The Federal Energy Regulatory Commission (FERC) recently developed fair and transparent guidelines that will help ensure regions are able to build the transmission they need to meet consumer demand and reliability needs, while also meeting the clean energy policy goals set forth by more than half of the states in the nation.
While leaving the details of how transmission is planned and paid for up to each individual region, FERC’s new rule is focused on ensuring those who benefit from new electric transmission facilities pay for those facilities, while also protecting those who don’t benefit from bearing the costs of any transmission they do not benefit from.
The FERC rule will provide the tools needed by the industry and its customers to strategically and efficiently plan and build urgently needed transmission upgrades by:
- Expanding the geographic scope of regional planning processes;
- Considering public policy objectives, such as state clean energy standards, in planning activities;
- Facilitating planning efforts between various regions.
- Requiring transparency and access to information to allow stakeholders to understand the benefits of proposed facilities and to determine if their needs are being addressed in a cost-effective manner
- Evaluating both transmission and non-transmission solutions as part of the planning process.
These measures build upon transmission planning reforms already initiated in many regions , accelerating progress toward:
- Opening energy markets to deliver cheaper forms of power to consumers;
- Ensuring the grid is more reliable;
- Providing greater access to domestic energy resources;
- Providing balanced benefits to customers across the entire region – not artificially drawing boundaries at state lines that are inconsistent with the basic laws of physics; and
- Identifying transmission projects that provide multiple benefits to businesses and residents.
Altogether FERC’s new rule continues the evolution of our grid toward a more robust and strategically planned network that accommodates current sources of power, and the energy mix the nation will use in the future. These simple reforms have the power to unlock the nation’s domestic power sources and provide cleaner, cheaper forms of energy to every American.
While FERC has provided fair guidelines for regions to move ahead with transmission investments, some have voiced opposition to rational measures that will modernize our energy grid. These opponents support legislation that will stymie investments in or grid at a time when our country needs infrastructure investments more than ever. Policymakers should reject these backward-thinking proposals and allow the regions, with FERC’s help, make the best choices about how to modernize our nation’s energy grid.
Who would want to block transmission investments?
Incumbent monopoly utilities that operate – and gouge captive customers – in uncompetitive energy markets. That’s who.
New transmission would give their customers access to new sources of power, competitive energy markets, and lower prices. This is not welcome news for a number of utilities that are making huge profits from congestion costs and closed markets that allow them to hike up electricity rates without any consequences.
A small but powerful group of utilities is working to block transmission development by meddling with regional agreements that determine how the electric grid is paid for. This group strongly backs a bill introduced by Senators Bob Corker (R-Tenn.) and Ron Wyden (D-Ore.) that would amend the Federal Power Act by prohibiting FERC from finding any electricity rate “just and reasonable” unless the cost allocation among consumers is “reasonably proportionate to measurable economic or reliability benefits.”
This backward-looking measure would halt all investment in the grid – investment that leads to economic activity, jobs and access to cheaper forms of power. Transmission projects would be subject to an unprecedented and unworkable “test” that would arbitrarily invalidate painstakingly negotiated regional cost allocation formulas put in place by regional stakeholders throughout the country. It would force a one-size-fits-all doctrine, and reverse more than five years of stakeholder involvement and majority consensus on cost allocation in the Midwest and other regions.
At a time when the American economy is struggling and infrastructure projects are needed, now is not the time to stymie private investment in our electric grid. The nation’s energy future awaits.