Biden seeks to revive concept of vital transmission corridors
The Biden administration’s high-profile infrastructure package will reset the strategy to expand the nation’s electric transmission capacity back to more than 15 years ago when the federal government played a more definitive role in the approval of new power lines.
Biden’s plan gives the Federal Energy Regulatory Commission (FERC) a more decisive level of clout in the siting of transmission projects, which the agency was granted when Congress passed the Energy Policy Act in 2005 and created the concept of National Interest Transmission Corridors (NITC). That authority, which was gradually eroded over the years as a result of various court cases, will be largely restored by the Biden plan and will presumably make transmission projects more attractive to private investors.
“It has a lot of potential to make a real impact,” said Liza Reed, research manager for low carbon technology policy at the Niskanen Center in Washington. “The scope (of the transmission corridor regulation) was narrowed down and this will broaden the scope back to the original congressional intent.”
It is hoped that clearer lines of approval ending with a friendlier FERC will attract more investors with the cash needed to bring more transmission online, expanding the grid’s capacity and its ability to serve a growing number of wind farms and solar arrays, and also increase the ability to move supplies of electricity from one area of the country to another.
“I think the transmission siting provision could be very helpful,” said Rob Gramlich, founder and president of the consulting firm Grid Strategies LLC. “It is important to note that the provision simply restores it to what a bipartisan Congress and Senate Energy Committee intended in 2005.”
The transmission corridor redux in Biden’s Infrastructure Investment and Jobs Act (IIJA) allows transmission projects to be designated as being in the national interest – part of the war effort against climate change. The idea is that renewable energy projects are often located in fairly remote areas and won’t be built unless transmission capacity is in place, or at least has the funding and necessary permits in hand.
The NITC was based on relieving grid congestion and allowing additional power to be brought into a specific area and to keep consumer electric bills at a reasonable level. The Biden proposal allows the Department of Energy to also consider a project’s contribution to overall energy reliability and to give new generators the ability to connect to the grid as being in the “national interest.” Analysts have interpreted that interest as increasing the country’s overall larger supply of emissions-free renewable electricity.
Reed told Daily Energy Insider that transmission has become a higher priority for Washington since 2005 because the renewable energy business has evolved to the point that transmission is clearly the starting point since wind farms and solar arrays won’t get built unless there are wires in place to bring that green power to market. “It has been called a ‘chicken-or-the-egg’ situation, but I don’t really agree with that; you can have the transmission built without the generation, but you aren’t going to have generation without first having the transmission; the transmission side has to be the leading edge.”
The theory makes sense, but like the railroads and highways built in the past, the heavy-duty towers and high-voltage wires must cross dozens, if not hundreds, of miles of public, private and tribal lands. With so many stakeholders with legitimate and time-consuming concerns, projects can become bogged down in hearings and litigation that produces tweaks and new provisions to plans like the NITC.
Moreover, the idea of having state regulators largely sidelined and easily overruled by the feds doesn’t sit particularly well with the state regulators who are charged with protecting the property rights of their residents and who also base their rulings on how it benefits consumers in their states. Some major lines could be constructed in “pass-through” states that neither host the power plants nor receive any of the electricity carried on the lines, it can be difficult to argue that those lines somehow benefit that particular state.
The National Association of Regulatory Utility Commissioners (NARUC) issued a statement last week urging Washington to keep state regulators in the loop rather than, in effect, issuing a decree telling them to rubber-stamp projects that the federal government wants built. The association called on Congress to further study the idea and provide guarantees that states and their constituents won’t be cut out of the approval process.
“One undeniable thing that state regulatory commissions do is assure that the affected citizens receive due process,” said NARUC Executive Director Greg R. White. “This legislation would remove the affected communities’ and landowners’ rights to due process. Everyone should be deeply troubled by that prospect.”
From an investment standpoint, however, the reset of the NITC provides investors with some assurances that they will get their money back in their lifetime. At the same time, there is increased acknowledgment that the grid needs to be expanded and developers are now more experienced and conscious of the concerns of state and local agencies. The likely scenario is that state regulators and Washington will be largely on the same page and that FERC’s veto power won’t be flexed too often.
Gramlich predicted: “I expect it only to be used in the rarest of circumstances, but that assurance can be helpful to encourage investment.”
