By Rory D. Sweeney
Amid an uptick in spending on transmission infrastructure that has attracted increased scrutiny from those paying the bills, customers and developers met Thursday for a workshop on how to get to the grid of the future.
The Department of Energy convened the daylong session at the National Rural Electric Cooperative Association’s conference center in Arlington, Va., to gather information for the department’s 2019 electric transmission congestion study.
American Municipal Power’s Ed Tatum summed up what transmission customers want: “Sunshine is the best.”
Tatum wasn’t alone in his call for transparency. Traci Bone, an attorney with the California Public Utilities Commission, took issue with transmission projects that receive little or no RTO review. Known as supplemental projects in PJM, they are usually developed by incumbent transmission owners within their own zones to address their own planning criteria. (See FERC Upholds PJM TOs’ Supplemental Project Rules.)
She noted FERC’s rejection in September of a complaint by the CPUC and others who argued that Pacific Gas and Electric and Southern California Edison are violating Order 890’s transparency provisions because much of their transmission planning is done without stakeholder input or review. (See ‘Asset Management’ not Subject to Order 890, FERC Rules.)
It’s “very concerning” that FERC has taken “such divergent views” from ratepayers, she said.
During audience questions following Bone’s panel, Exelon’s David Weaver criticized it as “a very one-sided panel” and said the decision to spend on resilience and security upgrades is not as straightforward as addressing reliability criteria.
“I think it can be perceived that wrong investments are being made,” he said.
“Not so much that they’re making the wrong investments, but we don’t know what investments they’re making,” Bone responded. “We need to have a say in that.”
LS Power’s Sharon Segner, who was also on the panel, argued for increased competition for transmission projects. Following a stakeholder campaign led in part by Segner earlier this year, PJM has begun considering developers’ cost-containment guarantees as part of its analysis of competitive transmission proposals. (See Cost Containment Clears MC Vote Despite PJM Plea.)
Segner noted that eight states — North Dakota, South Dakota, Minnesota, Oklahoma, Nebraska, Alabama, North Carolina and Indiana — have passed right of first refusal laws “to thwart Order 1000” and FERC’s efforts to introduce competition. Order 1000 eliminated ROFRs from FERC-approved tariffs and agreements, but the commission says it is powerless to block states from enacting such laws to protect incumbents’ monopolies.
Public Engagement
The workshop also looked at the importance of public engagement in getting large interregional projects completed. Dan Belin, of engineering firm Ecology & Environment, compared the permitting processes of the Great Northern Transmission Line — to link Minnesota with Manitoba’s hydro resources — and Northern Pass, which would have delivered Quebec hydropower into New England.
Great Northern “had a very robust public-involvement program” that included engagement with the Minnesota Department of Commerce prior to submitting its application, Belin said. The project was approved within the state Public Utilities Commission’s statutory 15-month timeline.
Northern Pass held no meetings prior to submitting its application. The filing attracted 9,000 public comments, and the seven-year review eventually ended in rejection by New Hampshire.
“That significantly draws out the process,” Belin said. “The public involvement piece was a big differentiator between the two projects.”
“What we saw in Minnesota is not typical and it should be more typical,” said Rich Sedano, president of the Regulatory Assistance Project.
He described transmission development as “a public process that is largely shielded from the public” and advocated for improving transparency and public engagement. The process should also remain within state authority, and the industry should “accept the stress it’s going to cause,” he said.
Bess Gorman, assistant general counsel with National Grid, suggested involving the public in the tangible benefits of projects, such as finding ways to include them in benefiting from cost savings.
“As much as you can do,” she said of the need for public engagement. “That’s how you’re going to get the project through.”
Rob Gramlich, president of consulting firm Grid Strategies, credited transmission expansions such as MISO’s multi-value projects, highway/byway projects in SPP and ERCOT’s Competitive Renewable Energy Zones with precipitating the growth in renewables.
“I don’t think we would have half of the wind industry that we have without these plans in the middle of the country,” he said.
Culture Change
Others discussed difficulties winning approval for interregional projects. EDF Renewables’ Omar Martino described a “quadruple hurdle” for one project that required satisfying individual criteria of MISO and SPP and their mutual criteria in addition to securing local approval. The host utility vetoed the project, he said, because it preferred to use an operating guide.
“Something is just not right,” he said. “There’s a gap that needs to be fixed.”
He and others called for culture changes at decisional bodies throughout the process.
“You have to create these programs … inside utilities, inside the RTOs. You also have to have the right culture, the right leadership, the right guidance,” he said.
Gramlich said “the concepts are generally in Order 1000” for interregional planning, “but it didn’t get the job done,” and decisions since then have “weakened” it.
“Nobody wants to pay for something they don’t benefit from, so there’s a healthy skepticism in the RTO process,” he said.
On Nov. 9, the Governors’ Wind and Solar Energy Coalition wrote a letter to FERC advocating for unifying the Eastern, Western and Texas interconnections via ultra-high-voltage lines. The coalition, which includes 19 state governors, compared the proposal to creating the nation’s interstate highway system 60 years ago and the $315 billion grid China is building today.
The coalition cited a study by Iowa State University that estimated the impact of two transmission expansion scenarios: a $40 billion investment in transmission that could allow renewable penetration to rise to 40% nationwide, and an $80 billion investment that could push renewables to 50%.
Cost Allocation
Determining how much transmission is needed and who’s going to pay for it are also obstacles to such ambitious proposals.
In the first morning panel, PJM’s Ken Seiler said that reliability has vastly increased from earlier in his career when “we were hanging on by our fingertips” daily during late-afternoon summer peaks.
Tatum, who shared the panel with Seiler, agreed that there’s no clear measure to “know if we’re over- or under-building” the grid. But he said that it is clear that developers are now making up for a “dearth of investment” in previous years. He noted that PJM is on track to add $7 billion to its Regional Transmission Expansion Plan this year, which would be the biggest addition in the plan’s history.
And then there’s the question of who picks up what portion of the tab.
“Everything goes really, really well until you get in to the concept of cost allocation,” Seiler said. “Once you start talking about money … that’s when the discussion gets really, really tough.”
Participants and audience members cited several examples of cost allocation fights, notably the ongoing debate over the Artificial Island project, PJM’s first competitive project under Order 1000. (See Del. Group Seeks to Block Artificial Island Project.)
“It’s really all about the cost allocation, but if you can solve that, the rest of this stuff is easier,” Gramlich said.
He advocated for broad, beneficiary-pays allocations in which many stakeholders shoulder smaller portions of the bill. Still, that won’t solve everything.
“There is no perfect solution for cost allocation except [to] pay a lot of lawyers for a lot of litigation,” Exelon’s Steve Naumann said.