The technology of transmission offers the optionality to be flexible as the electric industry moves forward in an era of uncertainty, FERC Commissioner Philip Moeller said.
Speaking at TransmissionHub’s TransForum East event in Washington, D.C., on Oct. 29, Moeller said he understood why some may be “less than optimistic” about investing in transmission, given uncertainty about revenue flow and about returns on equity (ROEs).
“I wasn’t thrilled about our agency going into that tar pit,” Moeller said. “I think we’ve learned a collective lesson: you really want to have an exit strategy before you go into a policy debate like this, because you create a couple of years of uncertainty based on action or inaction.” He added that rate cases have triggered some of that uncertainty as well.
But for a few concrete reasons, Moeller remains more than optimistic, he said. Regarding ROE, he said FERC has recognized that inaction has created uncertainty.
“A lot of the debate in the building is, ‘What we should do, how we should do it?’” he said.
Though he said he didn’t know when exactly FERC would revisit the ROE issue, he said, “Stay tuned. I think we’ll hopefully have greater [clarity] within the near future. Again, I will not define the near future, but recognize that at least it’s a live issue at FERC that is under major discussion.”
Another reason he said he was bullish was because of the intermittent nature of renewable energy.
“Unless there’s a dual siting of a fast-acting gas unit with the renewable resources, that fast-acting gas resource to back up the intermittent nature of that power is going to have to come to the system through transmission lines,” he said.
Furthermore, with the country’s abundant natural gas supply, the trend toward natural gas being used for electricity will continue.
“I’m bullish on transmission because of this transition in the gas-electric coordination and the convergence and general trending to use more gas to make electricity,” he said.
Transmission can enhance reliability, reduce congestion costs and allow more flexibility with respect to fuel choice, he said.
Finally, compliance with EPA regulations, such as the Mercury Air Toxics Standard (MATS), will require transmission to maintain reliability.
“I have to be fuel neutral but not reliability neutral,” he said. “My concern has always been that the timeline, in particular on MATS, was so aggressive that it will create challenges to maintaining health and safety in 2015-16. … The only way to survive without major load shedding is with transmission and that’s been generally recognized again by utilities, by states, by markets and hopefully by environmental regulators.”
Check back on TransmissionHub for more coverage of TransForum East.