FERC Response to Federal Seventh Circuit Rejection

Back in the summer of 2009, the US 7th Circuit Court of Appeals rejected FERC’s attempt to force all rate payers in PJM Interconnection to pay for high voltage transmission projects like PATH.  Instead of throwing out FERC’s cost recovery system, the 7th Circuit panel remanded the case to FERC, requiring FERC to identify the benefits that rate payers would derive from projects hundreds of miles away.

FERC has now filed its response to the 7th Circuit’s 2009 remand order.  Keryn has been covering FERC’s response over at StopPATH WV.  She has two recent posts on the situation here and here.

From what I can tell from the remand response, FERC still has a long way to go to justify burdening rate payers far from claimed benefits of new power line projects with the costs of those projects.  FERC pulls a lot of numbers out of the air to justify the “benefits” of distant transmission projects, but provides little clear reasoning or justification behind those numbers.  Here is a direct link to FERC’s remand response.

If you are interested in following the PATH situation, you need to stay on top of this case.  It has huge implications for how PJM will finance its high voltage transmission projects in the future.  It also has nationwide relevance to all of FERC’s new plans to ramrod transmission projects across the US.

3 thoughts on “FERC Response to Federal Seventh Circuit Rejection

  1. It seems that the bottom line here is that the future of renewable energy does not include more high voltage transmission since by its very nature is local power to be used where it is produced or in close proximity thereof.

    • The point that Judge Posner made, in his decision against FERC, was that the idea of making rate payers on one end of PJM pay for power lines that would only benefit rate payers on the far other end of PJM (In this case, the aggrieved rate payers were in Illinois, expected to pay for projects that only helped rate payers in NJ.) is entirely contrary to all previous federal court precendent in all FERC rate cases. So this is a big deal.

      The power companies and FERC are trying to claim that their new rate recovery ideas are needed to move land based renewable power (mainly land based wind power) to the coasts. But the best wind resources are right on or just offshore from the coasts. But powerful political forces (including Sen. Ted Kennedy, former Gov. Mitt Romney and oil baron David Koch) have combined to set US offshore wind power development back 20 years. This whole fiasco has shown that, as you point out, locally based electric generation, like rooftop PV, is cheaper, quicker to install, creates more jobs, and — eliminates all need for expensive high voltage transmission projects.

  2. Problem = favoritism toward utility scale renewables located in remote areas without access to transmission.

    Until states with RPS goals wake up and realize that in order to see real benefits they need to develop in-state/local renewables to meet their goals, we’re going to have this race to the finish line by competing investor-owned utilities developing utility scale renewables that will require hundreds of billions of dollars of socialized transmission investment.

    It doesn’t take much brain power to realize that RPS goals limited to in-state development will not only end up being cheaper for electric consumers by not requiring new long-distance transmission, but it’s also an economic boon to the state with jobs, tax revenue and manufacturing. I don’t have to tell you, JB, about how much green energy jobs can help a community.

    Instead, these clueless morons prefer to sit back and have their RPS goals taken care of by a handful of midwestern states at a huge cost to their electric consumers. All the jobs and economic growth will be concentrated in just a few midwestern states while the east coast continues to limp along whining about jobs and the economy. Duh. Sometimes, it’s really hard to fix stupid and make the light bulb go on.

    And as far as what FERC did — they’re probably going to regret it. Order No. 1000 is hanging out there requiring RTOs to develop cost allocation methods that ensure that charges are roughly commensurate with benefits. And then FERC gives them an example like this… and tells them not to use it to come up with new cost allocation methodologies. FERC was just lazy here. The hybrid methodology is “just and reasonable” but if FERC had jumped horses in mid-stream here, it would have been more work, so they stuck with trying to justify an earlier mistake because it was just easier. But, FERC set the guidelines here and when the new regional cost allocations methods are developed that reference what FERC did in this case as precedent, it’s just going to end up in even more controversy. Sometimes you’ve just gotta take the high road and become a good example. FERC disappoints here.

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