By Hannah Northey, E&E reporter
Federal regulators finalized far-reaching rules today that revamp how the United States plans, builds and allocates costs for new power lines.
The Federal Energy Regulatory Commission voted 5-0 to approve rules calling for transmission providers to participate in regional planning and cost-allocation methods and to consider state and federal goals for expanding the use of renewable energy.
The rule will take effect 60 days after it is published in the Federal Register, and transmission developers must then provide plans that comply with principles outlined in the final rule.
The rules strip a provision from FERC-approved tariffs that grant a right of first refusal to incumbent transmission owners and block projects that independent developers want to build (Greenwire, July 18). But that provision wouldn’t be eliminated for certain projects, including those considered upgrades to existing transmission facilities or proposed transmission lines that have already been approved through regional plans, FERC staff said.
FERC Chairman Jon Wellinghoff said the rule, aimed at making the aging grid more reliable, will help address the surge of wind and solar power entering the grid. The rule is also “technology neutral” and is not a “one size fits all” approach because it allows regions to craft plans that fit their needs, he said.
The chairman acknowledged the rule does not specify regions that must conduct transmission planning but noted that certain areas have already organized into entities capable of taking on planning decisions.
Wellinghoff also addressed a major concern expressed by Congress, saying that only ratepayers who benefit from new transmission lines would have to pay. “Those that receive no benefits should not be allocated costs,” he said. “No costs should be allocated outside a region unless the other region agrees.”
But Republican FERC Commissioner Philip Moeller partially dissented on provisions of the rule, which he said failed to address delays in transmission planning and construction caused by federal agencies and state laws and that it will “not resolve all of the difficult issues that discourage this nation from constructing needed transmission lines.”
“While today’s rule moves forward to achieve those goals, a different approach would have been better on these issues,” he said.
Commissioners Marc Spitzer, John Norris and Cheryl LaFleur expressed broad support for the rules. Spitzer said there is too much uncertainty in the markets that prevents transmission from being built and ultimately hurts ratepayers. Spitzer said there should be no more ad hoc decisions about transmission planning made by utilities and applauded the rule’s requirement for regional planning.
Norris said the electric grid is woefully underbuilt and facing increasing demands. LaFleur said she approved of the rule requiring transmission providers to determine if delays for certain projects require alternative solutions to be evaluated, including those of incumbent utilities that need to meet reliability needs.
A coalition of renewable energy companies and transmission developers applauded FERC’s action, calling it a “game changer” that could improve the grid and tap distant pockets of wind and solar energy.
Reid Detchon, executive director of the Energy Future Coalition — which includes American Electric Power Co. Inc., Iberdrola Renewables Inc., ITC Holdings Corp. and the Solar Energy Industries Association — said the rules could be a “big step” toward connecting renewables to population hubs and boosting the economy.
WIRES, a coalition of transmission providers and vendors, said the final rule “goes a long way towards putting the public policy pieces in place that will produce a robust U.S. interstate power infrastructure.”
Other groups that have fought FERC’s proposal to spread the cost of major new power lines had little comment today, saying they are still digesting the massive ruling.
The Coalition for Fair Transmission Policy has repeatedly criticized the commission for attempting to “socialize” the cost of large transmission projects and unfairly charging states that do not benefit (ClimateWire, Oct. 1, 2010).
Former FERC chairmen have suggested the commission’s final ruling will be challenged through the agency’s regulatory system and potentially the courts, but they insisted FERC has firm legal standing to revise transmission planning and payment schemes (Greenwire, July 18).
Wellinghoff said the commission has “strong grounds for the rule we enacted today.