The Department of Energy’s latest assessment of transmission congestion has concluded there is no need to designate national-interest electric transmission corridors, citing the “dramatic increase” in transmission investment since 2005. But it said future assessments should address the grid’s resilience and the threats posed by cyberattacks and natural disasters.
The Energy Policy Act of 2005 (EPAct) amended the Federal Power Act to direct DOE to conduct regular assessments of national transmission constraints and congestion. It also sought to give the department and FERC “backstop” siting authority if states failed to act. But DOE has not attempted to designate any corridors since court rulings rejected a bid to designate two.
Congress ordered the assessments after DOE’s 2002 National Transmission Grid Study reported that limited transmission construction since the 1990s had resulted in major transmission bottlenecks. The legislation was also spurred by the 2003 U.S.-Canada blackout — the largest blackout in U.S. history — which affected more than 50 million customers and caused an estimated $5 billion to $10 billion in economic damages.
DOE said its latest National Electric Transmission Congestion Study “has not identified transmission congestion conditions that would merit proposing the designation of national corridors.” Stakeholders’ comments on the study are due Nov. 23 and should be sent to 2020congestionstudy@hq.doe.gov.
The department noted that since EPAct, FERC issued Order 679, which created financial incentives for transmission investment, and Orders 890 and 1000, which set requirements for regional and interregional transmission planning and principles for regional cost allocation.
“Annual investment in transmission today is more than five times greater than it was during the years prior to 2005,” DOE said. “The department’s review of available information confirms that transmission constraints and congestion have abated, in large measure because of these investments. The department also confirms that related factors, including lower rates of growth in electricity demand and lower prices for natural gas, have contributed to reducing transmission congestion.”
The number of Level 3, 4 and 5 transmission loading relief (TLR) actions in 2018 was less than 1/10 of that in 2009, the report said. “Market reforms have contributed to some of these reductions, but transmission investment has also had a role in reducing the need for TLRs.”
New Approach: Resilience
While DOE said it saw no significant problems with congestion, the new report asks Congress to approve a broader scope for future studies, saying “critical issues facing the electricity system today go beyond understanding transmission constraints and congestion as these terms are defined and used routinely by industry.”
The new assessments should also evaluate the resilience of the existing grid to “emerging threats posed by cyber and physical attacks, severe weather, natural disasters and geomagnetic disturbances,” the department said. “For example, recent hurricanes affecting Texas and Louisiana and the combination of extreme heat and wildfires in California have underscored that a robust transmission network is critical for coping with such challenges.
“The potential for deliberate attacks and our increased vulnerability to severe weather pose new and growing threats to reliability,” it continued. “Our current ability to analyze the value of investments in the resilience of transmission infrastructure is limited due to the lack of details regarding potential threats; data and predictions on resulting impacts; tools required to model multiple infrastructures; and details concerning the coordination of numerous utilities and stakeholders involved in regional and national-scale energy system operations.”
DOE proposed using its North American Energy Resilience Model (NAERM) to evaluate such threats, describing it as “an integrated modeling approach to study the impact of critical energy and other infrastructures, including all forms of generation, on the electric power system.”
“Application of the NAERM will provide real-time situational awareness and analysis capabilities for emergency events so the federal government can respond quickly to potential threats to critical electric infrastructure and the North American energy system as a whole,” DOE continued. “The effort will advance the state of science in planning and operations of electric supply and delivery in extreme events and provide more rigorous resilience and associated economic metrics for the energy and other sectors.”
Former Assistant Energy Secretary Bruce Walker has touted NAERM repeatedly in public appearances. (See “Grid Resilience Model as a ‘Platform,’” DOE’s Walker Sees Big Cuts in Storage Costs.) Walker announced the model after FERC rejected then-Energy Secretary Rick Perry’s proposed rulemaking to benefit coal and nuclear generators in January 2018.
In June 2018, President Trump directed Perry to force grid operators to provide a lifeline to struggling coal and nuclear plants, saying their retirements threaten national security. Trump’s directive came after the leak of a 40-page draft DOE memorandum that cited the Defense Production Act of 1950 and FPA Section 202c, which allows the energy secretary to issue emergency orders during energy shortages. The department never released the memorandum, and the issue seemed to have died.
DOE said NAERM requires “a wider range of information and data — much of which is not now coordinated systematically or collected comprehensively … to assess comprehensively how the critical national interests identified in EPAct are being affected by the ongoing evolutionary changes in the relationship between transmission networks and the broader electricity system.”
“Current planning standards, which lead to identification of transmission constraints, have been designed to address the variety of unexpected circumstances that might compromise day-to-day reliability. These standards were not designed to ensure the transmission system can withstand extremely severe or long-lasting circumstances that threaten reliability.”
National Corridors
EPAct gave the energy secretary power to designate any area experiencing electricity transmission capacity constraints or congestion that adversely affects consumers as a national-interest corridor.
The secretary was directed to act upon a finding that “the economic vitality and development of the corridor, or the end markets served by the corridor, may be constrained by lack of adequate or reasonably priced electricity” or that “the energy independence of the United States would be served by the designation.” FERC was authorized to site transmission within such corridors if state officials or others with authority to approve the siting had “withheld approval for more than one year.”
In October 2007, DOE designated a Mid-Atlantic Corridor from metropolitan New York to Northern Virginia and a Southwest Corridor in Southern California based on its 2006 Congestion Study. But the 9th U.S. Circuit Court of Appeals vacated the designations in 2011, saying the department had failed to adequately consult with the affected states in the preparation of the congestion study. It also ruled that the National Environmental Protection Act required DOE to prepare an environmental impact statement on the corridors.
The order followed a 2009 ruling by the 4th Circuit that FERC only had authority to order construction if the affected states failed to act for more than one year on a request for construction approval. The court said Congress had not given FERC authority to reverse a state decision explicitly rejecting a project.
The two rulings “mostly eviscerates federal siting of electric transmission lines,” attorneys for Bracewell & Giuliani wrote after the 2011 ruling.
“Due to the subsequent ambiguity about what constitutes appropriate consultation with states, DOE has not designated additional transmission corridors,” Democrats on the House Select Committee on the Climate Crisis wrote in a report in June. (See House Dems Offer Climate Package.)
The Democratic report called on Congress to correct what it saw as flaws in EPAct, including its splitting of backstop siting authority between FERC and DOE. It said the authority should be assigned solely to FERC, triggered if one or more states have approved the project, but one or more states have denied it or withheld approval for more than two years.
It also recommended Congress align the transmission corridors program with national climate goals such as the development of renewables. It also said FERC, working with DOE and the National Labs, should develop a comprehensive, long-range electric infrastructure strategy to achieve 100% clean electricity generation by 2040.
The committee also had a strategic recommendation. “Requiring DOE to designate broad areas as corridors before project proponents have developed specific, narrow proposals can strain relationships with landowners and communities,” it said. “Allowing project proponents to apply for corridor designation after having laid the groundwork with landowners and communities may be better.”
Larry Gasteiger, executive director of transmission trade association WIRES, said, “It’s clear that exponential growth in transmission will be needed to deliver to load the enormous amount of renewable resources coming online to meet clean energy mandates and goals, to meet the needs of an electrified economy and to address resilience needs driven by increasing extreme weather events, aging infrastructure, and growing cyber and physical threats to the grid.
“The need for substantially increased investment in transmission has been supported by a growing mountain of evidence and was most recently demonstrated by the recent study done by ScottMadden [and] sponsored by WIRES. The good news is that regulators and policymakers seem to agree that the nation needs a lot more transmission.”
“Corridor designation should be based on not just current congestion but prospective congestion because one can assess the interconnection queue logjams and other sources of information about future needs,” Rob Gramlich, executive director of Americans for a Clean Energy Grid, said in an email. “I also think it is a better approach to focus on specific projects that a developer might require assistance with, so there should be a process for them to apply and present congestion studies to the agency.”
Spending, Congestion by Region
The DOE report highlights the progress grid operators have made in the past 15 years, noting that congestion costs in ISO-NE, MISO, NYISO and PJM have all dropped.
Congestion costs in ISO-NE “have been virtually nonexistent” for the past decade, it said. “Prior to significant transmission construction activities completed in 2006, congestion costs in ISO-NE were routinely in the hundreds of millions annually.”
Congestion costs in MISO, which hit almost $1.5 billion when it integrated the Entergy system in 2014, are now “far less than $1 billion annually.”
CAISO congestion costs, which exceeded $500 million between 2012 and 2014, dropped below that level during 2015-2017 before returning above it in 2018.
The report did not include congestion costs for ERCOT, which is not subject to the FPA, or SPP, which did not begin operating its wholesale market until 2014. DOE said SPP’s “historical record … is too brief to provide insight.”
DOE concluded that demand growth — 1.2% annually in the Eastern Interconnection and 0.7% in the Western Interconnection from 2006 to 2016 — “has not been a major factor influencing either transmission congestion or the need for additional transmission investment in recent years.”
The report said the highest annual investments in transmission are currently in the ReliabilityFirst, SERC Reliability and WECC footprints. “The highest levels of total transmission investment since 1996 have been in the RF footprint, followed by the WECC footprint … and then the SERC footprint and the” Northeast Power Coordinating Council.
