Perhaps the most contentious electricity transmission financing issue is cost allocation for newinterstate transmission lines.”
This controversial dynamic is attributable to the fact that the pricing of electricaltransmission has become increasingly complicated. Electrical providers and consumer beneficiaries have, historically, aligned geographically. However, post-1996 open-accesstransmission policy reforms under the Federal Energy Regulatory Commission (FERC) havedissociated utilities from their ratepayers.
Moreover, FERC delegates ample regional authority totransmissions owners and operators in determining cost allocation methods, further exacerbatingthe lack of national policy uniformity and clarity.
These policies have ultimately reduced thetransparency of electrical energy pricing, and are stalling efforts to integrate renewable energy intothe grid in pursuit of greenhouse gas emissions reductions for the energy sector. Renewableenergy incorporation requires inter-regional transmission lines and concerted power lineconstruction and funding to connect the remote sources of wind, solar, or geothermal energy topopulated load centers.
While various Independent System Operators (ISOs) and RegionalTransmission Organizations (RTOs)
have proposed several alternative pricing schemes, thelegality of these proposals is uncertain. Currently, as evidenced by the landmark decision in
IllinoisCommerce Commission v. FERC
(2009), courts seem hesitant to endorse cost socializationpolicies, in which all customers in a regional interconnection pay the price of a new project,
Stan Mark Kaplan,
Electric Power Transmission: Background and Policy Issues
, Rep. Congressional ResearchService, 14 Apr. 2009. Web. 20 Mar. 2011. <www.crs.gov> 20.
Stan Mark Kaplan and Adam Vann,
Electricity Transmission Cost Allocation
, Rep. Congressional Research Service,19 Apr. 2010. Web. 21 Mar. 2011. <http://www.wiresgroup.com/images/WIRES_Report_CostAlloc_041910.pdf> 3-4.
Federal Energy Regulatory Commission (FERC), "Regional Transmission Organizations (RTO)/Independent SystemOperators (ISO)," Federal Energy Regulatory Commission (FERC), 24 Mar. 2011. Web. 25 Mar. 2011.<http://www.ferc.gov/industries/electric/indus-act/rto.asp>.