Transmission

WPUDA urges caution in revising federal transmission policy

The U.S. electrical grid needs to be expanded and enhanced to ensure reliability, facilitate wholesale power sales to reduce costs to consumers, and bring renewable resources located far from the grid to load.

It is also clear that two primary barriers to the construction of new transmission lines are siting and cost allocations.

However, before moving to authorize full federal siting authority, which some parties have called for, WPUDA believes Congress should give the existing federal “backstop” authority a chance to work. If necessary, the limited existing authority can be changed to make it a more workable tool.

The National Interest Electric Transmission Corridor program, which Congress approved in 2005, directed the Department of Energy to study electric transmission congestion and to designate corridors in congested areas where new transmission facilities are needed.

The Federal Energy Regulatory Commission is authorized to use federal siting authority in those designated corridors when states lack authority to site multi-state transmission lines or when a state has delayed action on an application for more than a year.

To date, that “backstop” authority has not been tested.

We also believe that Congress should direct FERC to establish principles, through rulemaking, to allocate the costs of new transmission among the various entities that will benefit over the life of the project.
Some transmission owners are telling Congress that obtaining financing is difficult. This is generally not generally the case.

Investments in transmission facilities that have been approved by a state public utility commission are entitled to a guaranteed rate of return. FERC is currently approving rates of return of between 10 percent and 12 percent as the “base” return on equity. With incentives some new lines are earning 13 to 14 percent. There is no shortage of investors willing to invest in these kinds of projects.

Congress should also respect existing regional planning processes. WPUDA is pleased with the role we have and the way the process is working in the Pacific Northwest vis-à-vis ColumbiaGrid.

Moreover, needed transmission is getting built. To that end, we appreciate the Washington delegation’s help in getting the Bonneville Power Administration’s borrowing authority increased for this and other purposes.

Lastly, Congress should not give preference to renewable resources over transmission of baseload or other generation. Preference for renewable resources would run counter to existing federal transmission policy that favors open, non-discriminatory access to transmission and could create serious reliability and security issues.

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