SHOULD RENEWABLE ENERGY BE DEVELOPED LOCALLY, regardless of cost or efficiency, or should it come from where it is created most efficiently, with expensive transmission lines built to move the energy? Will the policies that expedite transmission development and determine who pays for it be clarified?
I recently discussed these questions with Dave Raskin, a Washington, D.C.- based partner and head of the Electric Power Practice at Steptoe & Johnson, who is immersed in Federal Energy Regulatory Commission (FERC) policy. His key clients include the Tres Amigas project in New Mexico, which is seeking to link the three transmission interconnections in the United States, and Northeast Utilities, which is in a partnership to build a line in New Hampshire to connect Quebec to New England.
Is electricity local, regional or national?
"There are two things that have been around a while and haven't been resolved," Raskin said. "The first: Is electricity a local business or is it a regional or national business? Seems to me we haven't made up our minds yet which one it is."
He cited the still-evolving rules around open access to transmission that has been a policy question since the regional transmission operator model was created in the late 1990s. Raskin said people in the industry seem to change their minds on this question fairly regularly.
"The second issue is to what extent are we going to rely on renewables? We have 30-plus states with renewable portfolio standards, so do they really believe in them, and even when they believe in them, are they going to support transmission to move renewable (energy) from one part of the country to another, or do they really hope to create jobs locally, just to get renewable built within their own states, even if they're not efficient?" he wondered.
Transmission vs. RPS mandates
These questions have not been addressed sufficiently, but the answers will have to be determined fairly soon. Although many states' mandates have been attained while the requirements have been fairly small, other states have requirements for 10 percent or more of electricity sales to come from renewable sources within a few years. And that doesn't even consider what happens if a national mandate is ever enacted. "At some point the country is going to have to move in one direction or another on this. If we're going to have a 20 percent or 15 percent RPS nationally, we're going to have to build a lot of transmission, there's just no way around it," Raskin added. "At some point we're going to have a national conversation before we hit a wall. Nuclear is off the table and coal is not going to get built."
So if a transmission build-out is the answer, how does that occur?
There are no any easy answers there, either, Raskin noted.
As discussed recently, FERC has embarked on a rulemaking proceeding with the emphasis on regional planning.
"That's controversial because, for the first time, FERC is talking about regional and interregional planning in parts of the country that have not done that previously," Raskin said. "I think it's going to be difficult to get the rules in place and actually put (them) into effect.
"The second aspect is cost allocation. That's a very difficult issue because there's no right answer."
How broadly costs are spread has been tackled regionally, but the concept has been under attack in the U.S. Senate.
The third issue is siting, with federal "back-stop authority" under the Energy Policy Act of 2005 coming under attack in the courts. More explicit legislation from Congress may be necessary, an idea that has not gained much currency.
"Hopefully, at some point, Congress will realize that by not expanding the authority that FERC already has, they're creating a situation that is inefficient," Raskin said.
Not yet, so far. But it seems that Raskin's questions about sourcing renewables have to be answered first.