On February 25, 2015, John Jimison of Americans for a Clean Energy Grid (ACEG) was chosen to sit on a panel Federal Energy Regulatory Commission’s (FERC) Denver Regional Technical Conference on Environmental Regulations, Electric Reliability, Wholesale Electricity Markets, and Energy Infrastructure. The conference covered a wide array of topics, with John’s specific panel covering the potential implications for wholesale markets and bilateral trading. ACEG submitted written comment (available here) on that topic and others in advance of the meeting, and also prepared a written opening statement (available here).
During the second panel on infrastructure needs, Chairwoman Cheryl LaFleur acknowledged ACEG’s written comments, and created a line of inquiry on them with Brian Parsons of the Western Grid Group, who joined in on ACEGs comments. A transcript of that interesting exchange may be found below:
I wanted to ask about the part where I had some hope that FERC could do something, and that’s on transmission planning, rate-making and cost allocation. Now, to kick off, the Western Grid Group and Energy Future Coalition put forth a proposal that I’ll call a ‘Federal CREZ,’ where FERC would help to identify the regions with the strongest, most cost-effective potential for renewable generation, and then oversee a process whereby having those identified would help states drive state plans. That has certainly worked well in Texas with ERCOT.
It’s kind of the opposite […] of Order 1000, which says ‘have a process, and you are required to look at the state plans and state policy drivers in determining what transmission might be driven by those state needs. We haven’t really given that that much time to work yet, but it’s something where we’ve done a tremendous amount of work on it, and all of the transmission planning organizations all across the Western parts of the country have put in hours upon hours into it. Do you see Order 1000 as helping to identify the transmission that might be needed to reach Clean Power Plan goals, and if not, what has to change? Because that’s exactly the kind of thing it was intended for.”
Renewable energy zones are a really good way to try and turn around a chicken-and-egg problem. The idea that renewable wind and solar plants can be constructed very quickly once their permitted, and permitting usually moves forward in a timely fashion, though not perfect every time. But when you look at development timescales for transmission and renewables particularly, the idea that you have to wait for an interconnection request for specific developers for a specific resource location, and then you start the transmission planning process…you’ve got this delay problem.
The renewable energy zone concept broadly turns that around and says if we know we’ve got a reason to build renewables, like in Texas, where we have an renewable portfolio standard in the state, and we need a little bit of power from the west resource areas, and we need wires to do that–not magic–and we know that to meet those goals that our transmission processes need to start and you can’t wait for the interconnection request from X, Y, Z developer and then still make the timeline. So they turned it around and said we know where the best resources are in the state. We’re going to say that these are now renewable energy zones that are going to be developed one way or the other to meet public policy requirements, so let’s start proactively building transmission now.
That worked great in Texas, a single state jurisdiction. They went and said we’re going to figure out what some of those problems were. Some of the problems are useful designation and cost allocation, and construction costs. You can wait until the transmission line is completed and then you go to the public utilities commissions and ask if it’s useful. If you planned well, the answer is yes. But there’s a risk that things changed in the last 5-10 years.
I applaud Texas’ proactive approach here. I’m trying to turn that around for the rest of the West, but I need help from a lot of other smart people to help figure this out. We haven’t done a renewable energy zone process in the West. The Western Governor’s Association and the Western Interstate Energy Board looked at Texas and said let’s do this in the West. We worked really hard and have identified those renewable energy zones and there have been some very positive effects from that. We see that in some of the federal plans trying to look at prior approvals; trying to do programmatic environmental impact statements; and trying to look at renewable energy zones that cross federal lands, and what we can do there.
Frankly, I think the problem is we come into these federal-state jurisdictional and multiple state jurisdictional cost allocation issues, and if Order 1000 can help us in the long-term to get down and start talking about those things, then great, we’re all going to celebrate. But I don’t think we’ve got a silver bullet here, and I would love if we could try to address this more directly, and if there is a way to start talking about cost allocation and public policies we’re trying to meet, and how we can move these processes forward as a result.
That’s very helpful, and the last thing I want to do is be argumentative, but I didn’t interpret Order 1000 as you needing to have a specific interconnection request before states say hey we’re going to need a lot of X-type resource. If you look at what the Midcontinent ISO did where they got together on the Multi-Value Projects, it wasn’t one specific generation that needed a hook-up, it was doing some big things together. The process was intended to enable that very thing among other types of planning for reliability and efficiency as well. We’ve tried with incentives and other things that are jurisdictional to us, to get the construction work in process or the abandonment where it’s needed to meet specific risks such as you identified. So, this is where it gets to the real dirt under the fingernails stuff. If we need to do things differently to make those processes do what they are intended to do, I would welcome comment.
I didn’t mean to be negative, I meant to say that there is at least a start to the process, and if we can figure out those tougher issues and use the tools we have available to us, and perhaps Order 1000 and the Clean Power Plan is in fact a public policy that can be figured into that, maybe that’s a way to start motivating those longer term discussions that are going to be needed.
I think if you structure it in a way that enables the participation of public power, at least in the planning, and there are things we need to differently to make it vibrant in the west, then that’s the whole goal.