Go West—and East—Young Man!

As a student of history I was always fascinated by the ideas that seemed to give life to the American dream. The desire of the young nation to push ever westward both inflamed and excited people. Yet without that provocative move, the United States would have remained a fragmented set of inconsequential states.

So it was very encouraging to hear none other than U.S. Senate Majority Leader Harry Reid say this week that he doesn’t want state regulators standing in the way of building a national “smart grid”.  Reid told a gathering at the National Clean Energy Project that he plans to introduce energy legislation to bring remote solar-thermal, wind and geothermal power sources to markets, and give the federal government the authority to build new transmission lines whether or not states like it.

Now is this change we can REALLY believe in?

The Energy Policy Act of 2005 established the concept of national interest electric transmission corridors (NIETC) and US DOE published just such largely East-West corridors to reduce congestion and facilitate access to market by renewable energy projects. But anyone who has been around the electric power business long knows that it has always been much easier to build new power generation than to suffer the death of a thousand delays from the tortured environmental review process that ruins the economics of most transmission projects.

Let’s face it, if we had NEPA and CEQA back when the Nation was founded, the pioneers would still be filing their environmental review appeals for permission to blaze a trail through the Appalachians today. Lewis & Clark Expedition?   Forgetaboutit!

Before we get too excited about these prospects, we might consider that Senator Reid may not realize that his words will inflame as well as excite the listeners. Environmental advocates will certainly be appalled that the Federal Government might pre-empt and actually be called on to balance economic and environmental interests in advancing smart grid construction because doing so opens the door to larger scale use of nuclear power for baseload generation as well as wind power and other renewable sources. Similarly, coal plant operators in Wyoming may have access to markets in California—despite the state ban on buying energy from coal plants—if the Feds pre-empt state rules to facilitate better transmission access and competition among supply options. On the other hand, efficiency might gain a big boost since national scale marketers and aggregators would finally be able to scale their business sufficient to make it profitable targeting high price markets. This is really change we can believe in when EVEN state regulators are forced to live in the market place of new technology, competitive markets and better ideas rather than subsidies and social engineering.

Congestion on the grid—like volatility on Wall Street—is a wonderful thing for some market participants and a curse for others. So Senator Reid’s comments combined with Senator Jeff Bingaman saying that he wants to give the Federal Energy Regulatory Commission more authority to modernize the nation’s power grid in a separate energy bill to be introduced in Congress in the next four to six weeks was newsworthy. The stimulus package signed into law has $11 billion to upgrade power transmission and distribution infrastructure — and $4.5 billion in matching grants for smart grid projects so this proposal may be serious –or it may be a back door earmark to give Congress more control over where state utility regulators permit transmission lines to go.

Energy Secretary Steven Chu is also pushing for federally funded smart grid standard technologies to encourage national interoperability. Remember, the power grids are not synchronized and “jumping the boundaries” has always limited East-West flows. There is enormous potential for both good and mischief in these musings by our legislative leaders, but stronger US Government leadership to create a truly integrated smart grid infrastructure has the potential to radically transform the electric power industry.

But the only way to have a truely integrated smart grid is to insist that our environmental laws fairly balance the economic public interests of the nation and its environmental public interests.   Doing so would force the parties in every project to settle their differences honestly and quickly rather than cause endless delay and continued environmental risk from lack of access to the best available technology applied in a market environment which rewards efficiency and emissions reductions with profits.

When Senator Reid proposes that policy it will REALLY be change we should believe in!