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A 'New Order of Business' for U.S. Electric Transmission Players

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January 23, 2012

A 'New Order of Business' for U.S. Electric Transmission Players

By Cheryl Kaften
TMCnet Contributor

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“We will not require a national singing of Kumbaya,” Commissioner Cheryl LaFleur promised a utility industry audience in Boston on January 23, during a speech describing the intended consequences of Order No. 1000 on Transmission Planning and Cost Allocation, which was finalized by the U.S. Federal Energy Regulatory Commission (FERC) last July.


The Commissioner ‘s comments were made during a keynote address at the New England Clean Energy Transmission Summit, which was held at The Federal Reserve Bank of Boston, and was hosted by three organizations that support the modernization of the U.S. electric grid: Americans for a Clean Energy Grid (ACEG), the Conservation Law Foundation (CLF), and the New England Clean Energy Council.

La Fleur said that, at this time, FERC is not asking for or expecting any sort of coast-to-coast dialogue or agreement among grid managers. Instead, Order No. 1000 mandates that neighboring utility regions — such as New England and New York — share their transmission plans with each other, in order to ensure a more open and comprehensive decision-making process.

In broad strokes, Order No. 1000 is intended to ensure that:

  • Every utility looks beyond its own footprint in the transmission planning process;
  • Non-utility players get a chance to compete;
  • There is fair play in regional cost-allocation;
  • Satisfying peak demand is not the only rationale for construction of transmission lines; and
  • Public policy must be a consideration—especially with regard to grid connection of renewable energy sources.

LaFleur elaborated on the need for Order No.1000. “I believe that [the United States] has underinvested in … transmission infrastructure, given the changes in power supply and the changes in our use of energy over the last decade,” she remarked, adding, “As a country, we built about 1,000 miles of interstate high-voltage transmission lines and, at the same time, we built about 20,000 miles of interstate gas pipelines. So there is a difference between the transportation of the fuel that is used to make electricity and the transportation of the electricity, itself, which is lagging.”

 She noted that transmission has not received the attention it deserves because, “It’s a costly and capital-intensive process—difficult to built, difficult to site. Order No. 1000 helps people make some progress on [those] dimensions.”

Getting utilities to look at the bigger picture through regional planning is key, said LaFleur. “The idea is to come up with more efficient and cost-effective transmission than you might get if each utility planned independently.” 

She also noted that planners will be asked to look at “non-transmission alternatives,” to ensure that what they are building actually is needed and to look at projects driven not only by economic reasons or to reduce congestion, but “driven by public policy requirements [e.g., enacted laws and regulations at the federal, state and local levels that call for increased deployment of renewable power].”

With a goal of engendering more competition and innovation, utilities no longer will have the right of first refusal to build transmission projects that are selected in a regional plan for cost-allocation.“There has been a tremendous growth in independent transmission,” explained LaFleur. “The order sought to create a process by which independents could propose projects on an equal basis with incumbents.”

However, the incumbents — the utilities currently providing service — still will retain the right of first refusal when they and their customers are footing the bill for projects instead of taking regionally cost-allocated funding.

Speaking before a predominantly New England-based group, the Commissioner noted that the need for the Order No. 1000 is not as great in that region as it is elsewhere in the nation.  “It’s fair to say that we will require less of a region like New England—which already has a very robust planning process, and has done a very good job of cost-allocating and of getting projects built—than we will of other regions that are just starting to plan … for the first time.”

In addition, according to the U.S. Department of Energy, the New England states already are prominent among the 32 nationwide that have set goals to increase usage of renewable energy sources. For example, Massachusetts law requires an 80 percent reduction in total emissions by 2050, compared with 1990 levels, and New Hampshire legislation requires 25 percent usage of renewable energy sources by 2025. That would mean more electricity at lower costs.

However, New England’s strengths may also enable utilities to push back on the new order of business. LaFleur acknowledged that “the transmission operating agreement signed by the New England companies [may have] raised a legal issue about the protection of their right of first refusal.” She said that FERC would defer consideration of this “New England-specific issue” to the compliance phase of the Order No. 1000 process.

Later this year, the results will become clear. Each public utility transmission provider is required to make a compliance filing with the Commission within 12 months of the effective date of the Final Rule. Compliance filings for interregional transmission coordination and interregional cost allocation are required within 18 months of the effective date.

The daylong New England Clean Energy (News - Alert) Transmission Summit in Boston also was scheduled to include speeches by Rep. Edward J. Markey of Massachusetts, the ranking Democratic member of the House Natural Resources Committee and a senior member of the Energy and Commerce Committee, as well as Bill McKibben, founder of 350.org., a global grassroots movement aimed at solving the climate crisis.

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Cheryl Kaften is an accomplished communicator who has written for consumer and corporate audiences. She has worked extensively for MasterCard (News - Alert) Worldwide, Philip Morris USA (Altria), and KPMG, and has consulted for Estee Lauder and the Philadelphia Inquirer Newspapers. To read more of her articles, please visit her columnist page.

Edited by Rich Steeves

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