Legislation Leads to Transmission Questions: FERC takes the spotlight with interstate transmission issues

Shutterstock / iVector / WarmWorld
Shutterstock / iVector / WarmWorld
Published On
Jan 14, 2022

It would be hard to make the case that electric transmission systems aren’t infrastructure in today’s highly electrified society. That’s why the Infrastructure Investment and Jobs Act signed by President Joe Biden in November 2021 includes billions for transmission upgrades in broader allocations for the nation’s power systems.

But policies and politics pose more roadblocks for transmission expansion efforts than insufficient funding. So, the new legislation also strengthens the ability of the federal agency charged with handling interstate transmission to push projects through over state-level objections. This move comes just as that agency—the Federal Energy Regulatory Commission (FERC)—is making efforts to work more collaboratively with state regulators to reduce the current backlog of interconnection requests across the country.

According to a recent Lawrence Berkeley National Laboratory study, a total of 750 gigawatts (GW) of proposed generation are now in limbo in interconnection queues across the United States. As a point of comparison, the researchers noted, total U.S. generating capacity currently stands at 1,117 GW. The vast majority—about 680 GW—is related to zero-carbon projects. In other words, clearing the roadblocks for just the renewable projects with financing in place would boost today’s U.S. generating capacity by 60%.

The bill gives FERC added power to overcome state-level objections to new interstate transmission construction, enhancing authority granted under the Energy Policy Act of 2005. That legislation required the U.S. Department of Energy (DOE) to conduct transmission congestion studies every three years and identify transmission corridors critical to addressing the shortfalls. However, court battles related to two such corridors identified by DOE reduced FERC’s authority to overturn a state’s denial or lack of action on proposed transmission projects. The infrastructure bill says FERC now “may issue permits for construction or modification of certain interstate transmission facilities if a state commission withholds or denies an application seeking approval for the siting of such facilities.”

The state-level challenges interstate transmission developers face are seen in the fight to bring 1.2 GW of hydropower from Quebec to Massachusetts, with a $1 billion transmission line constructed through Maine. This carbon-free electricity is key to Massachusetts’ goal of a net-zero electricity supply by 2050. In early November, Maine voters turned down the new line, then the state’s Department of Environmental Protection suspended the project’s previously issued permits soon. The developer, New England Clean Energy Connect, Portland, Maine, has filed suit against the vote, which was triggered by a citizen petition, ensuring a lengthy court process. This is the second time Massachusetts tried and failed to tap into Canadian hydropower—a proposed line through New Hampshire was shot down in 2018.

Permitting is just one area where FERC could see electricity transmission rise in prominence. This summer, the commission began reviewing its role in transmission planning, with many promoting a more proactive approach. One idea supported by some major power consumers would require transmission providers to identify areas with high renewable energy potential and plan ways to connect those zones to the larger grid. This long-term planning is the opposite of the project-by-project approach that’s now the norm.

FERC is also considering how transmission projects and interconnection efforts are paid for. It launched a task force on transmission development that includes state-level regulators. For example, who pays for transmission that crosses state lines or runs through the territories of multiple regional transmission operators (RTOs)? This is one of the complications developers of the SOO Green HVDC Link have had to address. The 350-mile, 2.1-GW project will bring wind energy from Iowa to Chicago and points east, crossing from the Midwest Independent System Operator into the PJM RTO.

Of course, there’s the issue of who makes money developing new transmission. In 2011, FERC passed Order 1000, which, among other things, withdrew the right of first refusal (ROFR) that gave incumbent utilities first crack at building regional and interregional transmission without competitive bidding. Several states overruled this provision, and utilities in those states argue ROFR supports more efficient project development and provides assets—the transmission lines—from which they can earn a rate of return to support their own profitability.

Unsurprisingly, large electricity consumers, such as Ford Motor Co. and the Steel Manufacturers Association, argue competitive bidding keeps costs down. The Electricity Transmission Competition Coalition, which represents such users, stated competitively bid projects are one-third less expensive than those backed by utilities. They want FERC to force competitive bidding for all states and regions for all projects above 100 kilovolts.

About the Author

Chuck Ross

Freelance Writer

Chuck Ross has covered building and energy technologies and electric-utility business issues for a range of industry publications and websites for more than 25 years. Contact him at chuck@chuck-ross.com.

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