfettered access to the nation's
grid so that they can supply electricity when and
wherever they need it. But transmission constraints
limit the amount of energy that can be transferred
to a load center. Grid operators must then find alternative
routes that oftentimes demand more costly forms of
generation. Congestion therefore has its price.
Where to build? In August, the Energy Department
labeled the area from New York City down to Washington,
D.C. as well as all of Southern California as "critical."
That is, new lines are definitely needed. It said
that New England, the Phoenix-Tucson area, the Seattle-Portland
region and San Francisco were "areas of concern."
The New York State Public Service Commission has
weighed in, saying that FERC should adopt a "clear
economic measure of congestion" that considers national
concerns and one in which projects are paid for by
the beneficiaries. Such an "objective" view would
narrow down the list of sites that might be viewed
as vital to the national interests.
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's resulted in a
significant decrease in transmission capacity, requiring
new lines get built.
The Energy Department also continues to assert that
Regional Transmission Organizations -- independent
operators that schedule power deliveries -- should
take a leadership role. As such, PJM Interconnection
has asked the department to designate two electrical
paths as vital -- authority granted to it by the Energy
Policy Act. They are the Allegheny Mountain path that
extends from West Virginia and serves the Baltimore-Washington
region and the Delaware River Path that serves the
areas around Philadelphia, New Jersey and Delaware.
The corridor designations address needs that result
from continuing growth in electricity use, closing
of local generating plants, limited construction of
new generating facilities and aging transmission infrastructure,
PJM says. In 2005, lost potential revenue due to transmission
congestion on the Allegheny Mountain path totaled
$747 million. It totaled $464 million on the Delaware
River path in 2005.
"Expansion of the electric transmission grid and
the consideration of alternatives are needed in these
key areas to ensure reliability and lower electricity
costs," says Phillip Harris, CEO of PJM, noting that
"large metropolitan areas make them the very type
of national interest concerns to which Congress was
ISO New England, meanwhile, says that about $900
million is needed for upgrades to maintain reliability
and efficiency. Southwest Connecticut in particular
has one of the most severely constrained transmission
systems in New England. All told, more than 30 transmission
projects have been planned or proposed for the Northeast,
although FERC says that it still won't be enough to
relieve the expected congestion.
The energy law stipulates that FERC does have the
authority to act, although it cannot take final action
and issue a construction permit until one year has
passed. While FERC expects the states to make the
vast majority of determinations, there will be cases
in which agreement cannot be reached and it will be
called upon to break the tie -- no guarantee that
the process would still not be consumed by legal wrangling
and regulatory battles.
Everyone wants the lights to turn on at the flip
of a switch. But, no one wants the transmission wires
to enable that reality to be located close to them.
The permitting process is democratic and all interested
stakeholders have the right and obligation to weigh
in. The Energy Policy Act does not want to circumvent
the procedure. It does, however, seek to create a
sound and modern-day grid.