FERC Commissioner John Norris on March 1 likened transmission development to parenthood as there is a need for “a tremendous amount of patience” and “you [have] to be in it for the long haul.”
In his keynote address at Infocast’s Transmission Summit 2012 held in Washington, D.C., Norris, who has been re-nominated to serve on FERC, said the biggest obstacle to building transmission in the country has been the inability to reach a consensus or decision on cost allocation.
FERC Order 1000 empowers the regional planning entities to come to an agreement on how to allocate costs for regional projects – for regional cost allocation, he said. “[Costs] have to be roughly commensurate with the benefits, so if you don’t benefit, you don’t pay,” he said. “[A]ll throughout Order 1000 we erred on flexibility, recognizing there are differences within regions and trying to let each region come up with their own resolution.”
He likened the cost allocation debate to a method involving rolling the dice that he and his wife employed to resolve arguments among his sons.
“The son who rolled the highest number still thought this was a great way to resolve this problem, but … the other two didn’t like this game any better than any other effort we tried to put forward,” he said, adding that is similar to what has happened in the cost allocation debate process throughout the regions.
“Everyone wants to be the biggest winner,” he said, adding that if everyone can accept that building new transmission will be beneficial, then regions can come up with a cost allocation formula that everyone can agree to.
If they cannot, there will be a record within that process by which FERC can make the decision, he said.
A key element of Order 1000 is the requirement for interregional discussions about joint projects and cost allocation for transmission within and between regions, he said.
Norris noted that he grew up on a farm in Iowa and was raised with the philosophy that it is better to talk to your neighbors, especially when building fences – they could split the cost for equipment that neighbor might also benefit from.
“I think the same occurs across regions, so if we can, through Order 1000, get regions talking more…[then] people can at least see the vision of how we can plan our system more efficiently for the long haul and achieve some of these national and local objectives by building a transmission system, a grid, that can support many different public policy initiatives, a competitive marketplace and a more efficient transfer of power across the regions.”
Among other things, he said transmission is a method to achieve the most efficient energy system possible in this country. “I think there are huge opportunities for this country to lower our dependence on foreign fuel, to lower our emissions and our carbon footprint and work towards a more sustainable energy system,” he said. “But to achieve that, we’re going to have to have a combination of both long-haul transmission and a robust distributed generation system throughout this country.”
The United States is making a substantial investment in high voltage transmission, in part due to past underinvestment, FERC Commissioner Cheryl LaFleur said in her keynote address on Feb. 29.
A big driver of this investment is the significant change in where the country gets its power supply. “States and federal agencies and market participants are making different decisions about how they balance that cost, reliability and the environment in making different choices about how we’re going to generate electricity in the future,” she said.
Factors driving investment include renewable portfolio standards and an increased reliance on natural gas for generation, LaFleur said.
Transmission has considerable benefits for customers, including enhancing reliability, making markets work better to reduce costs and connecting new power sources, she said.
Like Norris, she explained Order 1000, noting, for instance, that it required that regional planning groups look at transmission projects that are driven by public policy requirements.
“The idea is not to mandate scenario planning but to actually deal with laws that are on the books because that’s what we think is in our jurisdiction to require,” she said, noting that states will have a big role in the process, as the laws in question are mostly theirs.
Given the need for transmission infrastructure, an important precursor includes deciding what transmission is going to get built, LaFleur said.
“What Order 1000 does try to do is not answer the question of what transmission gets built, who’s going to pay for it [and] who’s going to build it, but set up a process through which the companies that are building the transmission and the regions can try to address those issues,” she said.