Transmission policy could transcend Washington gridlock

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Optimism regarding the federal energy policy debate has tempered in recent years. Opinions differ widely on how to best handle a number of issues, including hydraulic fracturing, offshore drilling and greenhouse gases.  With President Obama in the White House for another four years, both sides of the debate wonder how the policy discussion will shift in the near term.

Congestion issues and disasters such as Superstorm Sandy are clear indicators that the U.S. needs to beef up transmission infrastructure.

This lack of policy development looms large in the energy industry. Utilities and transmission companies are facing down new compliance regulations on air quality and coal generation, but remain unsure about what renewable and generation policies will come in 2013 and beyond. This affects generation and transmission planning, and makes spending riskier.

"It's no secret that the past few years have been among the most difficult and unfortunately least productive in terms of enacting new legislation, including energy bills," said Sue Sheridan, President of the Coalition for Fair Transmission Policy (CFTP), speaking at TransmissionHub in early December.

Transmission primed for expansion

But while it's pointless to speculate about how a gridlocked Congress might address renewable tax credits or carbon emissions, transmission policy is one sector of the energy industry that could enjoy relatively smooth sailing going forward. Congestion issues and disasters such as Superstorm Sandy are clear indicators that the U.S. needs to beef up transmission infrastructure.

Fortunately for utilities, transmission policy is one issue that has managed, relatively speaking, to avoid the Beltway rancor. Although disagreements crop up about cost, siting, or environmental impacts, new transmission projects tend to be welcomed.  The simple reason is that utilities, customers, and renewable energy developers all require a sturdy transmission and distribution system in order to get electricity from point A to point B. Without it, development sputters and reliability falters.

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Transmission policy is one issue that has managed, relatively speaking, to avoid the Beltway rancor.  ___________________________

"Robust transmission policy really impacts all electricity generation, and frankly benefits all consumers in all regions," said Frank Maisano, an energy communications professional with international lawfirm Bracewell & Guiliani.

Maisano reminded the conference audience that modern transmission increases power reliability, which lowers electricity costs and consumer bills.

Maisano called Obama's re-election good for transmission policy, and offered a positive prognosis of expanded transmission construction. This will be driven, in large part, by the need to support expected renewable energy growth.

"The renewable industry is poised to succeed, and they need transmission opportunities to make them go," Maisano said.

Specifically, additional transmission will be required as offshore and rural wind and solar projects are built. Ocean and wave power are also becoming popular sources of renewable generation, and transmission will be needed to bring this power onshore. But there is still a lack of transmission in both arenas.

Transmission policy outlook

A major aspect of transmission draws off the Federal Power Act, which ensures that electricity consumers pay just and reasonable rates. Transmission is a key part of achieving this equity, and must be done in ways that foster reliability and balance consumer cost with concrete, attributable benefits.

The White House, Congress and Federal Energy Regulatory Commission (FERC), among other agencies, all have a hand in shaping new transmission policy. The U.S. Department of Energy tried to streamline the transmission citing process several years ago by establishing National Interest Electric Transmission Corridors under the Federal Power Act authority. But these designations were struck down by the courts, and a new model remains elusive.

But while the corridors did not mandate any transmission citing, they would have helped identify the most congested areas and hone in on transmission needs. Maisano predicted a legislative effort that would try to revisit corridors in order to try and streamline and fast-track transmission development.

"You really do need some ways to try and improve" transmission citing, he said.

Transmission development is also going to be hampered by continued confusion over FERC Order 1000, which presents an obstacle by requiring regional planning and cost allocation at the state energy commission level. Groups like the CFTP have called for a rehearing on Order 1000, but these requests have failed to gain traction.

While Sheridan noted that there's no guarantee that Washington gridlock will end, she said there are other ways to drive the conversation forward.

"Congress doesn't have to move legislation to be effective," Sheridan said. "Oversight hearings are a way for Congress to look at issues and send signals to agencies."

FERC and transmission policy could certainly be a subject of one of these hearings, and it would allow Congress an opportunity to ask questions and get a better understanding of how to address transmission.

Whatever happens, transmission policy is going to be a key tool as the government works to implement President Obama's "all of the above" energy policy and secure a future of reliable, efficient, and affordable electricity.