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Harold A. Feiveson
Green Power Superhighways and Transmission Siting Authority of the Federal Energy Regulatory Commission YunSuk Chung
May 3, 2011
This paper represents my own work in accordance with University regulations.
EXECUTIVE SUMMARY Green Power Superhighways Although the United States contains vast quantities of renewable energy resources, the outdatedelectric grid severely limits their use for electricity generation. As of 2008, there were nearly 300 GW of wind power projects under development that faced deployment delays because the existing grid did not have enough capacity to accommodate their generation. More than 13 GW of solar power projects in California alone were also waiting in queue to be connected to the grid. This paper presents green power superhighways as an important step in modernizing the electric grid. Composed of high-voltage interstate transmission lines² with capacity of 765 kV or more²the superhighways will directly deliver electricity from remote areas with renewable energy resources to population centers with significant demand for electricity.Constructingsuperhighways will not only improve access to renewable energy resources, but also mitigate congestion and improve reliability of the electric grid in a cost-effective manner. FERC and the Current Siting Regime Among the obstacles facing green superhighways, the current siting regime presents some of the most challenging problems. Traditional approach to determining ³public need´ is outdated, as few state siting boards are authorized to consider interstate or regional benefits. In fact, statutes of twelve states are silent on the issue of siting interstate transmission lines. Thus, by emphasizing state interests over national ones, the current regime leads to the problem of public goods. Although the Energy Policy Act of 2005 granted backstop siting authority to the Federal Energy Regulatory Commission (FERC) within national interest electric transmission corridors, a series of recent court rulings have undermined FERC¶s basis for action. Subsequent attempts to bolsterits authority have stalled in Congress. Meanwhile, administrative challenges have further frustrated attempts to coordinate the planning and siting processesamong state and federal agencies,as each agency is subject to a different set of regulations. The Road Forward Since 2009, the Congress has produced at least five bills thatamend the current siting regimewith the aim of constructing green power superhighways.Among them, the Inslee Plan seems to strike the best balance between state and national interests.It authorizes states within the Eastern and Western Interconnections to establish FERCcertified multistate transmission planning authorities (MTAs). In turn, FERC receives backstop authority to site the transmission lines planned by the MTAs. The National Governors Association hasalreadyendorsed the idea of multistate planning entitiesas an effective vehicle for state coordination.Even if the Inslee Plan does not materialize, efforts should be made to improve interstate and federal-state coordination from the early stages of planning interstate transmission lines, which would alsofacilitate thesiting process.
1. THE NEED FOR GREEN POWER SUPERHIGHWAYS Although the United States contains vast quantities of renewable energy resources, the outdatedelectric grid severely limits their use for electricity generation. As of 2008, there were nearly 300 GW of wind power projects under development that faced deployment delays,partly because the existing grid did not have enough capacity to accommodate their generation.1More than 13 GW of solar power projects in California alone were also waiting in queue to be connected to the grid.2 One of the most effectiveways to address this problem is to enlarge the transmission capacity of the grid by constructing³green power superhighways,´ also called ³clean energy superhighways.´Composed ofhigh-voltage interstate transmission lines²with capacity of 765 kV or more²the superhighways willdirectly deliver electricity from remote areas with renewable energy resourcesto population centers with significant electricity demand, serving as backbones of the bulk power system.3
1.1 Cost-effectiveness The first advantage of green power superhighways comes from the costeffectiveness of high-voltage lines. On the one hand, constructing higher voltage transmission lines incurs greater costs per mile than lower voltage lines. A study by Edison Electric Institute estimated that construction costs of 345 kV lines amount to $2.539 million per mile, while 765 kV lines cost $6.578 million per mile. 4 However, because the transmission capacity of a line is roughly proportional to the square of the
AWEA, Green Power Superhighways, 1. Ibid. 3 Ibid. 4 The Brattle Group, Transforming America¶s Power Industry, 35.
voltage, higher voltage transmission lines are more cost-effective in terms of cost per unit capacity. As a result, 345 kV lines cost $2,850 per MW-mile, while 765 kV lines costless than 50%of that at $1,320 per MW-mile. 5 According to a study by the National Renewable Energy Laboratory (Figure 1), a national 765 kV transmission overlay based on wind power that extends 19,000 miles and costs approximately $60 billion can reduce peak load electricity losses by more than 10 GW annually.6
Figure 1. Conceptual Map of a National 765 kV Transmission Overlay7 1.2 Congestion Second, once integrated into the grid, green power superhighways can
AWEA, 8. Ibid. 7 Smith and Parsons, ³What Does 20% Look Like?´ IEEE Power & Energy Magazine November/December 2007, 23.
helpmitigate transmission bottlenecks that lead to excessive use of inefficient power plants.The transmission constraints of the existing grid prevent congested regions from replacing old power plants or importing energy from surrounding regions at lower prices. According tothe Joint Coordinated System Plan Study in 2006, congestion in New York and New England contributes to a substantial price premium in theaverage retail electricity prices, which are 67% higher than the national average.8The study also found that congestion costs consumers in the Eastern U.S.$16.5 billion per year from higher electricity prices alone.9 However, a small number of selective additions to transmission capacity can mitigate most problems arising from congestion. According tothe 2006 National Electric Transmission CongestionStudy, the bulk of the congestion rent was incurred during the relatively few hours per year during which transmission capacityexceeded its binding limit.10In the Eastern Interconnection, for example,42% of the most heavily used transmission linesaccounted for 90% of the congestion rent, even though they exceeded their binding limit less than 10% of the time.11 In this sense,strategically connecting green power superhighways to a small number of congested areas can significantly reduce congestion rent, as the addition of high-voltage lines would takethe load off the mostcongestedlines.
1.3 Reliability and Variability A more reliable electric grid can significantly reduce the costsfrom power outages.
Ibid., 11. Ibid. 10 U.S. Department of Energy, National Electric Transmission Congestion Study, 28. 11 Ibid., 29.
The 2003 blackout in the Northeast U.S. and Canada, for example, cost approximately $7 billion to 10 billion in economic losses.12There are two major components to reliability of the grid, namely, adequacy and security.13The former refers to the ability of the electric system to meet the demand and energy requirements of customers at all times. In this respect, green power superhighways can improve adequacy of the grid by bringing additional electricity from resource areas to population centers. However, constructing superhighways alone is not sufficient to ensure improved adequacy because of variability of wind and solar powers.For example, the amount of available wind power, which peaks at night,islowestduring peak demand hours. Therefore, in order to contribute to adequacy of the electric grid, superhighways need to be accompanied by better storagetechnologiesas well as better management. This entails improved measurement and forecasting of variable generation and more comprehensive planning approaches includingdemand-side management. Green power superhighways have more potential to contribute to the second component of reliability, security. In this context,security refers to the ability of the electric system to be resilient against sudden disturbances. In this regard, green power superhighways can bolster security of the grid by diversifying the portfolio of electricity sources from which the power system can draw. In other words, by delivering renewable resources that peak at different times, the superhighways can help ³hedge´ against the risk of unexpected failures. A case in point is the complementarity between wind and solar powers, which peak at different times daily and seasonally. In this sense, green
AWEA, 13. National Council on Electricity Policy, Electricity Transmission, 8.
power superhighways, together with better management technologies and storage systems, can lead to a more reliable electric grid.
1.4 Renewable Portfolio Standards Lastly, the green power superhighways will spur the development of renewable energy industry and help the U.S. meet its renewable portfolio standards. President Barack Obama¶s New Energy for America plan calls for renewable energy resources to supply 10% of the nation¶s electricity by 2012, and 25% by 2025.14In addition, many states have created their own renewable portfolio standards, with California setting the highest bar at 33% by 2020.Both the Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC)explicitly identified developing high-voltageinterstate transmission lines asa key requirementfor meetingthese renewable portfolio standards in a cost-effective manner.15More specifically, by improving access to renewable energy resources, green power superhighways willspur the development of renewable energy industry and make renewable energy resources more competitive, which would help increase the amount of electricity supplied by renewable energy resources.
1.5 Current Proposals Currently, there are a fewactive proposals for constructing green power superhighways. One such project is named ³Green Power Express,´ proposedby International Transmission Company in 2009in order to integrate wind energy in the
Statement of Rhone Resch, President & CEO, Solar Energy Industries Association, ³Hearing before the Committee on Energy and Natural Resources,´ March 12, 2009, S. Hrg. 111-15, 109. 15 NERC, 2009 Scenario Reliability Assessment, 9.
Midwest into the existing grid (Figure 2). The project calls for approximately 3,000 miles of 765 kVtransmission lines and will cost between $10 and $12 billion. Once completed, the Green Power Express will span seven states and deliver up to 12 GW of wind and stored energy to population centers in the region.In April 2009,FERC approved the transmission infrastructure investment rate for the project and highlighted the importance of high-voltage interstate transmission lines in meeting the nation¶s renewable energy goals.16However, the project has not been able to move past state regulatory bodies due to regulations that discourage investment in transmission lines not designed to serve an immediate need.17
Figure 2. Conceptual Map of Green Power Express18
Howell, ³¶Green Power Express¶ gains federal rate incentives,´ Greenwire, April 13, 2009. Suzukamo, ³U.S. Chamber of Commerce singles out stalled energy projects,´ Pioneer Press, March 10, 2011. 18 International Transmission Company, ³Conceptual Map,´ at:
Another project, named ³Atlantic Wind Connection,´ seeks to access offshore wind energy in the mid-Atlantic region (Figure 3). Led by Trans-Elect Development Company and sponsored by Google, this project will connect 6 GW of offshore wind energy, enough to serve approximately 1.9 million households. The $1.3 billion project calls for constructing765 kV transmission lines spanning four states. Although TransElect has filed arequest with FERC for approval of incentive rates, the project already facesprotests from local interest groups, state governments, andutility companies who are worried about bearing the costs of construction.19
Figure 3. Conceptual Map of Atlantic Wind Connection20
http://www.itctransco.com/projects/thegreenpowerexpress/thegreenpowerexpress-map.html. 19 ³Atlantic Wind Connection defends US FERC incentive rate request,´ Platts, February 25, 2011. 20 Atlantic Wind Connection, ³AWC Schematic,´ at: http://atlanticwindconnection.com/news/awcschematic/.
As these two examples show,green power superhighways are now being seriously considered as viable projects. In fact, beginning in 2008, green power superhighways emerged every year as an important topic during congressional hearings before the Committee on Energy and Natural Resources. At the same time, these examples draw attention tothe challenges thatgreen power superhighwaysface. For example, under the current system, private developers have to wade through various regulatory requirements on their ownas they begin to plan the superhighways. This system creates an ample room for conflict among utilities, nongovernmental organizations, and governments at all levels even before the project reaches the siting boards.In fact, there is a wide range of contentiousissuesfrom siting and cost allocation to environmental and health concerns, and most specificallyFERC¶s authority to site interstate transmission lines.
2. FERC¶S SITING AUTHORITY UNDER THE CURRENT SITING REGIME The issue of siting isone of ³the greatest obstacle[s] to the construction of new [electric] transmission [capability].´21According to NERC¶s 2010 Long-Term Reliability Assessment, more than 40 projects were being delayed at the time solely because of siting and permitting impediments imposed by state and local regulators, representing 1,500 miles of transmission.22In addition, projects for high-voltage transmission lines were most likely to be delayed for more than five years.23In one NERC survey, executives of the electricity industry identified transmission siting as an issue that they expect to emerge in the next ten years with the highest likelihood andthe most serious
Eagle, ³Securing a Reliable Electricity Grid,´ 2. NERC, 2010 Long-Term Reliability Assessment, 23. 23 Ibid., 24.
consequences.24 Under the current siting regime, almost all of the siting authority resides with the states. In this sense, challenges ofinterstate transmission siting resemble the classic problem of public goods. Because states seek to maximize their own benefits from siting without fully consideringbenefits to other states and the region, the U.S. as a whole sitesfewer than the optimal number of transmission lines.As the economic theory of public finance suggests, one possible solution is federal government¶s provision of the public good, which would require FERC to have greater authority over siting interstate transmission lines. However, the current statutory regime does not support this solution.The concentration of authority at the state level still stands asa legacy from the past when vertically integrated utilities occupied local, isolated electricity marketsand constructed their own transmission lines.25As a result,state or local agencies usually hold the power to veto any proposed expansion of transmission capacity.26In fact,according to FERC, only 14 interstate transmission lines with capacity of 345 kV or higher have been built between 2000 and mid-2007, amounting to 668 miles.27From mid-2007 to 2010, the figure was less than 82 miles.28 To make matters worse, statutes regarding interstate transmission siting differ considerably among states. Most states have different regulatory standards and procedural requirements for siting interstate transmission lines, while statutes oftwelve statesare
NERC, 2009 Long-Term Reliability Assessment, 52. Eagle, 3. 26 Meyer and Sedano, Transmission Siting and Permitting, E-26. 27 Kaplan, Electric Power Transmission, 15. 28 LaFleur, ³Speech at the Braemar Energy Ventures Annual Meeting,´ 10.
silent on this topic.29A report by the National Electrical Manufacturers Association likens the process of siting interstate transmission lines to ³a real life game of Chutes and Ladders«[that] can take years of skillful navigation with millions of dollars on the line.´30As an illustration, the report citesa project proposed by American Electric Power (AEP)in 1990 to construct 90-mile high-voltage transmission lines connecting West Virginia and Virginia.Often called the ³765-kV Project,´ this projecttook thirteen years to site and just under three years to construct.31 It was not until 2005 that the Congress passed the Energy Policy Act (EPAct 2005) to address the shortcomings of the siting regime. One provision of the Act directs the Secretary of Energy to ³conduct a study of electric transmission and congestion´ and ³designate any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor.´32 So far, the Department of Energy has designated two such corridors(NIETCs), the Mid-Atlantic Corridor and Southwest Area Corridor. The American Recovery and Reinvestment Act of 2009 later mandated additional study on areas where lack of access to the grid hampers the use of renewable energy resources.33 In turn, FERC receivedbackstop authority to approve and issue siting permits for new transmission lines withinNIETCs. One of the most important conditions under which FERC may issue permits is when ³a State commission or other entity that has authority to approve the siting of the facilities haswithheld approval for more than 1 year after the
National Council on Electricity Policy, Coordinating Interstate Electric Transmission Siting, 7. National Electrical Manufacturers Association, Siting Transmission Corridors, 1. 31 NERC, ³2009 Long-Term Reliability Assessment,´ 5. 32 Energy Policy Act of 2005, Pub. L. 109-58 at §1221. 33 American Recovery and Reinvestment Act of 2009, Pub. L. 111-5 at§409.
filing of an application.´34Taking a step further, FERC issued a Notice of Proposed Rulemaking in 2006that stated ³withholding approval´ also includes denial of the application.35Once the rule was approved, it gave FERC authority to site interstate transmission lines within NIETCs that were denied by the states. Proponents of the EPAct 2005arguedthat FERC¶s siting authority would facilitate siting of interstate transmission lines in at least two ways. First, FERC can directly exercise its backstop authority when states delay sitinginterstate transmission lineswithin NIETC. Second, the possibility of FERC¶s interventioncanincentivizestatesto seek regional siting solutions. To some extent, states seem to have taken heed of FERC¶s new authority. For example, in order to minimize FERC interventions, the National Governors Associationproposed the formation of multistate entities to site interstate transmission lines.36 However,FERC¶s backstop siting authority has not resulted in any significant increase in application for interstate transmission lines or their approval. A number ofFERC officials expressed pessimism from the start, stating that ³the review of a transmission line proposal in the national corridors would have little impact on the states¶ existing process.´37 Then Chairman Joseph T. Kelliher also made a statement in January 2009 that designating NIETCs would only ³[promise] years of litigation, while diffusing responsibility for siting electric transmission facilities.´38 In fact, one study found that state commissions received more applications for projects outside NIETCs than for
Energy Policy Act of 2005, Pub. L. 109-58at §1221. FERC, Final Rule, 71 Fed. Reg. 69,444. 36 National Governors Association, Interstate Strategies for Transmission Planning and Expansion, 10. 37 United States Government Accountability Office, Transmission Lines, 3. 38 Letter from Joseph Kelliher to Senator Jeff Bingaman, January 21, 2009.
projects inside NIETCs after the passage of the EPAct 2005.39 Only one company started the pre-filing process for FERC¶s backstop siting authority, buteventually withdrew the request.40In this light, the following subsections examine various challenges to FERC¶s siting authority in more detail.
2.1 Legal Challenges Two recent cases in the U.S. Court of Appeals have challengedFERC¶s backstop authority. The first, Piedmont Environmental Council v. FERC, took place in the Fourth Circuit in 2009. More specifically, the petitioners in Piedmont challenged FERC¶s rule that ³withholding approval´ included denial of an application under the EPAct 2005. The court rejected this rule, arguing that denial ³within one year ends the application process,´ while the statute requires continuous withholding.41Following the decision, a petition for certiorari was filed at the Supreme Court on behalf of FERC, placing a new emphasis on the importance of interstate transmission lines in promoting renewable energy. However, the Supreme Court denied the petition in January 2010, effectively binding FERC¶s handswhenstates deny siting interstate transmission lines. The second case, California Wilderness Council v. Department of Energy, whichtook place in the Ninth Circuit, challengedthe Department of Energy¶s designation of NIETCs in 2006. According to the petitioners, which includedstate and local governments affected by the NIETC designations, the DOE ³(1) failed to consult with the affected States in undertaking the Congestion Study«(2) to properly consider the
Swanstorm and Jolivert, ³DOE Transmission Corridor Designations and FERC Backstop Siting Authority,´ 416. 40 Ibid. 41 Piedmont Environmental Council vs. FERC, 558 F.3d 304, 313 (4th Cir. 2009).
potential environmental consequences of its designation of [NIETCs]; and (3) the actual designations«are arbitrary, capricious, and not supported by the evidence.´42 In February 2011, the courtaccepted these claims. Further, ruling that ³these failings were not harmless errors,´ the court went on to vacate the existing Congestion Study and NIETC designations.43Because FERC can exercise its siting authority only within NIETCs, this decisionrendered FERC completely toothlessat least until the next Congestion Study that is due in 2012. Although these two cases represent clear legal setbacks to FERC¶s siting authority, it is notable that neither courtruled against the constitutionality of FERC¶s siting authority. Instead, it only limited the extent of FERC¶s authority, which can be recovered through future legislation.In fact, a substantial number of precedents suggest that the court views federal authority over interstate transmission lines as legitimate and constitutional under the Commerce Clause. For example, in FERC v. Mississippi, the Supreme Court ruled in 1982 that FERC has the authority to direct state utility commissions to adopt retail rate designs and regulatory standards affecting retail rates. The court went even further to note that ³it is difficult to conceive of a more basic element of interstate commerce than electric energy.´44More recently, in 2002, the Supreme Court upheld FERC¶s authority to mandate open access transmission under Order No. 888in New York v. United States. Again, the court ruled that ³transmissions targeted by FERC are indeed transactions µof electric energy in interstate commerce.¶´45
California Wilderness Coalition v. U.S. Department of Energy, No. 08-71074, 1918. California Wilderness Coalition v. U.S. Department of Energy, 1919. 44 FERC v. Mississippi, 456 U.S. 742, 757 (1982). 45 New York v. United States, 535 U.S. 1 (2002).
Although transmission siting was not the central issue of bothFERC and New York,these cases serve as precedents that can help predict how the courts might view FERC¶s siting authority.46Given that the court has consistently recognized interstate transmission lines as essential to interstate commerce, it is highly unlikely that the courts will find FERC¶s siting authority to be unconstitutional in the future. In this sense, the mostpressing challenges to FERC¶s siting authority may not lie in the legal front, but rather in the political arenawhere legislation on FERC¶s siting authorityis shaped in the first place.
2.2 Political Challenges In the political arena, FERC¶s siting authority faces challenges from various local and state government bodies. At the local level, officials are bound by law or political interests to give local concerns greater weight than objectively warranted. In turn, local residents are often ³unwilling to accept what are perceived as significant impacts on their community and the way of life´ despite convincing evidence that interstate transmission lines can reduce prices, improve reliability, and provide net environmental benefits.47 Often referred to as NIMBY-ism, most opposition at the local level emphasizespossible decline in property value, aesthetic and environmental consequences, and adverse health effects of electromagnetic fields on humans and animals.48Proponents of the existing siting system further argue that local governments are in the best position
Vann, ³The Federal Government¶s Role in Electric Transmission Facility Siting,´ 8. Hibbard, ³U.S. Energy Infrastructure,´ 17. 48 Eagle, 25.
to know and serve the interests of their local citizens. 49In some cases, state lawsempower local governments to stall interstate transmission line projects. For example, localities can appeal to³prudent avoidance,´ according to which exposure to electromagnetic field should be avoided if the cost of doing so is low compared to the concerns of local citizens.50In fact, twenty-two states have statutes that directly authorize localities to reject transmission expansion projectson similar grounds.51 Opposition to FERC¶s siting authorityiseven more visible at the state level. First, state law often favors local businesses that hire local workers and provide local benefits. A useful illustration comes from the Cross-Sound Cable project between New York and Connecticut.Proposed by TransEnergie US, Ltd. in 2000, the project sought to build a buried 26-mile undersea cable to improve reliability of the regional grid and to enable New York to import generation from New England by expanding the transmission capacity.52 Although New York quickly approved the project, the Connecticut Siting Council rejected it in 2001, citing environmental concerns and inequitable cost allocation. However, there was also an ³anticompetitive angle´ to opposition to the project, as a local Connecticut company owned a competing transmission line and wished to block a new entrant to the state¶s power industry.53Even when the Connecticut Siting Council finally approved a revised proposal of the Cross-Sound Cable in January 2002, and the project was completed, the governor of Connecticut signed a moratorium on transmission lines, making the new line inoperable for more than a year. It was only when FERC
Meyer and Sedano, E-21. Eagle, 26. 51 Rossi, ³Moving Public Law out of the Deference Trap in Regulated Industries,´ 647. 52 Meyer and Sedano, E-9. 53 Rossi, 645-6.
threatened to issue an order deciding the dispute that the parties negotiated a resolution.54 Even when local business interests are not involved, state officialsoftenrefuse tosite interstate transmission lines because they are primarily concerned withcosts and benefits to their own states. According to a NERC manager, if a project proposes to transmit electricity from a remote area to a population center in another state but has to pass through a third state, obtaining approval from the third state is ³almost impossible.´55The problem is aggravated by the outdated approach to determining ³public need,´asfew state siting boards areauthorized to consider interstate or regional benefits.56
2.3 Administrative Challenges In addition to legal and political challenges, lack of coordination among state and federal agencies during the siting process can also delay interstate transmission line projects. The 765-kV Project proposed by AEP, mentioned above, illustratesthis problem well and is worth explaining in detail.57 The project required approval from onlytwo states, Virginia and West Virginia, in addition to the U.S. Forest Service, the National Park Service, and the U.S. Army Corps of Engineers. Because the proposed line crossed ecologically sensitive areas in New River, the Appalachian Trail, and the Jefferson National Forest, the Forest Service issued a draft environmental statement in 1996 that recommended against the proposal.
Lambert, ³New York and Connecticut Agree to End Cable Dispute,´ New York Times, June 25, 2004. Levesque, ³Stringing Transmission Lines,´ 50. 56 For a detailed discussion from the legal perspective, see Brown and Rossi, ³Siting Transmission Lines in a Changed Milieu,´ 705-70. 57 Ibid., E-8-9.
The AEP proposed an alternative route the following year, which required the company to start over the siting process with both states. Then, Virginia Corporation Commission requested AEP in 1998 to study yet another route that would follow the same path as before in West Virginia, but terminate at a different substation in Virginia. This set off another round of approval process in which the West Virginia Public Service Commission had to review the route again even though the proposed route in West Virginia did not deviate much from the onethat the commission had already approved in 1998. Furthermore, because the new proposed route crossedeleven miles of national forest in area not studied by the Forest Service in 1996, the Forest Service had to conduct another supplementary analysis. This example highlights the lack of coordination among state and federal agenciesduring the siting process. AEP had to submit its plans to each agency separately, which proceeded to carry out the siting process in isolation from one another. For example, when the AEP revised its route in 1998, it had to file applications again to siting boards of both West Virginia and Virginia even though the path in West Virginia did not change much from the one that had already been approved.Also, even though the project involved only two states, each state commission exclusively focused on the question of whether the proposed route would have adverse environmental and social impacts within its own state without regard for costs and benefits in the other state.58Another problem stemmed from the planning process, as AEP was not required to study and propose alternative routes when it first filed for approval. By proposing a wider range of
Meyer and Sedano, E-9.
alternatives, the AEP could have avoided the trouble of going through a new siting process every time there was a minor change in the proposal. In this sense, attempts to strengthen FERC¶s siting authority should be accompaniedbymechanisms to improve interstate and federal-state coordination from the early stages of planning interstate transmission lines, which would also facilitate the siting process.59
3. ALTERNATIVE COURSES OF ACTION Despite various challenges, the current siting regime is not irreparably flawed. For example, even though California Wilderness Coalition struck down the DOE¶s designations of NIETCs, the EPAct 2005 provides for periodic studies that open up the possibility for FERC to regain itssiting authority, however limited it may be. At the same time, it would be difficult and costly to construct green power superhighways under the current regime. This section examines several proposals that seek to improve the current siting regime by strengtheningFERC¶s siting authorityand coordinating the planning process.
3.1 Congressional Proposals After the Court of Appeals limited FERC¶s backstop siting authority in Piedmont, the 111th Congress conducted a series of congressional hearings to determine whether there is a need for a new legislation. These hearings led to at least five differentbills that amend the current siting regime with the specific aim of constructing green power superhighways. In summary, all bills streamline the planning process by establishing
National Governors Association, 18.
multistate planning authorities. With respect to FERC¶s siting authority, the bills either(1) directly address the court¶s ruling in Piedmont, giving FERC authority over rejected projects within NIETC, (2) remove the current authority, but give FERC backstop or exclusive siting authority over green power superhighways, or (3) keep the current authority and give FERC backstop or exclusive authority over siting new green power superhighways. Table 1 provides a brief summary.60
Rep. Waxman (D-CA) Sen. Reid (D-NV) Sen. Dorgan (D-ND) Sen. Nelson (D-NE) Sen. Bingaman (D-NM) Rep. Inslee (D-WA)
H.R. 2454 S. 539 S. 774 S. 807 S. 1462 H.R. 2211
FERC authority over rejected projects
Yes (only for Western Interconnection) No (keeps current authority) No (removes current authority) No (keeps current authority) No (removes current authority) No (removes current authority)
FERC authority over green power superhighways
No Backstop authority over delayed or rejected projects Exclusive authority Exclusive authority; backstop authority overdelayed or rejected secondary lines Backstop authority over delayed or rejected projects Backstop authority over delayed or rejected projects
Table 1. Proposed Congressional Solutions in the 111th Congress A more interesting aspect of these bills is how they try to accommodate states¶ conflicting interests while giving greater authority to FERC. For example, the Waxman Plan narrows its focus to the Western Interconnection and authorizes FERC to site interstate transmission lines when state bodies in the Western Interconnection fail to issue a decision within one year or denies its approval.61 However, its limited scope makes the
For a more comprehensive review of these bills, see Noor, ³Herding Cats,´ 145-76, and Tara Benedetti, ³Running Roughshod?´ 253-76. 61 American Clean Energy and Security Act of 2009, H.R. 2454, 111th Congress, Sec. 151(b), 2009.
bill incomplete in addressing the problems in the rest of the country. A more common solution is to give FERC backstop or exclusive authority over green power superhighways, butalsomandate states¶participationduring the planning process of the superhighways. The Reid Plan, introduced on March 5, 2009, requires FERC to take into consideration recommendations of states that participate in interconnection-wide planning. When states ³identify siting constraints and mitigation measures´ related to the green power superhighways, FERC must try to incorporate those constraints or measures.62 If FERC finds that such constraints are infeasible, not costeffective, or inconsistent with the purpose of the superhighways, it must seek to resolve the issue with the states individually or otherwise publish a statement of finding addressing why the constraints are infeasible, not cost-effective, or inconsistent. The Dorgan Plan includes similar provisions, requiring FERC to accept siting constraints submitted by states during a pre-filing process, including those related to ³habitat protection, environmental considerations, cultural site protection, or other factors.´63 The plan goes a step further than the Reid Plan, however, by establishing a Siting Dispute Resolution Board that includes a representative from FERC, a representative from each affected state as designated by the governor, and an expert. In turn, FERC can incorporate the state¶s concerns or publish a statement of finding that explains why those concerns are inconsistent with the purpose of green power superhighways.Still, it remains unclear whether states will find the Reid Plan or Dorgan
Clean Renewable Energy and Economic Development Act, S. 539, 111th Congress, Sec. 3(a), §404(a) (2009). 63 National Energy Security Act of 2009, S. 774, 111th Congress, Sec. 101, §216(d)(3)(A) (2009) (amending 16 U.S.C. §824p (2006)).
Plan satisfactory, both of which may come across as marginalizing their interests into recommendations andlimiting their ability to plan interstate transmission lines independently.64 The Inslee Plan gives greater weight to states¶ interests by authorizing states within the Eastern and Western Interconnections to establish multistate transmission planning authorities (MTA) certified by FERC. Then, each MTA would submit plans for green power superhighways within one year. Upon reviewing the plans, FERC has the authority to modify or reject the MTA plans, while the MTA would be able to revise its plan within ninety days of rejection. If FERC and MTA cannot resolve the matter, FERC would then be able to exercise backstop siting authority.65 This planseems to be the most consistent with the approaches favored by both FERC and the states. In the past, FERC has supported the establishment of Regional Transmission Organizations, which form a voluntary system that administersthe operation of the grid on a regional basis. Similarly, MTAs will encourage a regional planning process with voluntary participation from the affected states, attracting wider public acceptance and reducing political conflicts between state and federal governments.66Furthermore, even the states that opposestrengthening FERC¶s siting authority have considered FERC-state joint boards to be ³effective vehicles for state coordination on regional transmission planning and expansion.´67Should this approachbe chosen, the MTAs, RTOs, and FERC wouldneed toclarifytheir respective roles in order to
Noor, ³Herding Cats,´ 165. Benedetti, ³Running Roughshod?´ 266-7. 66 Benedetti, ³Running Roughshod?´ 255. 67 National Governors Association, 19.
remove uncertainties regarding their domain of power.
3.2 Natural Gas Pipeline Model Another commonly proposed solution is to adopt the model of FERC¶s siting authority over natural gas pipelines.During congressional hearings in 2009, FERC Chairman Jon Wellinghoff argued that FERC ³has established regulatory regimes that encourage timely development of appropriate energy projects«through decades of experience in siting natural gas pipelines.68In fact, the electric industry and natural gas industry share various common features and challenges. For example, construction and operation of transmission lines and pipelines result in asymmetrical benefits to the states affected by them. Also, there is a potential for conflict between the broad economic benefits of the lines and the local environmental and aesthetic concerns. Unlike the electric industry, however, the natural gas industry did not develop in local, isolated markets, especially because gas had to be transported over great distances from early on. In this sense, the natural gas industry had a much earlier start in dealing with the issue of delivering energy from remote areas to population centers.69In 1938, the Natural Gas Act authorized FERC to regulate interstate transportation of natural gas, while the states retained the authority to regulate intrastate transportation.Through court decisions and rulemakings over the years, FERC has now gained exclusive authority over issuing certificate of public convenience and necessity, while states interstitially regulate
Statement of Jon Wellinghoff, Acting Chairman, Federal Energy Regulatory Commission, ³Hearing before the Committee on Energy and Natural Resources,´ March 12, 2009, S. Hrg. 111-15, 8. 69 Denise L. Desautels, ³Who Should Regulate the Siting of Electric Transmission Lines Anyway?´ The Electricity Journal 18(4): 13.
the siting of some pipelines essential to their interests.70 This does not mean, however, that no conflict exists between FERC and the states. In June 2001, for example, Islander East Pipeline Company proposed building a natural gas pipeline across the Long Island Sound.71 Despite holding numerous public meetings before the formal siting process, fierce opposition arose in Connecticut. The Connecticut Governor issued Executive Order No. 26 in April 2002, prohibiting state agencies from approving any utility projects across Long Island Sound until June 2003. In response, FERC exercised its siting authority and approved the project, concluding that environmental effects were minimal and acceptable contrary to claims made by the Connecticut Department of Environmental Protection (DEP). The Connecticut DEP then lashed back by refusing to issue a water quality permit, which prevented the project from going forward. Ultimately, the case was resolved through a judicial action, in which the court upheld the Connecticut DEP.72 This episode bears an uncanny resemblance to the Cross-Sound Cable project between New York and Connecticut, suggesting that interstate transmission lines and natural gas pipelines share similar challenges.In this sense, following the model of natural gas pipelines by itself is not likely to reduce the political conflicts surrounding the siting process.
4. PRINCIPAL FINDINGS Constructing green power superhighways will be an important step in modernizing the electric grid of the United States.The current grid is outdated and
Desautels, ³Who Should Regulate the Siting of Electric Transmission Lines Anyway?´17. Hibbard, 20. 72 John Rather, ³Planning the Fate of a Nuclear Plant¶s Land,´ New York Times, January 1, 2009.
imposes unnecessary costs to consumers and the society as a whole. Congestion costs consumers in the Eastern Interconnection $16.5 billion per year in the form of higher electricity prices alone, while the 2003 blackout led to economic losses ranging from $7 billion to $10 billion. Green power superhighwayscan both mitigate congestion and improve the reliability of the electric grid, especially when accompanied by better storage systems and better management. Furthermore, the superhighways will improve access to renewable energy resources and make them more competitive, helping the U.S. meet its renewable portfolio standards and reduce its environmental impact. The current siting regime is one of the most important obstacles that need to be overcome toconstruct green power superhighways. Traditional approach to determining ³public need´ is outdated, as few state siting boards are authorized to consider interstate or regional benefits. Thus, by emphasizing state interests over national ones, the current regime leads to the classic problem of public goods. Although the EPAct 2005 granted backstop siting authority to FERC, it has been weakened by a series of court rulings that undermined FERC¶s basis for action. Political and administrative challenges have frustrated attempts to strengthen FERC¶s authority and coordinate the siting process of interstate transmission lines. Local and state concerns about interstate transmission lines include decline in property value, aesthetic and environmental consequences, and adverse health effects of electromagnetic fields in addition to their favoritism toward local businesses. As a result, states are reluctant to support measures thatstrengthen FERC¶s siting authority. In addition,different statutes and regulations concerning the siting process further hinder coordination among
states. For example, although AEP¶s 765-kV Projectinvolved only two states and three government agencies, the project took thirteen years to site and less than three years to build. Among the existing proposals, the Inslee Plan seems to strike the best balance between state and national interests.It authorizes states within the Eastern and Western Interconnections to establish multistatetransmission planning authorities (MTAs).In turn, FERC receives the authority to certify the MTAs and modify or reject their plans. Like Regional Transmission Organizations, MTAs will encourage a regional planning process with voluntary participation from the affected states.Several states have already endorsed the idea of establishing a multistate planning entity in collaboration with FERC as a potentially effective vehicle for state coordination. Should this approach be chosen, the MTAs, RTOs, and FERC shouldclarify their respective roles in order to remove uncertainties regarding their domain of power. Even if the Inslee Plan does not materialize, efforts should be made to improve interstate and federal-state coordination from the early stages of the planning process.The processes of planning and siting interstate transmission linesare related and alwaysinvolvevarious state and federal agencies. To facilitate coordination,these agencies need a channel tocommunicate with each other throughout the entire process.The Inslee Plancreates such a channel by establishing MTAsthat coordinate various interests from the planning stage of green power superhighways. However, there are ways to improve coordination without such overarching authorities. For example, applicants for siting interstate transmission lines should be required to seek input from regulatory bodies
anddevise several alternative routes before they start the siting process.Such measures will also enable regulatory agencies and siting boards to pay more attention to the bigger picture instead of focusing on the small segment of proposed transmission lines over which they have jurisdiction.
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