Pushmepullyou: Disputes and Discussions on Grid Politics

In the last full week of September, a Dickensian moment occurred: the best of times and the worst of times, simultaneously. Readers can conclude which were the best and which were the worst, based on their own perceptions and predilections.

Pushing the “Smart” Grid

In Washington, D.C., the annual GridWeek yack-and-brag fest took place. It’s a conference organized by Clasma Events for the many folks who believe the smart grid is the next high-tech energy gravy train. The Obama administration’s economic stimulus package has $4.5 billion pointed at the allegedly smart grid.

Conference organizers claimed it was the best turnout they had ever seen for the GridWeek extravaganza and supplied suggestions about how to cope with GridWeek gridlock. It was their third meeting, and by all accounts the most successful. Watch for more to come.

In the week leading up to the GridWeek show, my email inbox was brimming with opportunities to meet with executives from multiple firms, pitching their goods and services, seeking to spin any available journalists to the gospel of the smart grid. I had planned to attend, and registered for the event, which made my email address available to PR types of all descriptions. IBM, Current Communications, Siemens, you name it—and lots of firms you couldn’t name. The PR pros were earning their keep.

The Undecided Fate of the “Strong” Grid

At the same time, in Shepherdstown, W.Va., the smart grid was far from the minds of the West Virginia Public Service Commission and many ordinary citizens from the region of West Virginia, Virginia, and Maryland, where the 765-kV PATH transmission project proposed by American Electric Power and Allegheny Energy would run. The West Virginia regulators were holding the first of a series of public hearings on the project, which has drawn enormous, vociferous, and predictable local opposition, along with muscular support from local unions seeing the project as a jobs engine.

This is one of the “national interest” grid projects the Department of Energy has identified under the terms of the feckless 2005 Energy Policy Act for potential federal siting preemption. If one of the state commissions that must judge the project turns thumbs down on the PATH project, it could wind up at the Federal Energy Regulatory Commission (FERC) to potentially overturn the state action. The project has the enthusiastic support of West Virginia’s Democratic Governor Joe Manchin and much of the state’s prodigious Democratic political machinery.

I suspect that if any state along the route rejects the project, years, maybe decades, of litigation will follow. The same will occur if the project gets all the needed state approvals. I wouldn’t bet a dime on the outcome of the PATH transmission conflict one way or the other.

My view is partially based on an attempt more than 20 years ago by West Virginia Gov. Arch Moore (a Republican in a Democratic state, who eventually was felled by corruption charges involving cash in a desk drawer) to build an interstate line to move excess West Virginia power to markets in New Jersey and New York. That ultimately failed when Pennsylvania regulators—facing well-organized opposition—concluded there was nothing in the plan that benefited the Keystone State.

Poor Understanding of Grid Politics at the Grassroots

Rather than dip into the denizens of the “smart grid” devotees in Washington, I chose to sample the views of the opponents and proponents of what I have called the “strong grid,” although I can’t in fairness defend the PATH project as truly grid-strengthening. (It is, at least, more strongly visible than elements of the smart grid.) I wanted to scope out the local understanding of the prospect of federal preemption of state siting authority under the 2005 law rather than the pie-in-the-sky, let’s cash in, smart grid lobbyists meeting in D.C.

My working hypothesis was that the local folks, some of them my neighbors, had no understanding of the new authorities in the 2005 law and would be outraged when they understood what their elected representatives in Washington had done in terms of grid siting.

They didn’t have a clue. They were astonished. I spoke to several folks after the West Virginia session. They were gobsmacked when I told them that if the state regulators turned down the project, the feds could overrule the state. They also were flummoxed when I told them that their Republican members of Congress—Shelley Moore Capito (Arch Moore’s daughter) in West Virginia and Roscoe Bartlett in Maryland—had voted for the legislation that would allow giant transmission lines to tromp across their land, even if state regulators opposed the project.

“How the heck could that be,” a West Virginia high school teacher told me. “That doesn’t sound Constitutional to me. I thought the states had powers not enumerated in the Constitution.” What about the Commerce Clause and federal supremacy? “I don’t know what you are talking about. Electric regulation and siting of power lines has always been a state power.”

The reaction of locals to the prospect of Uncle Sam allowing giant investor-owned utilities to big-foot transmission that has no local benefits, in the name of national policy, is akin to, and ultimately more grounded in reality than, the “grassroots” rage that some folks expressed last August about the Obama administration’s aims for health care reform.

At the meeting at Shepherd State University there was no overt outrage by opponents, other than some applause at statements by opponents of the power line. But there was a deep-seated sense of shock that the government could do this to them: force a high-voltage power line across their land, without offering any benefits to folks underneath the line.

At the same time, local trade unions—the International Brotherhood of Electrical Workers, the equipment operators union, the carpenters—were enthusiastic about the project. It represents high-paid construction and operating jobs. That’s entirely understandable, and the unions made their case both with testimony and their presence at the meeting. At least a third of the attendees were union members.

It’s up to the state regulators to make the first judgments. FERC may get the second-order decision. Ultimately, it will be up the courts to make final determinations.

 “Strong” vs “Smart”

In the meantime, at GridWeek in Washington, myriad private interests were exploring ways to leverage their technologies into the local distribution grid to control appliances, send price signals, and the like. These folks are convinced that their future lies in a smart distribution grid, regardless of what happens with the 800-pound gorilla in the room: the high-voltage transmission grid.

These are two different worlds, not easily reconcilable. Money to build out a robust interstate, interconnected grid—against stiff local opposition—will compete with money to equip the local distribution system with the brains to allocate and ration electricity to bolster efficiency (rationing, are we talking rationing?). In both cases, customers will pay, a circumstance few customers appear to understand at this point.

In both cases, proponents of their grid plans are arguing for significant subsidies. In the case of the big iron folks, the subsidy is federal eminent domain authority, to be exercised by FERC and, presumably, the guarantee of cost recovery through rates as a result. A determination that FERC will call the shots—as it does with natural gas and oil pipelines —will mean access to lower-cost capital on Wall Street. But that’s a long way from fruition.

For smart grid advocates, the golden ring on the policy merry-go-round is direct DOE funding, through the stimulus piggy-bank, which also makes private money cheaper to raise. Ultimately, of course, customers will pay for these costs in rates, although proponents of the smart grid argue that the savings will exceed the costs. That’s yet to be seen.

It is a lot easier to be in favor of a smart grid than a strong grid. Although both will ultimately cost customer dollars, the smart grid is also a stealth grid. It’s on the distribution side, where the lines are already in place, and it involves cyber bells and Internet whistles added onto existing infrastructure, most of which will initially slide under the customers’ rate radar.

Most folks won’t notice if their local utility swaps out the existing electric meter for one that can identify their power usage patterns, control the home air conditioner, and slice a firm, unripened tomato (Ron Popeel’s claim for the original Vegematic). They won’t notice until they get the bill, if then.

The big iron, on the other hand, is very visible as it marches across the landscape. Like wind, big transmission is unsightly and, for the most part, doesn’t deliver any immediate benefits to the folks who have to give up their land to site it and then look at the ugly aspects of electric infrastructure.

Ultimately, it looks like gridlock in both directions. It may be time for a new paradigm in electric transmission and distribution, although I readily confess that I don’t have a clue what that paradigm might be.

—Kennedy Maize is MANAGING POWER’s executive editor.