Forbes - 9 Mar 09

Prof. Robert B. Laughlin
Department of Physics
Stanford University, Stanford, CA 94305
(Copied 1 Aug 09)

Feds To Take Control Of Electric Superhighway

Proposed bill could give U.S. government authority to grant permits for transmission lines when states delay approval.

Andy Stone
March 9, 2009, 05:27 PM EDT

Chalk up one for the federalists. Last week Senate Majority Leader Harry Reid, D-Nev., introduced a bill that would give the federal government authority to grant permits for new electric transmission lines, trumping states' jurisdiction on the matter.

Reid's bill, the Clean Renewable Energy and Economic Development Act, provides a regulatory framework for the development of a national electric superhighway, a network of high-voltage power lines that would transmit electricity from remotely located wind and solar farms to energy-hungry urban areas. The transmission lines would play a key part in President Obama's push to produce 25% of the country's electricity from renewable sources by the year 2025.

Reid's proposal offers the Federal Energy Regulatory Commission "backstop" authority to grant permits for new transmission lines when states delay approval. FERC's authority would be limited to "renewable energy zones," regions that the Energy Department deems especially rich in renewable energy potential, such as wind-swept Great Plains states.

The legislation addresses the reality that interstate transmission projects are notoriously difficult to build. Projects can be easily scuttled when a single state refuses to permit a line across its territory, often because it fears having to pay for a line that will ultimately provide little energy to its own residents.

But the states are beginning to come to terms with Washington's commitment to building a national power grid--and the inevitability of FERC oversight. In February the National Association of Regulatory Utility Commissioners, a lobby for state public utilities commissions that has opposed federal siting, introduced a draft resolution suggesting it would "not oppose amendments" to federal law providing oversight to FERC.

Traditionally, states have regulated transmission projects within their borders because electricity generation and delivery has been a relatively local business, with vertically integrated utilities producing power that they ultimately sold to their own customers.

But renewable energy will require electricity to be transmitted hundreds of miles to market, possibly turning some states into mere transmission corridors for power to be consumed elsewhere. State public utilities commissions, arguing that little benefit will come to their residents, have stalled long-distance line projects before.

But Reid's bill to take power out of state's hands has a precedent. The Energy Policy Act of 2005 granted FERC authority to override states in areas where electricity demand was particularly high and transmission lines were lacking, and defined "congestion corridors" along the Atlantic seaboard and in the Southwest.

FERC's theoretical backstop authority took a hit in February when the Fourth Circuit Court of Appeals in Virginia ruled that FERC could only move to permit lines when a state had delayed its decision for more than a year, but it could not overturn state decisions. FERC has yet to exercise its backstop authority in any case.

The new legislation "is not perfect, and there is ample room for improvement," Reid said in a news release introducing the bill. Indeed, final legislation, which will likely appear as part of a larger energy bill to be introduced in Congress this summer, will have to close potential loopholes that would delay transmission projects and concretely deal with the question of who will pay for new lines, details left out of the 2005 act.

As it stands, Reid's proposal will give the president, via the Department of Energy, up to 270 days to specify renewable energy zones. States would then have one year to submit plans to FERC for new transmission lines in the renewable zones. FERC would have authority to take over planning and siting when a state misses the deadline.

FERC would add a surcharge to the electric bill of all customers that get power from the line, ensuring that utility customers don't end up paying for lines that provide no energy to their state. In addition, FERC's authority would only apply to lines carrying at least 75% electricity generated by renewable sources.

Nevertheless, the legislation would be a big step toward a unified power grid.

"Transmission is primary to enabling wind energy," said Bob Gilligan, the head of General Electric's electric transmission business, in a February interview. "Transmission is also the bottleneck."