Energy economist Judy Chang spent more than two decades opining on electric markets and policy as a principal at the Brattle Group.

Since her appointment last June as undersecretary of energy for the Massachusetts Executive Office of Energy and Environmental Affairs, she’s had to think about implementing policies to meet the state’s goal of reducing emissions 85% below 1990 levels by 2050.

The state will need to add 15,000 MW of offshore wind to meet its goals, which include interim targets of a 50% reduction by 2030 and 75% by 2040.

“Now that I’m in this job, I’m staring at the numbers and developing policies to achieve these targets, and I will tell you it will be very challenging,” Chang said at the WIRES spring meeting Tuesday. “And we certainly cannot do it without having a really close look about how to plan transmission and how to build the transmission that we need. … We can’t afford to develop the grid in a piecemeal manner.”

Chang and other speakers at the meeting said grid planners must connect renewable resource areas to loads and abandon their narrow categorization of transmission projects to allow broader cost allocation.

“Most transmission does not fit neatly into the distinct categories that we created as an industry,” said Chang, citing projects categorized as being for system reliability, economic dispatch or public policy. “It’s just not an either/or question. As we move into the future, all of the transmission, I would argue, support collectively all of these goals.”

“What does not work [is] having one generator at a time queueing up … and the one that has the worst luck has to pay for system upgrades,” she said.

John Moore, director of the Natural Resources Defense Council’s Sustainable FERC Project, agreed, saying that given the increasing dependence on intermittent renewable generation, transmission planning must be designed to ensure resource adequacy.

“The days of planning for each region’s resource adequacy [separately] are fast drawing to an end,” he said, citing recent studies by the National Renewable Energy Laboratory and Princeton University identifying the interregional transmission needed to fully deliver renewable energy to load centers. (See Net Zero Price Tag: $2.5 Trillion.)

Renewable resources must be regionally shared, and that requires much more transmission, said Chuck Marshall, vice president of ITC Holdings Corp.

“The notion of planning the system for the peak hour of the year …. is growing increasingly irrelevant and really offers little value on a going forward basis in this renewable future,” he said. “Simply put, we need our neighbors more than we ever have needed our neighbors, and we need infrastructure where we can really leverage one another.”

Chang said leadership is needed to put “a stake in the ground to declare certain areas … as renewable energy zones,” citing the Texas’ Competitive Renewable Energy Zones as a model. Then “the RTOs and ISOs and [transmission owners should work] to develop the best configuration that can be deployed in a phased manner, minimizing risks and minimizing costs.”

To illustrate, she displayed a map of some of the 28,000 MW of offshore wind planned for the East Coast, with a theoretical transmission backbone connecting projects from North Carolina to Massachusetts.

To take advantage of renewable energy resource zones, the U.S. needs “broad interconnection-wide and hopefully cross-interconnection-wide planning,” Moore said.

“We’re also talking about asking FERC to encourage the development of interregional planning boards” represented by the states, he added.

“FERC has the authority. It got up to — but didn’t cross — that bridge in Order 1000, when it just required only the coordination between regions but not the actual interregional planning,” Moore said. “I think FERC has the authority to remove the double hurdle or the triple hurdle [thresholds that have prevented neighboring RTOs from teaming up on joint transmission projects, and] to establish a single set of planning criteria between and among regions — and that includes the non-RTO planning regions like parts of the Southeast.”

He added that FERC could assert more oversight of transmission costs, requiring that planning result in efficient projects to produce just and reasonable rates.

Glick Seeks Action on Queues, Cost Allocation

FERC Chair Richard Glick sounded many of the same frustrations during his remarks opening the half-day conference.

Noting that FERC is required to allocate transmission costs in a manner “roughly commensurate with the benefits,” he said the commission should reconsider how it identifies benefits and beneficiaries. “Is there a way to spread out the cost recognizing that … a particular transmission project or set of projects … might provide significant benefits to a broader group of people than we might normally think of?” he asked.

Glick said the current method of participant funding of upgrades needed to connect generation is hampering the build-out needed to accommodate renewable growth. “The fact is, if you build one project in a windy area, you’re going to build several projects in the area. There’s certainly a disincentive to be the first one in line and have to pay for all the network upgrades.”

Glick also elaborated a bit on his plan — first revealed at the April commission meeting — to develop a “more formal process between the states and federal government” on transmission development and policymaking. He said FERC and the National Association of Regulatory Utility Commissioners would be making an announcement soon.

“We can make more progress working together than doing it separately,” he said, noting states’ roles in siting, public policy, planning and cost allocation.

RTO Incentive

Glick also defended the commission’s April 16 proposal to keep the transmission rate adder for utilities that join RTOs at 50 basis points and terminate the incentive after three years (RM20-10). The vote represented a sharp turnabout from last March, when the commission, then chaired by Republican Neil Chatterjee, proposed doubling the adder to 100 basis points. (See FERC Proposes to Narrow RTO Incentive.)

He said Republican James Danly opposed the revised Notice of Proposed Rulemaking based on a “tortured analysis” of the word “that” in the Federal Power Act.

Chatterjee opposed the NOPR on the grounds that it could lead utilities to leave RTOs. But Glick cited Chatterjee’s comments referring to the benefits utility ratepayers receive from RTOs independent of the adder as evidence that the companies will stay.

Comments on the NOPR are due May 26, with reply comments due June 10.

If the comments provide evidence that the change in policy will lead to an exodus from RTOs, “that’s something we need to consider on a going forward basis before we finalize that proposal,” Glick said. “I tend to think there’s not a lot of evidence in the record to suggest that right now, but the record will be developed in the comment process.”