FERC Rhetoric on Cost Allocation Contradicted by Reality of Transmission Order 1000, Coalition for Fair Transmission Policy President Sue Sheridan Says During E&ETV Interview

Sep 26, 2011, 17:53 ET from Coalition for Fair Transmission Policy

WASHINGTON, Sept. 26, 2011 /PRNewswire-USNewswire/ -- The Federal Energy Regulatory Commission's statement that the costs of new transmission lines must be allocated at least roughly commensurate with estimated benefits is "encouraging," but the Coalition for Fair Transmission Policy "is afraid there's a lot of slippage between the rhetoric and the reality" in FERC's Order 1000, CFTP President and General Counsel Sue Sheridan said in a recent interview with E&ETV's OnPoint.

For example, FERC's order on transmission planning and cost allocation "would still allow subsidization of long-distance lines when there might be cheaper, renewable sources closer to home," Sheridan told E&ETV. "And all of that would add up to costs that aren't just and reasonable for consumers as the [Federal] Power Act requires," she said. "If you socialize the costs of certain transmission, then it can be seen under the Power Act as an undue preference, which means that there aren't just and reasonable rates resulting from that kind of socialized spreading of costs."  

Sheridan also noted that FERC's rulemaking failed to clarify several important issues. "FERC specifically said it wouldn't define benefits. And I think that leaves an awful lot of uncertainty for us based on both the rule and also on the MISO decision, where that was one of the chief concerns, whether benefits had been assigned to the proper customers," Sheridan said. "We could have a number of regions coming up with a vast difference between what's considered a benefit and consumers who in some regions are paying for benefits that go to consumers in other states." FERC's MISO order addressing cost allocation for new transmission in the Midwest would force Michigan to pay 20 percent of an estimated $16 billion for the cost of new transmission even if Michigan consumers receive none of the benefits resulting from these power lines.

Asked whether FERC Order 1000 will encourage development of renewable energy, Sheridan responded that the commission's approach simply favors long-distance transmission lines needed to deliver electricity hundreds of miles to markets for that clean power. "We think it biases and skews market choices toward distant renewables when there might well be cheaper renewables closer to home," Sheridan emphasized.  

Along with dozens of other organizations, the coalition has filed a rehearing request asking FERC to provide clarity on several issues and to define benefits. "There's a way to determine whether or not the benefits are proportionate to the cost imposed and that's something FERC has been doing forever," Sheridan noted. "It's the heart of the question in the pending Seventh Circuit decision, which had to do with the cost allocation in PJM," she added. "Of course, anyone who filed for rehearing is eligible to go to court to bring a suit if they want to, but we've just got to see what comes on the rehearing decisions," Sheridan said.

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 which 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