Ken Silverstein | Oct 03, 2011

Electric reliability has always gotten the runaround. Today, some state regulators would say that they are getting the end-around.

It may sound like a repeat but it is a really a re-make. The Obama administration, of course, has given a high priority to updating the country’s transmission system, which would become more efficient and therefore make room for more green energy. Earlier laws that have given more permitting authority to federal regulators have largely flopped.

So, the president wants to alleviate congestion by giving dual authority to both state and federal policymakers. The administration says that such a tack is “more efficient” and would result in key wires getting built. The states disagree, saying that their authority would be usurped and that the concerns of local citizens would be ignored in favor of utility companies.

“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.”

Recall the Great Blackout of 2003 that rolled through the Northeast and parts of Canada? After that, the 2005 Energy Policy Act gave the U.S. Department of Energy the ability to assign national interest electric corridors in those areas that have capacity constraints. The Federal Energy Regulatory Commission (FERC) would then have backstop permitting authority -- to bypass state regulators if they have failed to act within a year.

More than six years later, only two projects have gone to the FERC and asked those regulators to assert their “rights” under federal law. Those projects, based in the Southwest and Mid-Atlantic, have since withdrawn their requests citing both a decline in the demand for electricity as well as adverse court rulings.

In one case, the U.S. circuit court of appeals said that if the states rule within a year against new lines, then FERC can’t overrule them. In a second, the judges said that the Energy Department must consult with the stakeholders before creating national transmission corridors.

“Unifying federal authority with respect to siting interstate transmission projects would allow a more efficient, direct process," writes FERC. "Clearly, the backstop transmission procedure established by Congress has not yet been effective.”

Green Growth

The Energy Department says that it will come up shortly with a new proposal. Beyond having the feds work alongside the states, the agency may give FERC its duties and have it draw up the national interest electric corridors. FERC wants that job and says it would evaluate each proposal on a case-by-case basis.

Giving the feds a greater say in transmission has appeal among both industry and certain environmentalists. The National Electrical Manufacturers Association says that giving FERC the ability to designate high priority areas as well as allowing it to review cases alongside the states would reduce congestion.

The Natural Resources Defense Council generally agrees, although it wants more green energy to flow through those new wires. It says that the process will not short circuit state regulators, noting that the transmission process would be “transparent and inclusive.”

The North American Electric Reliability Council adds that if action is not taken to build out the national grid, it will harm the growth of renewables that must be transported from isolated regions to urban areas. It has said that 11,000 miles of high-voltage transmission lines must get built in the very short term.

But the state regulators have enjoined some in the environmental community to oppose the Energy Department’s proposal. Many green groups want to first encourage conservation before considering more transmission -- lines that some fear would run roughshod through sensitive habitat.

While the Obama administration says that the proposed process would go smoother, the public utility commissions beg to differ. They are saying that not only would the FERC quell their concerns but also that the Energy Department and FERC are supposed to watch each other to prevent too much federal control.

“If Congress had intended this, they would have simply given this authority to FERC in the first place,” writes regulator Gray. “Indeed, it is easy to imagine developers pursuing a FERC corridor designation and running the clock on State-siting processes in an attempt to circumvent State-siting review.”

The Energy Department has indicated that it will devise a new plan that allows for more federal authority in the permitting process. Because the states will oppose that, more lawsuits will come and the whole episode will play out all over again.

 

EnergyBiz Insider has been been nominated in 2010 and 2011 for Best Online Column by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.

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energybizinsider@energycentral.com