The Feds Can do Some Good in Transmission, But Will it be Legal?Location: New York The U.S. Department of Energy's proposal is under attack. It wants to “delegate” its responsibilities under the Energy Policy Act of 2005 to FERC to conduct transmission congestion studies and designate national interest electric transmission corridors to facilitate action to relieve the congestion. DOE has had a terrible time trying to perform this responsibility, all of which have to do with politics and control. “To the extent that this proposal is motivated by a desire to reduce barriers to transmission, it fails,” writes Charles Gray, executive director of the National Association of Regulatory Utility Commissioners. “It relies on a tortured reading of the statute that would cause uncertainty, litigation, damage to State and federal relations, and delays in transmission development.” But US DOE went through two ‘tortures’ cycles of congestion studies in 2007 and 2009. In the later it designated two transmission corridors: one in the mid Atlantic region where congestion has always been bad and a second in the Southwest where rapid growth of solar energy capacity needs access to the California markets. But the Ninth Circuit Court of Appeals struck down those designations, concluding the DOE failed to provide sufficient state consultation and failed to perform the required environmental analyses on expected projects. The objection over the environmental processes by green groups was expected, but increasingly the Hobson’s choice for those advocates is becoming a choice between the transmission line or renewable energy. That is, without additional transmission to bring wind and solar to market with renewable portfolio standards, the aspirations for a clean energy economy are tough to meet. But the court decision requiring a full environmental analysis amounts to a broad regional study of congestion: Is there any or not? If so where? That has a chilling impact on the entire effort since it piles on an environmental review that will have to be re-done when a specific transmission project and route are determined later. This is truly the death of a thousand cuts NIMBY process out of control. DOE is still on the hook to do congestion studies and the next one is due to Congress in 2012. Wanting no part of a repeat of its torment of the last two cycles, a plan is hatched under which US DOE would “delegate” its duty and authority to perform the congestion studies to FERC and FERC would use its established regulatory process to perform the study, consult with the states and stakeholders so as to conduct the reviews. Perfect Solution At the end of this process FERC would designate the needed transmission corridors, if needed, based upon the evidentiary record. Neat, clean, transparent, consistent, orderly. So what’s not to like about it? The states smell a trap. This delegation and FERC process is ‘too neat, clean, transparent, consistent, orderly -- and perfectly legal.’ It will essentially give FERC the authority, absorbing the entire decision process and relegating the states to intervener status in a FERC proceeding. This is the greatest fear of state regulators---being usurped by a ruthlessly efficient federal regulator. Yet DOE has cleverly crafted a plan that is in compliance with the Energy Policy Act of 2005 to get the congestion studies done. It is in compliance with all court rulings. And most importantly, it gets this entire mess off the shoes of DOE in the middle of a presidential election campaign so it can spend its time doing important work like spending money being a venture capitalist for ‘good’ causes. Environmental groups have reasons to worry too. The proposed delegation goes beyond the required environmental review process and establishes other criteria for determining the reasonable and necessary designation of a transmission corridor. Those non environmental factors include economic benefits, energy independence and national energy security. If these non-environmental factors work their way into the evidentiary record and become precedents for future rules and decisions that will undermine the environment advocates tactic of using the environmental laws as a delay tactic to kill projects or suing to assure that the environmental interest is the only factor considered in a decision. Balancing of economic and environmental interests in regulatory proceedings is common sense but not common law. This is a perfect bureaucratic solution: The process is valid and the parties are forced to negotiate a settlement in a regulatory arena, not a political one. No one will like the outcome and there will be those who question its legality. But it makes perfect sense. |