FERC Order 1000 is Looking Busy, while Not Solving the Electric Transmission Problems

National Interest Electric Transmission Corrid...

Northeast National Interest Electric Transmission Corridor via Wikipedia

The Federal Energy Regulatory Commission (FERC) adopted Order 1000 on July 21, 2011 to push the line of scrimmage a little closer to the goal without getting sacked in the process.  Order 1000 attempts to speed up resolution of transmission issues by:

  1. Requiring a regional transmission planning process;
    1. Setting procedures to reconcile differing public policy issues such as renewable portfolio standards and other state clean energy requirements);
    2. Limiting the right of first refusal for certain new transmission facilities to encourage more merchant transmission development competition; and
    3. Providing procedures for planning and cost allocation to balance costs and benefits equitably within and between regions.

FERC has a broad policy responsibility to encourage competitive, reliable interstate electricity markets at fair and reasonable rates.  But it lacks the authority to actually do the job Congress gave it.  We can’t have a clean energy economy without fixing interstate electric transmission.  We can’t fix interstate transmission without addressing our dysfunction environment review process and the longstanding conflict between Federal and State jurisdiction over transmission.  FERC Order 1000 does none of that because FERC lacks the authority to make such changes, so don’t get your hopes up for big changes.

To realize the promise of smart grid and renewable energy we need to know whether the market for the commercial application of these and other new technologies is scalable enough across state lines and regional markets to make them practicable and profitable. Without the answer to that question some of America’s best clean energy technology advantages will stall out because they cannot grow fast enough to drive down costs and create the critical mass needed to achieve the benefits possible.  The key to scalable growth of renewable energy is transmission access and the capacity to deliver the benefits that make all these smart meters worth their cost.

But that is not the only problem:

Federal versus State jurisdiction—who’s on first? For years we have tolerated the fragmented state-by-state regulation of electric transmission planning, siting, funding and construction because the political conflict between states and the FERC jurisdiction has been allowed to fester by Congress.  The result is a tortured process that typically makes it much easier, faster and cheaper to build new power generation rather than transmission. This torment is made worse by seeing the difference a rational interstate process can make by comparing the electric transmission experience with the natural gas pipeline experience where FERC has clear authority over interstate gas pipelines.

What part of night and day difference don’t we see?

Environmental Regulation is Out of Control. Add to this fragmentation the problem of our intentionally dysfunctional environmental review process.  You know the problem—let’s be honest about it.  While there is broad public support for environmental quality and protection the process is broken.  Our environmental laws allow virtually anyone to intervene and speak for the ‘public interest’.  Most often those interveners have no financial skin in the game and thus no incentive to get their issues resolved because the very purpose of their intervention is to stop the project.  None of our environmental review laws requires any equitable balancing of interests, the Federal and State resource agencies own no burden of proof for their biological opinions nor are they subject to peer review before being thrust upon the ‘public interest’ as fiat.  There is no duty imposed on the Administrative law judge or the agencies to balance the equitable interests of the parties or to define the public interest as also including the interest of economic competitiveness, jobs, and regional economic development.  The result is that the Delta smelt has more rights than the sum of the millions of Californians in the Great Central Valley or Southern California and industries contributing billions of dollars to the US economy are put at risk by endless litigation and regulation and its enormous cost.

Been There, Done That, Didn’t Work. Congress directed US DOE to perform independent studies of electric transmission grid congestion every two years and report to Congress.  DOE has done two such studies and is on the hook to do another in 2012.  But the Court of Appeals action invalidated the National Interest Electric transmission Corridors (NIETC) and told FERC is must run the environmental review process gauntlet for each possible transmission alternative before it can designate NIETC corridors which say the obvious—-these are the most congested transmission areas.  No wonder US DOE wants to delegate its transmission congestion study duties to FERC.  This is a signpost that we don’t have our energy policy act together.  America’s clean energy transformation is being held hostage by our own dysfunction.

Hold Your Applause: FERC Order 1000 is a Baby Step not a Big Leap Forward

FERC Order No. 1000 will require significant compliance process and tariff changes many of which will be contested providing parties plenty of opportunity to vent their feelings. Much will be said—and more will be said than done at the end of the proceedings, because until Congress clarifies the authority of FERC and confronts the environmental and regulatory issues which increase the costs of doing business and frustrate the aspirations of our competitive clean energy economy—we’re on our own.