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While Congress continues to struggle with the problem of fashioning forward-looking energy and climate legislation, two much less visible organizations have recently quietly laid a foundation for resolving one of the most intractable obstacles to widespread use of America’s renewable energy resources–the question of who pays for new transmission lines.

The first step was taken by the Southwest Power Pool (SPP), the regional body that oversees the electric transmission system in the windy southern Plains states (Nebraska, Kansas, Oklahoma, Missouri, and parts of Texas and Arkansas). SPP earlier this year approved a “highway-byway” approach to paying for new lines. The critical part of this approach is payment for the “highways”–the cost of major interstate power lines to carry electricity from windy areas to cities will be broadly spread among all of those who benefit.

Next was the Federal Energy Regulatory Commission (FERC), which recently approved SPP’s proposal. FERC Chairman Jon Wellinghoff’s comments during this action are of particular note:

[quote]Thank you for this presentation and your thoughtful work in drafting this order for the Commission’s consideration.

“SPP management and its Members have developed a proactive approach to planning for the reliability and economic needs of the SPP transmission system. It is also a flexible approach that allows SPP and its stakeholders to regularly assess whether that process is achieving its objectives and to adjust as the needs of the system change over time. They deserve praise for crafting a process that will allow their region to address some of the most pressing challenges facing the electricity industry. SPP has been proactive in its assessment of its transmission planning needs, and other regions may want to follow its lead so that the transmission infrastructure that is needed to maintain reliability, reduce congestion, and meet policy objectives is built. I am pleased to vote to approve SPP’s proposal.[/quote]

Let’s hope this marks the beginning of the end for a true “gridlock” that has largely stalled the construction of new transmission lines for the past 30 years, resulting in massive power blackouts and threatening to exert a continuing drag on America’s economy.

What happens when there’s suddenly too much renewable energy to meet a utility’s needs? That was the subject of a [url=http://green.blogs.nytimes.com/2010/07/07/sudden-surplus-calls-for-quick-thinking/]blog post[/url] today by Matthew Wald of the [i]New York Times[/i]. In the post, Wald describes how heavy spring rains, accompanied by strong winds, produced a sudden excess of both hydroelectric and wind power for the Bonneville Power Administration, which manages the utility system in the Pacific Northwest.

AWEA Manager of Transmission Policy Michael Goggin posted the following comment to Wald’s report:

[quote]It’s important to point out that wind plants’ superior technology and capabilities allowed them to play a critical role in helping the Bonneville Power Administration manage this unusual spring water runoff event. Unlike other power plants that have limited ability to reduce their output on command, wind plants can reduce their output to zero within a matter of seconds by pitching their blades out of the wind in the event that the grid has too much electricity. Of course, a more optimal outcome would be to transmit this zero-fuel-cost, zero-emissions electricity to other regions by upgrading our power grid so that it has greater capacity to transmit electricity from region to region.

This event is a testament to the amazing job grid operators have done for generations in managing the variability and unpredictability in electricity supply and demand, whether caused by an extreme heat wave, the sudden loss of a large conventional generator, or an abnormally large spring runoff. Building additional transmission capacity will give grid operators greater flexibility to accommodate such events by moving power from regions with excess power to regions that need it.

As the article notes, building additional transmission lines will improve our country’s ability to move clean energy from regions with abundant wind energy resources to regions that need the power. Generations ago our country upgraded our power grid to move the Pacific Northwest’s abundant hydroelectric resources to areas that need it, and now it is time to do the same thing for wind and solar, the clean energy resources of the 21st century. The Bonneville Power Administration has been actively working to build additional transmission infrastructure, and we encourage them to continue doing so. As noted in the article, making greater use of demand response resources, like timing the use of electric water heaters that are already installed in homes and businesses, can also play a role in making more efficient use of our existing grid.[/quote]

The [url=http://www.awea.org/GreenPowerSuperhighways.pdf]Green Power Superhighways report on transmission[/url], authored by AWEA and the Solar Energy Industries Association (SEIA), argues that federal leadership is needed to speed the process of building new interstate transmission lines. The reason for this is that when it comes to interstate lines, states always get bogged down in the question of who benefits the most and should pay the most for the new transmission.

Here’s a statistic that vividly demonstrates the problem:

Between 2000 and 2007, 14 interstate transmission lines were built, totaling 668 miles in length. During that same time period, FERC [the Federal Energy Regulatory Commission] approved 11,492 miles of natural gas pipelines, or 17 times as much.

Transmission reform is urgently needed, not only to take advantage of America’s vast wind resources, but to strengthen the utility system’s reliability and avoid costly blackouts. Hopefully, this low-profile but critical national infrastructure issue can be addressed soon in comprehensive energy and climate legislation.

Transmission remains the single biggest obstacle to realizing the full potential of wind and other forms of renewable energy. The latest proof of this thesis is a decision announced late last week by the Federal Energy Regulatory Commission. The case involved two utilities and several wind generators in the Midwest, and the Midwest Independent System Operator (MISO), the independent entity established by FERC to regulate transmission in a broad area of the Midwest.

The wind generators wanted to connect to the grid, to deliver power to their customers. The companies that operate the transmission in that region, Otter Tail Power Co. and Montana-Dakota Utilities Co. (MDU), a subsidiary of MDU Resources Group, wanted the wind companies to pay almost all the costs for the transmission improvements needed to carry the extra electricity. But the wind companies (and AWEA) argued that since other power generators would benefit from the grid improvements, the costs should be spread more broadly among MISO’s users.

MISO, the grid operator, and FERC, which oversees MISO, sided with the utilities. Their decision–announced quietly late on a Friday afternoon– illustrates the crux of the “cost allocation” issue that has been a stumbling block for transmission improvements: new transmission infrastructure for wind and other renewables can only be built if the costs are allocated broadly among all transmission users. But getting that accomplished is difficult, if not impossible, under the existing rules (and players) of the game.

AWEA’s Rob Gramlich, senior vice president for public policy, expressed the frustration felt by many in the wind industry, especially since there were less drastic solutions available for solving the problems faced by Otter Tail, and MDU. “This decision is baffling. How did we go from a problem for just two small utilities to a region-wide policy that hinders the transmission investment and renewable energy development that all four Commissioners say they want? It is not hard to guess what cost allocation plan the anti-transmission utilities in MISO will continue to push.”

He added, “At some point FERC and the states will need to exercise some leadership,” and noted that in its ruling last week, the FERC commissioners said their decision was an “interim approach” and that MISO was working on a new cost allocation system that they hope to unveil next year.

There was a bright spot on transmission today: the Obama Administration produced a memo of understanding (MOU to the wonks) that will streamline decisionmaking on siting new transmission on federal lands.

This is very significant because much of the new transmission is needed in the West, where most federal lands are. and because federal agencies don’t usually cooperate without many meetings and studies. As a result, lengthy delays in obtaining permits from federal agencies to build transmission lines across federal land are a major barrier to accessing the country’s best renewable energy resources.

AWEA CEO Denise Bode voiced enthusiastic support. “The wind industry applauds the Obama administration for recognizing the need to address transmission barriers and enacting a measure to improve the speed and ease with which transmission can be constructed across federal lands. This MOU is an important step towards putting more of our abundant renewable energy resources to use, powering American homes and businesses with clean, domestic sources of energy while creating thousands of high-paying jobs here in America,” she said.

But this is not the only action needed, Bode suggested. “The policy announced today is an important complement to legislative measures that have been proposed in the Senate to update policies that govern how transmission is planned, paid for, and permitted. Investment in our grid has lagged because our transmission policies have failed to keep up with changes in the electric sector, like the growing need to access renewable energy resources…We urge Congress, the Administration, and state and federal regulatory authorities to take further action to streamline transmission permitting processes and implement broad transmission cost allocation policies.”

The [i]New York Times[/i]‘s Matt Wald reports in his blog today on a [url=http://green.blogs.nytimes.com/2010/04/30/alliance-against-a-wind-rich-grid-2]seemingly surprising coalition of utilities and elected officials that opposes expansion of the nation’s electric transmission system[/url]. In our view, expressed by Manager of Transmission Policy Michael Goggin, the truth is far less surprising–it’s a group of companies using their monopoly power to keep inexpensive wind-generated electricity from flowing into their systems, reducing their profits, and saving their customers money. Check out Michael’s response in the second comment for more details.

An amendment currently included in energy legislation pending in the U.S. Senate could disrupt planning for new transmission lines and interfere with reaching national energy goals, a coalition of 62 companies and organizations warned Senate Leadership yesterday.

The seemingly minor language change, adopted by the Senate Energy Committee, deals with a critical (and eternal) issue: how the Federal Energy Regulatory Commission (FERC) determines who pays for new power lines. According to the coalition, it “would require lengthy, complex, cost-benefit analyses, invite litigation, and further contribute to uncertainty for investors.” (And according to us at AWEA, if there is one thing the current transmission planning process does [b]not[/b] need, it’s to be slowed down further from an already glacial pace.)

“The Senate cost allocation language would block grid investment right at the time when there is a desperate need to expand the transmission system to deliver clean energy, assure reliability, and remove constraints that result in higher wholesale power prices,” commented Joseph Kelliher, Executive Vice President of Federal Regulatory Affairs for FPL Group and a former FERC Chairman.

AWEA CEO Denise Bode concurred, adding, “As a former state regulator, I believe the Amendment would bias regulatory decision making in transmission, where costs are certain but benefits are large and difficult to precisely measure.”

A press release with additional information, including the full text of the letter, is available [url=http://www.modernizethegrid.com/documents/20091102-group-urges-congress.pdf]here[/url].

A [url=http://www.prnewswire.com/news-releases/midwest-iso-study-results-consistent-with-itcs-green-power-express-79247047.html]study[/url] by the Midwest Independent Transmission System Operator, Inc. (Midwest ISO) has concluded that a high-voltage electric transmission solution is needed to allow the continued growth of renewable energy resources in the Upper Midwest.

Joseph L. Welch, chairman, president and CEO of ITC Holdings Corp. ( ITC), said, “The Midwest ISO study verifies that a robust electric transmission system is necessary to address the nation’s desire to grow its renewable energy sources.” ITC proposed such a solution in February 2009 with The Green Power Express, an extra-high voltage electric transmission project.

Michael Goggin, AWEA’s manager of transmission policy, said, “The results show transmission is very cost effective in light of the benefits, and that many of the needed lines are common to all of the scenarios outlined in the report. We should get busy building these critically needed transmission lines.”

He added that for those lines to get built, MISO will need to adopt a cost allocation methodology that broadly spreads the cost of transmission upgrades. MISO recently issued a decision that did just the opposite.

Texas is number one in wind energy, not least for its forward-looking approach to getting transmission built to serve its wind projects. Here is an excellent [url=http://www.amarillo.com/stories/012410/opi_15606399.shtml]article[/url] by the state’s Public Utilities Commission Chairman Barry T. Smitherman on how the commission is approaching the prospect of approving transmission in the Texas Panhandle.
[quote]While the Panhandle has some of the best wind resources in North America, there aren’t enough power lines to support meaningful wind development. Therefore, it’s time to build the transmission lines needed to deliver this clean, Texas- based energy source to the rest of our growing state and continue to lower electricity prices in the process. And we must do it in a way that respects private property rights and maintains the natural beauty of the Texas Panhandle.[/quote]