Utility planners who have been warning of a looming crisis in the U.S. electricity-transmission system for the last decade or so now may have a new weapon in their ongoing battle to expand transmission capacity. The federal government has begun asserting new powers granted in the 2005 Energy Policy Act (EPAct) that could lead to it issuing transmission-line construction permits. In some cases, this authority could result in the use of eminent domain to seize disputed property and move projects forward.

In March 2008, the U.S. Department of Energy (DOE) denied requests for rehearings regarding its designation of two National Interest Electric Transmission Corridors (NIETCs) in the Southwest and Mid-Atlantic regions. This gives developers the go-ahead to begin a prefiling process that could lead to intervention by the Federal Energy Regulatory Commission (FERC) in negotiations regarding controversial transmission-construction projects in these areas. Southern California Edison already has begun the process to enlist FERC’s support as it seeks approval for its beleaguered Devers-Palo Verde project, and others soon may follow suit. Although the regulations by no means provide carte blanche to utility-project developers, they may add strength to developers’ negotiation efforts.

The 2005 legislation directed the DOE to conduct studies to determine just how congested the nation’s transmission system had become and to identify regions or corridors where congestion was particularly severe. Results, released in 2006, identified the Southwest Corridor, including portions of Southern California and Arizona, and the Mid-Atlantic Corridor, including all of New Jersey, Delaware and the District of Columbia, along with most of New York, Pennsylvania, Maryland, West Virginia and portions of Virginia and eastern Ohio, as “critical congestion areas.” Four additional “congestion areas of concern” were noted in New England, the Phoenix-Tucson area, the San Francisco Bay area and the Seattle-Portland area.

A hearing process gave corridor critics a chance to dispute the Southwest and Mid-Atlantic designations, and those discussions took place in 2007. With the rehearing denial in March, developers seeking to build new transmission lines in these regions now may be able to call on FERC’s authority to help bring proposed projects to approval.

Building on pipeline experience

While the notion of federal intervention in states’ regulatory processes may raise concern, FERC already has such authority when it comes to siting natural gas pipelines. And FERC representatives play down the possibility of widespread eminent--domain proceedings, noting the rarity of such efforts in the commission’s years of work with pipeline projects.

“Eminent domain is used very sparingly. FERC has years of experience doing this kind of thing,” said Mary O’Driscoll, FERC spokesperson. “And there are additional restrictions on these transmission projects.”

In natural gas projects, FERC’s ability to issue construction permits extends across federal and state lands. This is not the case with electricity transmission lines. Additionally, O’Driscoll emphasizes that eminent domain would be a last-step measure, taken only after all other options had been explored and negotiation efforts had failed.

The process for gaining FERC construction permits will be lengthy, a fact O’Driscoll said should encourage utilities to pursue traditional approval processes before knocking on the commission’s door. First, the utility must negotiate with state and local authorities for at least a year before they can begin the prefiling process required under the regulations. Prefiling incorporates a period of information gathering, during which developers must implement a plan, identifying tools and actions to facilitate communications between all interested parties, and commission staff will begin environmental reviews. This work will form the basis for the eventual application. Once that application is filed, FERC has one year to conduct a comprehensive project review and issue a final decision.

While they recognize the process will remain long and complicated, proponents of this new FERC authority still believe it could help break through the logjam of state and local interests transmission projects currently face. Such help is especially critical for more ambitious projects that cross multiple state lines.

“It gives project developers the ability to pursue projects that are more regionally focused than simply state focused,” said Dan Venora, a partner in the Energy and Utilities practice of New Haven, Conn.-based Wiggin & Dana, a law firm that often represents utilities in transmission-line siting cases. “They call it ‘backstop’ siting authority, and I really think that’s how I view it. It gives you another tool in how you get the project approved.”

No added renewables help

The new corridors may ease interstate siting conflicts, but they don’t address another major transmission-capacity concern: developing capacity to remote renewable resources. Developers of wind, geothermal and large-scale solar projects outside the two identified corridors won’t see any added relief in their efforts to connect their facilities to the larger grid.

“Those corridors weren’t intended to map to renewables, so it’s not surprising that they don’t do it well. It’s not a flaw,” said Shalini Vajhalla, a fellow with Washington, D.C.-based Resources for the Future, an independent energy and environmental research group.

Vajhalla has spent the last several years studying transmission-siting processes, especially as they apply to renewable-generation projects. She sees need for more big-picture transmission planning, a process that electric-utility deregulation has hampered.

“I think the corridors are a positive step forward,” Vajhalla said. “But I think the debates are still pretty fragmented. It’s all very project-specific or type-of-facility-specific.”

She notes that legislation now under consideration by Congress would establish renewable energy zones, similar in concept to the transmission corridors. The Western Governors Association is exploring the concept in the Western United States. Although the new approach could aid renewable-energy development, it also would add yet another layer of rules for line builders—and their opponents—to negotiate.

According to Vajhalla, this scenario raises an important question: “How do you get a whole system built, and not end up with a Frankenstein of different pieces and parts?”

What’s next?

With the designation of the first two corridors now, essentially, a done deal, observers are laying odds on the possibility that other identified congestion areas of concern will be upgraded to “national interest” status. Such a move could happen as soon as 2009, when the DOE is scheduled to conduct its next mandated transmission congestion study.

“They’ve essentially settled the issue with these two areas,” Venora said. “I think it is legitimate to conclude that they’re not done, especially in the Northeast. We have six New England states here. That’s a lot of state agencies you have to navigate your way through.”

ROSS is a freelance writer located in Brewster, Mass. He can be reached at chuck@chuck-ross.com.