Overruling the states
The Energy Policy Act of 2005 (EPAct) directs the U.S. Department of Energy (DOE) to pinpoint transmission congestion problems and authorizes the secretary of energy to designate as “national interest electric transmission corridors” geographic areas where such problems “adversely affect consumers.” Once an area has been designated a national interest corridor, the federal government—specifically, the Federal Energy Regulatory Commission (FERC)—can approve any proposed transmission project within the area for which state regulators have “withheld” approval for more than a year. In a 2006 rulemaking, FERC interpreted the meaning of the word “withheld” in EPAct to include “denied.” So, in effect, FERC can overrule a state’s rejection of any transmission project in a designated congested region simply by finding that it would ease the congestion.
Last month, the DOE designated areas of Arizona and southern California—including some that DPV2 would pass through—as the Southwest national interest corridor, presenting SCE the opportunity to have FERC reverse the ACC decision. It remains unclear, however, whether the utility will take it. SCE has stated that it will continue to work with the CPUC and ACC on DPV2 permitting issues.
Back to square one
SCE’s initial reluctance to involve FERC suggests that the utility believes it may be cheaper and quicker to try to work things out with Arizona. Asking FERC to intervene requires a project’s sponsor to file an application, essentially restarting the entire approval process. The application would be (as at the state level) subject to protest—an inevitability for any large transmission project. As part of any application proceeding, FERC would also conduct a full environmental review and evaluate “alternatives.”
SCE filed its DPV2 application at the CPUC in April 2005. Now, more than two years later, it finds its only two options are to address the ACC’s concerns or to begin again at FERC. Although FERC’s history of approving virtually every application it has received for natural gas transmission pipelines suggests it offers a “friendlier” venue, pursuing either option will delay the project and increase its cost.
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