House OKs Grid-Siting Reform, but Only in the West

The bill that the U.S. House passed 219-212 in late June to establish a cap-and-trade regime for control of global warming gases also includes new authority for overriding states on siting power lines. But the new authority only applies to the West.

As part of the massive energy legislation narrowly passed late last month, the U.S. House of Representatives approved compromise legislation that would substantially expand federal jurisdiction over power line siting only in the West—a scaled-back plan that avoids controversy over enhanced federal transmission authority in the East but also differs significantly from Senate proposals to provide nationwide grid expansion reform.

FERC Gains Authority in the West

The House language on transmission—crafted by Rep. Jay Inslee (D-Wash.)—was added late in the process of passage to the 1,200-page energy and climate change bill (H.R. 2454) that the House narrowly approved by a 219-212 vote. It would establish new “backstop” authority for the Federal Energy Regulatory Commission (FERC) to approve certain new power lines in the Western Interconnection if the power lines had been blessed by regional planning efforts and if an affected state then failed to approve the line.

That would substantially change current policy, which gives states somewhat exclusive authority over power line siting. Although FERC was given backstop authority under the Energy Policy Act of 2005, federal courts have limited that authority.

Nevertheless, the House-passed language is less comprehensive than previous transmission reform proposals from Inslee and from pending legislation in the Senate, both of which would grant FERC some form of backstop authority in the East as well.

ITC Holdings Corp., the country’s largest privately held transmission-only utility, said lawmakers must enact more sweeping reforms if they are serious about building new power lines and encouraging development of remote renewable power sources such as wind and solar.

“[House Energy and Commerce Committee Chairman Henry Waxman] and Rep. Inslee clearly appreciate the critical role transmission plays in facilitating the achievement of the energy policy goals and objectives of the legislation, including the development of renewable, emissions-free resources,” Joseph Welch, chairman, president, and CEO of Michigan-based ITC, said in a written statement. “Unfortunately, they were unable in the limited time available to craft the needed provisions to be included in the bill.”

States Are Resistant to Change

The Obama administration and Democratic lawmakers say the enhanced federal authority is needed to induce construction of new power lines to bring renewable power from remote locations to cities. In the past, states have often blocked construction of lines needed to ship that power long distances, particularly if the lines merely shipped power across the state and delivered none inside its borders.

While H.R. 2454 gives FERC new siting power in the Western Interconnection, FERC would get no new authority in the Eastern Interconnection, the grid east of the Rockies, and the Great Plains. That differs with a bill passed out of the Senate Energy and Natural Resources Committee earlier in June, which would give FERC similar backstop authority in both the East and West.

The transmission language in the House bill also differs from previous proposals from Inslee, who wanted to expand federal transmission siting authority in the East, too, as long as the eastern lines were built underground.

Inslee dropped plans to boost FERC authority in the East in response to eastern-state officials who say expanding federal authority would wreak havoc on any transmission development already under way.

Among those skeptical of the need for new FERC transmission authority is Rep. Ed Markey (D-Mass.), chairman of the House Energy and Commerce Energy and Environment subcommittee, who coauthored H.R. 2454 along with Waxman (D-Cal.).

Fed Can Designate Corridors it Deems in National Interest

In another apparent concession to colleagues and other officials worried about boosting federal transmission powers, Inslee’s language adopted in H.R. 2454 would trim existing authority FERC received in the 2005 energy act to approve lines in designated “National Interest Electric Transmission Corridors” (NIETC). In the 2005 law, Congress gave FERC broader authority to overrule states under certain circumstances on power lines sited within those corridors, which are designated by the DOE in areas that the department finds urgently need new transmission.

Lawmakers in many NIETC-affected states, however, have bitterly opposed the corridors, particularly in Virginia, West Virginia, and Maryland. H.R. 2454 would limit FERC’s NIETC authority “to the Eastern Interconnection and to interstate lines and intrastate segments that are integral to a proposed interstate line.”

The transmission language in H.R. 2454 also differs from the Senate transmission language. The Senate bill does not limit what type of generation could be served by lines sited under the new FERC authority. By contrast, Inslee’s amendment says that FERC can only use its backstop authority if a regional entity deemed that a line was needed “in significant measure” to access renewable energy. That language was also a compromise. The previous version of Inslee’s transmission plan would have required that any such generation served by the power lines emit greenhouse gas at a comparable or lower rate than a single-cycle natural gas plant.

As for ITC’s concerns, Welch argued that H.R. 2454 does not address the issue of cost allocation, which Welch and others say is key to support the type of long-haul power lines needed for renewable resources. The Senate bill would let FERC spread the costs of certain power lines to all customers in a given region. To do so, FERC would have to determine that the power lines provided broad regional benefits, such as reduced congestion, and determine that the costs to a region did not exceed the benefits.

Northeastern governors particularly oppose that part of the Senate bill, saying it would force customers in their states to underwrite wind farms in the Midwest while economically undercutting the development of renewable power sources in the East.

Welch and some congressional Democrats say costs must be broadly allocated to make affordable projects such as ITC’s proposed Green Power Express, a 3,000-mile project meant to deliver wind power from the Dakotas to Chicago.

—Jeff Beattie is a reporter for The Energy Daily, a sister publication of MANAGING POWER.