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The meeting at the Federal Energy Regulatory Commission today could represent a major step toward the greater adoption of clean power.
The push toward electric vehicles, electric stoves, and a host of other appliances and conveniences only makes sense if that electricity is clean—not just the result of swapping out fossil fuel generation from coal for fossil fuel generation from oil and gas. Fortunately, renewables, defined by Grist as solar, wind, hydropower, geothermal, and biomass, have been expanding rapidly over the last decade, putting the vision of a completely clean power sector closer to reality.
The U.S. is now at about 22 percent renewables on the grid, and solar has increased eightfold in the last ten years. In the last three years in California, battery storage has grown tenfold, equal to five nuclear reactors and enough to begin to quiet the claims that renewable power cannot serve America’s electricity needs because it is not the kind of “baseload” power that is always generating throughout the day. If battery storage can ensure smooth distribution of power regardless of time of day, then renewables really can dominate the grid.
But though in some sense the debate about whether to move to clean power is over and the clean-energy advocates have won, 22 is not that close to 100. One reason why is the large queue of utility-scale renewables that want to but cannot get connected to the grid, because of the dearth of transmission capacity available. A critical meeting at the Federal Energy Regulatory Commission (FERC) today is intended to deal with many of the major challenges to that, and could present a major step in electrifying America.
The new rule before FERC today deals with two of what advocates describe as the “three Ps” that have held transmission back: planning, permitting, and paying. FERC’s new rule is specifically an update to the planning process, but it also seeks to untie the Gordian knot of cost allocation, which determines who pays for what when transmission crosses state lines and goes through multiple system operators.
The permitting process also got a lift last month when the Department of Energy (DOE) updated its rules on transmission lines, allowing categorical exclusions from the National Environmental Policy Act (NEPA) for upgrades and rebuilds that could significantly expand the amount of energy that can move across existing power lines.
But these advances face roadblocks from within the industry. Many power companies don’t really want to spend money on new lines or upgrades and don’t want to pay for them if they are built. And even the alleged allies of getting transmission built don’t always act that way. Sen. Joe Manchin (D-WV), elevated as a golden god for his advocacy for permitting reforms, said late last month he would seek to overturn the DOE’s permitting rule, because it’s not exactly the permitting changes he previously put forward.
Turf wars aside, clean-energy advocates are eagerly anticipating today’s FERC planning rule, though it falls short of a comprehensive reboot. “All of these regulatory actions are essentially compensating for the lack of a comprehensive legislative solution,” said Christina Hayes, executive director of Americans for a Clean Energy Grid and a former FERC staffer. “We hope these pieces cobbled together hold, but it’s not a guarantee.”
FERC PROPOSED THIS RULE MORE THAN TWO YEARS AGO, which points to a slowness that is disturbingly normal. Hayes pointed out that the seeds of the current changes came after the adoption of Order 1000 on Transmission Planning and Cost Allocation back in 2011, when she served as an adviser to one of the commissioners. “I didn’t have time to plan for my kid’s third birthday because of our work on that,” she said. “My kids are now shaving and driving.”
The proposed rule requires more coordinated planning for the future of the grid among the various regulators and regional power providers. Elise Caplan, who runs regulatory affairs at the American Council on Renewable Energy, a coalition of stakeholders in the sector, said that regional providers often limit the benefits of transmission to savings in production and maintenance. “There are significant benefits in other areas,” she said, citing the ability to serve more customers, avoid congestion on power lines, and gain flexibility to continue supplying power when a storm knocks out one plant.
The new planning rule may include a requirement for a 20-year analysis with an expansion of the calculation of benefits. This could force power companies to look ahead at their needs rather than confining themselves to near-term thinking about where the grid is most stressed. It could also include requirements on what grid-enhancing technologies should be used for new power lines as well as for upgrades.
These technologies, as well as a process sometimes called reconductoring, could also squeeze a lot more out of the grid we already have. The word “reconductoring” is in the tradition of energy wonks using esoteric neologisms to describe completely normal processes, in this case just upgrading the actual transmission wires. An advanced “conductor,” or wire, would limit the energy loss from transporting power, and allow much more energy to go across the line. It involves little beyond the wire replacement and upgrades to some equipment at the substations.
The costs of reconductoring are up front, and utility companies have been reluctant to fork over the cash.
While advocates are careful to say that reconductoring cannot be the entire solution to the grid challenges, it does eliminate much of the costliest capital expenditures while increasing, and in some cases quadrupling, transmission capacity. The fixes in many cases can be built without having to take down that part of the grid for maintenance. And the DOE rule on permitting allows for reconductoring along lines that are longer than 20 miles to be eligible for the categorical exclusion that significantly reduces environmental study and accelerates the timeline.
The costs of reconductoring are up front, however, and utility companies have been reluctant to fork over the cash, even though it would cost them more in the long run to build new lines to keep up with power needs. One problem is that some grid-enhancing technologies are considered ongoing maintenance and not capital expenditures, and therefore the utility cannot increase rates to offset the costs. But Caplan argues that upgrades “more than pay for themselves,” not only to reduce the need for build-out but also reducing technical problems with the power lines.
The administration is essentially bribing these power companies to upgrade their wires, by making $10.5 billion available through the Grid Resilience and Innovation Partnership (GRIP) to help upgrade 100,000 miles of transmission over the next five years. The FERC rules could act as a hammer to require more upgrades as part of overall planning, and remove the cautiousness utilities have around new technologies.
Cost allocation is another major hurdle for new building or even upgrades. Often the benefits to increasing transmission capacity go to an overlapping set of multiple utilities. But each one wants to forward as little funding as possible to pay the freight. It’s a massive free-rider problem and there isn’t really a definitive way to handle who pays for what. Transmission spending has recently been limited to areas that are within one utility’s control, to avoid this problem. Unfortunately, that has really degraded the interregional grid.
The new rule may include a component that allows states to allocate costs among the various payers—both utilities and in some cases the states themselves. But if they fail to come to agreement, then FERC can step in with a methodology to determine payments based on long-term regional benefit. “Getting the required benefits analysis right feeds into cost allocation, there is no wall in between,” Caplan said. The proposed rule, however, did not prescribe a set of defined benefits for cost allocation, as Sen. Chuck Schumer (D-NY) warned in a letter to FERC.
It’s unclear where FERC will come down. Allison Clements, a Democratic commissioner, clearly wants the strongest possible rule, with maximum pressure on states to work together on capacity needs. She recently said in a FERC ruling that “making necessary transmission upgrades contingent on a state’s voluntary assumption of costs could imperil reliability.”
But Mark Christie, currently the lone Republican on FERC, said recently that “you cannot cut states out of the process” of transmission build-out, which is at odds with what Clements is trying to set up.
Willie Phillips, the Democratic FERC chair, whose pro-utility record was scrutinized at the Prospect before his confirmation, has put a priority on getting the rule done. But we don’t know which way he will lean on the final rule, whether he will put in real teeth to force planning and cost allocation or pull back.
Moreover, finalizing a rule doesn’t mean that it will be implemented with the same spirit. Sen. Manchin decided not to allow former chairman Richard Glick to get a hearing at the end of 2022, creating a vacancy on the commission that has not yet been filled. FERC is currently operating with just three of its five members; President Biden has nominated three others, to fill the two vacancies and to replace Clements, whose term expires at the end of June.
One of Biden’s Democratic nominees, David Rosner, is a FERC staffer who was detailed to Manchin’s Senate office. Climate hawks have expressed despair that the agency might have a pro-corporate tilt once these new nominees are confirmed, at the request of Manchin, who is retiring from office anyway.
What’s definitely not included in the rule is FERC’s “backstop” siting authority, which could preempt state permitting processes in so-called “national interest” corridors. FERC has a separate proposed rule on this authority, boosted by a clarification in the bipartisan infrastructure bill, but the agency hasn’t decided whether to finalize it yet. But the DOE last week designated ten national interest corridors, a clear prelude to get that authority moving and make transmission upgrades and build-out in those areas eligible for loans. That designation is preliminary, however.
Advocates would also love to see a tax credit for new transmission, in the spirit of the Inflation Reduction Act’s expenditures through the tax code for clean-power generation. And in general, they want to see a strong commitment to a clean-power future.
“When the bridge in Baltimore went down, it impacted I-95,” Hayes said. “The federal government has stepped in to address this component of the highway system. Transmission has broad benefits and cost should be allocated in the same way.”
