FERC Takes Next Step Toward Less Reliable Grid
Our old buddy Matt Wald had a story in the New York Times last week about a new rule published by FERC. As usual, Mr. Wald repeats FERC’s claims, but fails to make the important connections. In this post, we will try to put the new FERC rule in a larger context, so that it makes sense, particularly for Power Line readers who are trying to figure out the chances of a PATH revival.
First, let’s start with grid reliability expert George Loehr’s statement to the Senate energy committee in 2008:
To enhance reliability and security it’s best to locate generating sources, the sources of power and other resources closer to the load. But that’s not always practical. I’m talking about local generation distributed generation and DSM.
Now some people would say that the addition into transmission will always increase reliability. But that’s not true.
Now, take a look at the map prepared by AEP for the US Dept. of Energy showing the company’s wish list for NEW 765 kV transmission lines. This federal push to create a single national transmission grid so that electricity traders at Goldman Sachs and JPMorgan Chase can trade electricity coast to coast also requires a scheme for paying the $100 billion that AEP estimated such a nationalized system would cost. FERC has been putting this system in place as well. If you have been following the PATH case, you know that forcing all consumers to pay for new, unnecessary transmission lines is a high priority for FERC and regional transmission organizations like PJM.
The rule that FERC published last week is the next step in nationalizing the transmission grid and turning it over to electricity traders and power conglomerates. The main purpose of the new rule is to create planning and cost allocation structures for transmission lines that go from one regional transmission organization to another. If you think transmission planning in PJM is a mess, just wait until PJM and MISO have to do transmission planning and cost allocation. The new FERC rule creates a legal smokescreen for cost allocation and planning problems that are guaranteed to appear in multi-RTO projects.
So, look at AEP’s map again. In order to create this monster grid, AEP and other power conglomerates need a system for building transmission lines that are hundreds of miles long, involving two, possibly three RTOs. Although PATH was to be 250 miles long and spanned three states, it was to be built entirely within PJM Interconnection. The new FERC rule is setting up a system for much longer lines.
The other important element in the new FERC rule has to do with the new code phrase “public policy requirements.” The summary of the planning section of the new rule states:
Local and regional transmission planning processes must consider transmission needs driven by public policy requirements established by state or federal laws or regulations. Each public utility transmission provider must establish procedures to identify transmission needs driven by public policy requirements and evaluate proposed solutions to those transmission needs.
If you have read my post from last April about PJM’s plan to change its transmission planning process, this part of FERC’s rule will ring a bell. FERC’s new rule is another step toward using land based Big Wind and Big Solar projects to justify new transmission lines. “Public policy requirements” are the code words for using state renewable portfolio standards to force new transmission construction. The idea is that new interstate/inter-regional transmission lines are needed to being Big Wind/Solar power from the western US to meet standards set in eastern states.
So FERC’s new rule is the next step in rigging the game to create a less reliable power grid. FERC continues to promote long distance transfers of electricity to major load centers in the US when the nation’s best wind resources lie less than 20 miles offshore on the Atlantic coast and in the Great Lakes.