Since TransmissionHub’s launch in September, numerous transmission news has occurred, including the Obama administration announcing in October that it would accelerate the permitting and construction of seven proposed electric transmission lines, and FERC rejecting the virtual divestiture solution that Duke Energy (NYSE:DUK) and Progress Energy (NYSE:PGN) proposed to mitigate market power concerns arising from their merger.
Below are a few examples of the major happenings TransmissionHub covered in 2011.
Obama administration to accelerate permitting, construction of 7 projects across 12 states
The Obama administration said Oct. 5 that it would accelerate the permitting and construction of seven proposed electric transmission lines that cross 12 states, including Oregon, Wisconsin and New Jersey.
The chosen projects include the CapX2020 Hampton-Rochester-La Crosse transmission line, which includes about 125 miles of 345-kV line and 15 to 18 miles of 161-kV line, and whose targeted in-service date is between 2013 and 2015; the approximately 145-mile, 500-kV Susquehanna to Roseland line proposed by PPL’s (NYSE:PPL) PPL Electric Utilities and Public Service Enterprise Group (NYSE:PEG) subsidiary Public Service Electric and Gas that would go from the Susquehanna substation in Pennsylvania to the Roseland substation in New Jersey; and the 700-mile, 600-kV TransWest Express Transmission Project, whose development phase will be funded by the Western Area Power Administration and TransWest Express.
CapX2020 is a joint initiative of 11 transmission-owning utilities in Minnesota and the surrounding region, including Xcel Energy (NYSE:XEL) to expand the electric transmission grid.
Duke/Progress: FERC rejection of virtual divestiture a ‘surprise’
FERC’s rejection of the virtual divestiture solution that Duke Energy and Progress Energy proposed to mitigate market power concerns arising from their merger came as a surprise to the companies, a Progress spokesperson told TransmissionHub Dec. 16.
“It’s a bit of a surprise in this case because we believed the mitigation plan did address the issues that were raised,” he said.
The North Carolina-based utilities are evaluating all of the mitigation measures the commission offered in September. The companies expect to have another proposed solution and specific merger timeline “in the coming days,” the spokesperson said at the time.
Though the proposal was rejected, a virtual divestiture is not off the table.
“Our analysis and discussions of potential remedies is going to span the whole scope of what’s available and attempt to address FERC’s concerns without eroding any of the value of the merger,” the spokesperson said.
MISO board approves MTEP 11
The board of directors of the Midwest Independent Transmission System Operator on Dec. 8 unanimously approved MISO’s Transmission Expansion Plan 2011, bringing more than $2bn in annual benefits for decades to Midwest energy consumers.
MISO also said that when integrated into the existing power transmission network, the projects approved in MTEP11 will improve system reliability, connect 2,700 MW of queued generation and lower the cost of delivered energy, while enabling energy policy mandates.
MTEP11 recommends 215 new transmission infrastructure projects, including 16 multi-value projects. Together with a previously approved MVP, the 17 MVPs will create $15.5bn to $49.2bn in net present value economic benefits over a 20- to 40-year timeframe.
DOE/FERC collaboration on back stop siting
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 in October.
Frederick Anderson, partner at McKenna Long & Aldridge, for instance, 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.
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.
Reaction to FERC Order 1000
FERC Order 1000, which reforms FERC’s electric transmission planning and cost allocation requirements for public utility transmission providers, prompted much discussion in 2011.
During the 123rd Annual Meeting of the National Association of Regulatory Utility Commissioners in November, for instance, it was made clear that the state commissioners are still grappling with the order’s dictates.
Paul Centolella, commissioner of the Public Utilities Commission of Ohio, wondered aloud about FERC’s reasons for changing the fundamental way transmission planning is carried out. Under Order 1000, that planning “incorporate[s] greater consideration of economics, greater consideration of uncertainty,” and that has a material impact on his role as a regulator.
FERC Chairman Jon Wellinghoff said in October before the House Energy and Commerce Subcommittee on Energy and Power that the order preserves flexibility for regions to determine benefits.
John DiStasio, general manager and CEO of the Sacramento Municipal Utility District, said in testimony presented to that subcommittee in October that the rule would allocate the cost of new transmission development to utilities on the basis of presumed “benefits,” whether or not the utilities to which these costs are allocated use the new facilities.
Interviews with execs, others
Several executives spoke with TransmissionHub in 2011, including William Gausman, senior vice president, strategic initiatives, with Pepco Holdings (NYSE:POM); Peter Flynn, president of National Grid USA’s FERC-regulated businesses; and Jim Muntz, president of Northeast Utilities’ (NYSE:NU) Transmission Group. They provided updates on their companies’ respective transmission efforts. National Grid is a subsidiary of National Grid plc.
TransmissionHub also spoke with Sue Sheridan, president of the Coalition for Fair Transmission Policy, which is concerned about the regionalization of transmission planning and cost allocation issues.
FERC Chairman Jon Wellinghoff was also among those interviewed in 2011, sitting down with TransmissionHub in September to discuss FERC Order 1000 and its implications.
In November, former FERC Chair James Hoecker, counsel to the industry transmission group, WIRES, gave TransmissionHub a preview of the topics he would address in his keynote address at the Nebraska Wind Power conference. Among other things, he discussed the challenges and opportunities of wind development in the upper Midwest.