WASHINGTON, April 10, 2012 /PRNewswire-USNewswire/ -- Speaking at a utility industry conference last week, Coalition for Fair Transmission Policy President Sue Sheridan highlighted concerns with the Federal Energy Regulatory Commission's Order 1000, an unprecedented and massive rulemaking on transmission planning and the allocation of costs for new power lines.
"Getting cost allocation right is essential if we are going to ensure consumers can take advantage of the lowest-cost clean energy alternatives," Sheridan emphasized. "Masking price signals through the broad socialization of transmission costs will lead to poor choices about our energy sources and place local renewables at a competitive disadvantage with distant solar or wind projects located hundreds of miles from consumers," Sheridan said.
Sheridan spoke on April 4 at the Edison Electric Institute's Spring 2012 Transmission, Distribution and Metering Conference in Newport, R.I.
FERC's Order 1000 issued last July required utilities to file regional transmission plans that account for state and federal policy requirements and to develop inter-regional planning agreements. Utilities must also file cost-allocation methodologies. The costs of new transmission "must be allocated at least roughly commensurate with estimated benefits," FERC stated.
The Coalition's concerns were not alleviated by Order 1000. On planning, FERC must ensure that state legislative and regulatory prerogatives are not pre-empted in the regional planning process and 'bottom up' regional planning processes should be required, Sheridan said. "As for cost allocation, we agree with FERC that 'beneficiary pays' is the right principle, but what matters most is how 'benefits' are defined," Sheridan said.
"FERC's lack of clarity provides the opportunity to get it right — or terribly wrong," Sheridan said. "We must keep the objectives of transmission planning and cost allocation in the forefront by ensuring reliability and efficient markets for generation while providing electricity to end-use customers at the lowest reasonable cost," she added.
If the wrong transmission policy is implemented, consumers could pay a steep price, Sheridan said. "Local renewable generation would be unable to compete with remote resources if consumers are subsidizing long-distance interstate power lines," she noted. Consumers could be asked to pay for transmission lines even when the benefits are speculative at best, and they could also be on the hook for billions of dollars even when there is no basis to ensure that new investment in transmission is needed, Sheridan said.
The right transmission policy can best be achieved by "bottom up" planning based on utility and customer needs as well as by defining—and measuring—benefits correctly. Then all users of the transmission system will face the right price signals, generation will be located in the right places, and consumers will be treated fairly, Sheridan said.
FERC may not have the final say on transmission policy. Sheridan noted that last year seven U.S. senators introduced the Electric Transmission Consumer Protection Act, which protects consumers from paying for transmission projects unless they receive "measurable benefits." Several senators have also requested hearings on FERC transmission policy.
Congressional efforts would reinvigorate the debate on national transmission policy. "We support expanding the nation's transmission system and the use of both renewable and other clean energy resources, including demand-side management and energy efficiency resources, in the most cost-effective manner — and in the best interests of consumers," Sheridan concluded.
About the Coalition:
The Coalition's seven members are CMS Energy Corporation, Consolidated Edison, Inc., DTE Energy Company, Progress Energy Inc., Public Service Enterprise Group, SCANA Corporation, and Southern Company. More than 28 percent of U.S. electric customers, representing 26 states, are served by utilities and companies that are either formal members of the coalition or are on record supporting the group's goals. For more information, visit the Coalition's website, www.fairtransmission.org.
SOURCE Coalition for Fair Transmission Policy