DOE and FERC collaboration on back stop siting is positive, yet issues remain

  • Collaboration may spur faster state siting
  • Reasoning behind DOE’s decision unclear

U.S. Energy Secretary Steven Chu’s decision to have his department work closer with FERC in reviewing proposed electric transmission projects under section 216 of the Federal Power Act, as an alternative to delegating additional authority to FERC, is a positive move, but issues remain, industry sources told TransmissionHub.

Frederick Anderson, partner at McKenna Long & Aldridge, said the announcement raises several issues, including whether it is smart for DOE to retain the authority rather than let FERC assume it.

“If we’re going to build additional grid capacity, the lines will cross a huge variety of land uses, wetlands, and scenic and historic areas,” he said, adding that state and local governments will be keenly interested.

“Having the secretary involved is positive – that’s a way to keep this moving on the secretarial level,” Anderson said. “A negative – cabinet-level attention may politicize things a bit. While we may need a new line to relieve pressure on the existing grid, it might turn out that for political reasons, extra-technical considerations may prevail.”

Anderson said the bottom line is that it is positive that there is any attention and movement at all, but cautioned that after the Solyndra episode, for instance, DOE might lapse back into extreme caution and inability to move decisively. Solyndra, which was awarded a DOE loan guarantee, has filed for bankruptcy.

“What is truly remarkable is that it makes news when an independent regulatory agency joined at the hip with a cabinet Department agree to cooperate on a pressing issue like our overloaded electrical grid,” Anderson said. He added that DOE and FERC should routinely do cooperate without having to make an announcement about it.

Benefits of working together

There is a bit more political control at DOE than there is at FERC from the administration and FERC is a bit more independent, which may have come into play in the decision, David Flynn, a partner at Phillips Lytle, said.

“There is a recognition that building up a more robust grid is going to require some significant federal investment and really, FERC doesn’t have a lot of ways to get money and put [it] into projects, whereas that’s a big part of what DOE does,” Flynn said, noting that DOE can get money from Congress and allocate it to projects.

A big driver for moving the grid forward is the ability to better use and develop renewable energy resources, he said, noting that that may be more of an agenda issue for DOE than it is for FERC. “DOE wanted to make sure that transmission projects were based in part to increased deployment of renewables and at a different level of priority you might see from FERC on that issue,” he said.

Katherine Hamilton, a director at Quinn Gillespie & Associates, said Oct. 19, “It’s really important that the agencies work together,” noting that they have different skill sets.

For instance, DOE is good at evaluating technology, while FERC is good at evaluating reliability and cost-effectiveness and it sets rules for the energy market. “DOE can provide the underpinning research and analysis that will allow for the rules to be done so that grid reliability is maintained and so that everything is done in a cost-effective manner for customers,” she added.

Will it work?

Jason Johns, an attorney at Stoel Rives, said the announcement marks positive steps as the two agencies, in consultation with each other, may improve the transmission planning process and the identification of areas that need congestion relief.

While this may be a slightly positive step on transmission planning, with respect to section 16 and building transmission, he said this will not “get us closer to that under 216” as section 216 is, from a federal siting perspective, essentially broken by a couple of court decisions.

“Without a Congressional fix, FERC and DOE can plan to relieve congestion, but if they can’t site transmission using back stop authority, section 216 isn’t very useful,” he said.

Perhaps what this will do, along with Order 1000, is create some momentum for states to move faster on transmission siting. “[M]aybe this joint statement, as well as Order 1000, signals a little more activity at the federal level with respect to transmission infrastructure and that may provide impetus to states to get moving themselves,” Johns added.

Another industry source said she was surprised by the amount of pushback that the proposal got from different quarters. “There were lots of comments filed on FERC’s proposal,” she said. “I don’t know what they thought about over there [at DOE] because they certainly didn’t address people’s concerns. They just said, ‘We’re not doing that, we’re just doing this,’ in a one-page response.”

She noted that DOE as an executive branch agency with expertise over all aspects of the energy field would have some resources to bear on corridor designation and the congestion study process.

“FERC has expertise as well on its side,” the industry source said. “The idea of pooling that together and each one bringing their strengths to the process, that actually makes some sense.”

About Corina Rivera-Linares 2886 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.