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Calendar
June 27-28
June 28 -29
July 12
WIRES Summer Mtg July 20-21
For the latest on other important events related to the high-voltage transmission grid, see the
WIRES Calendar
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WIRES News
An Update on Transmission Law and Policy from WIRES |
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Will the Grid be Ready for a Major Shift to a
Carbon-Constrained Future?
The brouhaha about the Clean Power Plan (CPP) may miss the point! In fact, CPP may end up a lagging- instead of a leading-indicator of the transformational changes about to hit the power business. It always struck us that CPP would never work as planned without major transmission upgrades and that EPA's faith-based approach to transmission adequacy was therefore mystifying, especially in light of the need to move new, lower-carbon resources to market. But, several things are now absolutely clear.
- First, the changes wrought by low natural gas prices, new technologies, more diverse energy production patterns, the cost competitiveness of renewable resources, and potentially restrictive environmental rules will be immediate and transformational.
- Second, expecting the current transmission grid, largely built to serve the analog economy of the mid-1900s, to serve as well in the new era of carbon rules, competitive clean resources, and market uncertainties is unduly risky.
- And finally, the way transmission is currently being planned - incrementally, largely justified on reliability grounds, one region or sub-region at a time, using a short planning horizon - will not modernize the high voltage grid fast enough to seize many of the advantages that new digital technologies, liquid bulk power markets, electric transportation, fuel diversity, and lower cost generation will offer North American electricity consumers.
So, we asked industry experts how planners and policy makers could do things better, or at least differently, to get out in front of the coming changes. The answer came back from the economists at The Brattle Group that "anticipatory" transmission planning, including scenario-based analysis of the uncertainties faced by the industry and the economy, will result in a more robust transmission network and place customers and energy providers in a position to choose among resource options and avail themselves of the multiple benefits of a smart, integrated grid. Brattle's pioneering paper on why planning must be overhauled, entitled "Well-Planned Electric Transmission Saves Customers Costs: Improved Transmission Planning Is Key to the Transition to a Carbon-constrained Future," was issued by WIRES June 6.
WIRES President Bob McKee of American Transmission Company, stated: "To ensure that electricity is delivered to customers in the most cost-effective, reliable, and safe manner, high-voltage transmission needs to be considered as part of the solution to making this transition."
Given the long lead times needed for transmission planning and development under current laws, "there is little time to waste in readying the grid to help reduce the cost of meeting the profoundly changing market fundamentals," according to
Jim Hoecker, WIRES Counsel
and former FERC Chairman.
We eagerly await to see who begins to internalize the message.
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WIRES' Spring Meeting in Washington DC
WIRES members gathered in Washington DC in April. Keynote speaker and former CIA Director James Woolsey gave an eye-opening speech about cyber- and other risks to our North American infrastructure, including but not limited to the electric grid. Woolsey  chairs the Leadership Council of the Foundation for Defense of Democracies. He specializes in a range of alternative energy and security issues. We were also honored to hear an address by new NARUC Executive Director Greg White about the regulator's four goals of affordability, reliability, safety and security.
Pictured above are: WIRES Board member Gregg Lemler, Vice President, Electric Transmission Operations, PG&E; Joe Doetzl, Head of Cyber Security, ABB Enterprise; James Woolsey; Mrs. Kate Doetzl; Kerrick Johnson, Vice President of Strategy & Communication, Vermont Electric Power Company; WIRES President Robert McKee, Director of Regulatory Relations & Policy, American Transmission Company; and WIRES lead counsel Jim Hoecker.
The Policy Session included panels with WIRES member firms and industry experts on:
WIRES' Summer Meeting will be held in Minneapolis, Minnesota on July 20-21.
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WIRES Comments to FERC on the Fifth Anniversary of Order No. 1000
On March 17, 2016, the Federal Energy Regulatory Commission announced
that it would convene a technical conference in June to discuss new issues that have emerged in the wake of Order No. 1000, the five-year-old landmark initiative that required transmission planning processes and cost-allocation-decision-making to be conducted regionally across the U.S. Order 1000 also suggested that those engaged in the regional process should or could evaluate the need for 1) interregional projects and 2) projects that support public policies such as state renewable portfolio standards.
The Commission has not looked back to see how this ambitious but largely open-ended rulemaking has performed. Moreover, new developments that followed the 2011 rule are being evaluated. Focused initially on the complications of competitive solicitation of transmission proposals in some RTOs, the scope of the proceeding seemed to expand, until it encompassed many aspects of Order No. 1000, including the cost-containment provisions and interregional transmission coordination issues, under the May 10, 2016 order. WIRES submitted pre-conference comments on June 6 and will be represented at the June 27-28 Technical Conference by its President Bob McKee. In comments, WIRES made clear that we are most concerned about:
"... interregional planning processes that were put in place by Order
No. 1000. They have not performed well in promoting the develop
ment of interregional projects that provide electricity customers
in multiple regions with measurable reliability, economic, and public policy benefits."
In a related development, FERC Staff presented the Commission with a study at its March open meeting. Entitled "Transmission Metrics: Initial Results" (March 2016) the study was part of an apparent effort to find out if FERC policies had helped "achieve appropriate levels of transmission investment." Although determining whether Order No. 1000 had been a success is a laudable objective, the study's questionable assumptions and methodology indicate that much better data is needed with respect to analyzing the current state of transmission investment. The technical conference may or may not focus on this analysis.
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CapX2020: The Vanguard of Regional Transmission Planning
As of Spring 2016, the CapX2020 group is on track to complete five new high-voltage transmission lines. Spanning nearly 800 miles at a cost of $2.1 billion, all projects are on time and on budget. That alone is a significant achievement. It is even more impressive given that the last large high-voltage transmission line projects in Minnesota were built in the 1970s. Kent Larson, Executive Vice President and Group President of Operations at Xcel Energy noted, "This thing started more than 10 years ago. If you think about a project of this size and magnitude and complexity, you could think of a lot of reasons for it not to happen. It's easy to kill a project, but it's much more difficult to make it happen, and this group came together and made it happen." Reported by Dr. Elizabeth J. Wilson, Professor of Energy and Environmental Policy and Law at the University of Minnesota in "Transmission Planning and CapX2020: Building Trust to Build Regional Transmission Systems".
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A Unique Transmission Investment Challenge & Opportunity
Most of the major transmission providers in the U.S. have been investor-owned utilities (IOU's) and, in some regions, government power administrations. However,
there are a number of large, highly sophisticated non-public utilities in the U.S. Among these entities are generation and transmission cooperatives (G&Ts) that are owned and often operated by smaller distribution cooperatives. In addition, large municipal utilities, commonly referred to as 'public power,' can be owners and operators of major transmission assets.
Although cooperatives and public power have been successful in addressing the transmission needs of their customers after having made substantial investments in transmission infrastructure in the past, the need for additional investment in transmission expansions and upgrades has inspired development of new and potentially powerful business models. GridLiance GP, a new undertaking supported by major private equity interests, has offered to bring to the non-investor-owned utility community the opportunities and returns in the transmission area heretofore available only to IOU's regulated by FERC. The model is to plan, develop, own, and operate transmission jointly with public power and cooperatives. GridLiance will become a WIRES member effective July 1.
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Shorts/Member News
Fortis Inc. of Canada has agreed to acquire Michigan-based
ITC Holdings Corp.
, the transmission-line owner with the highest rate of return among U.S. electric utility owners, for $6.9 billion in cash and stock to add stable, regulated returns. ITC will continue as a stand-alone transmission company. Fortis, Canada's biggest utility owner by market value, is a power and natural gas distributor based in St. John's, Newfoundland.
ITC Holdings was a founding member of WIRES ten years ago and the first publicly-owned pure-play transmission company.
Eversource Energy
expects to start construction in late 2016 or early 2017 for its $777 million Northern Pass electric transmission project, with the project operational by the first half of 2019, company officials said May 5 during a first-quarter earnings call. The 192-mile, high-voltage, direct-current transmission line would deliver 1,090-MW from Hydro-Québec through New Hampshire to the grid operated by ISO New England Inc.
Representative Fred Upton (R-Mich), Chairman of the House Committee on Energy and Commerce, Prepares for some Serious FERC Oversight. Read Chairman Upton's letter .
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Legal Briefs
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The D.C. Court of Appeals for the District of Columbia Circuit announced in May that the full court will hear arguments on the
EPA's Clean Power Plan (CPP)
, rather than a panel of three judges - a practice known as sitting "en banc." The oral argument date for the regulatory package was pushed from June 2 to Sept. 27, suggesting that it would not be decided before the election. Implementation of the CPP, which would cut carbon emissions from the power sector 32% nationwide by 2030 from 2005 levels, was stayed by the Supreme Court as reported in our last Newsletter.
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Cases involving the FERC's policies and its jurisdiction seldom land before the U.S. Supreme Court. It is virtually unprecedented for three such cases to make their way to the High Court in the same year. The demarcation is often fuzzy between federal and state jurisdiction over interstate commerce and over energy industries that tend to be integrated from the local to the state and regional levels. In three Court cases under the Federal Power Act and the Natural Gas Act, FERC nevertheless fared very well against attempts to curtail its authority under the Natural Gas Act and the Federal Power Act. The cases are narrow and only time will tell whether they will have a significant impact under other facts, however.
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FERC v. Electric Power Supply Assn
(
136 S. Ct. 760 (2016)
involved a demand response, or voluntary curtailment of electricity usage, program run by a FERC-regulated RTO and whether FERC's claim that it was primarily wholesale and legitimately priced at locational marginal price (LMP) or whether DR occurs primarily in retail - i.e., state regulated - markets. The Court ruled that DR directly impacted wholesale transactions.
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If You Need, Own or Depend on Electric Transmission -
You Should Join WIRES!
WI
RES is the transmission industry's voice on key public policy issues at all levels of government. During this time of change and challenge in Washington and across the country, your support for WIRES - and participation in its educational and advocacy programs - are essential to building America's electrical grid to meet both current and emerging challenges.
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