An Update on Transmission Law and Policy from WIRES
Fourth Quarter 2017
WIRES to DOE: There's a Better Way to Ensure Reliability than
Out-of-Market Baseload Pricing Subsidies - More Transmission!
Secretary of Energy Perry proposed in October that the Federal Energy Regulatory Commission (FERC) ensure the continued reliability of the electric power system by issuing a rule that would incent certain utilities not to retire currently-uneconomic coal and nuclear generation plants. (Docket No. RM18-1) The DOE proposal cited the critical importance of electric reliability and the need for greater resilience in light of the changing economy. Over 500 comments were filed in response, but most commenters view the initiative unfavorably, including WIRES.
In a comment filed at FERC on October 20, 2017, WIRES stated that DOE's rule would (1) compromise or retreat from the market-oriented and technology-neutral regulatory policies that the Commission has fostered for a quarter century, with the approval of the Congress and the court, and (2) fail to fully acknowledge the central role that development of robust electric transmission infrastructure must also play in any effort to make the grid more reliable and resilient in the coming decades.
WIRES asked FERC to undertake (1) a robust analysis of the need to prolong the lives of potentially uneconomic nuclear and coal plants in the interest of reliability and resilience compared to the potentially adverse consequences for consumers of doing so, and (2) an examination of the vital role and importance of regional and interregional electric transmission investment in ensuring the reliability and resilience of the Nation's bulk power system and the security of the electric economy.
New Officers and Directors to Lead WIRES in 2018
In 2018, WIRES will be led by an industry leader from the nation's largest independent transmission provider and a corps of officers that are focused on growing the organization and reaching policy makers with the message that developing a modern electric transmission grid is critically important to the economies of North America. As of January 1, 2018, WIRES Officers are:
- President Nina Plaushin (pictured above), Vice President, Regulatory, Federal Affairs and Communications, ITC Holdings
- President-Elect Paul Dumais, AVANGRID
- Vice President Brian Gemmell, National Grid
- Treasurer Brian Drumm, American Transmission Co.
- Secretary Tom Hestermann, Sunflower Electric Power Corp.
The WIRES Board of Directors for 2018 will be comprised of:
- Gregg Lemler, Lead Director, Vice President, Pacific Gas & Electric
- Bob McKee, Director, American Transmission Company and WIRES' 2016 President
- Teresa Mogensen, Senior Vice President, Transmission, Xcel Energy and President, Xcel Energy Transco
- Dan Rogier, Vice President, Transmission Asset Strategy & Policy, American Electric Power
- Kathleen Shea, President of Transmission, Eversource Energy and WIRES' 2017 President
WIRES' Annual Meeting in Sonoma
At WIRES' 2017 Annual Meeting in Sonoma CA, the group of utility and energy executives held committee and business meetings, followed by discussions exploring the economic and efficiency benefits of a modernized grid, and how federal, state and local environmental policy goals are helping drive transmission investment, with a focus on the West.
In its Full Supporting Member business meeting, the group finalized its 2017 Strategic Plan, previewed the forthcoming study by London Economics that quantifies the benefits of transmission investment, and elected new Officers and Directors for 2018 (see article above). WIRES also recognized Gerald Deaver of Xcel Energy (pictured right) for his many years of distinguished and selfless service to WIRES as Treasurer.
WIRES Explores Transmission Drivers in West
Keynote speaker Michael Picker, President of the California Public Utilities Commission, told WIRES members about a core goal of building renewables, customer choice, and other important changes happening in California energy markets. California is already exceeding its goal of 33% renewables by 2020 and the policy and technology innovations in the state means a significant decline in carbon emissions and integration with power markets outside the state.
Keynote speaker and California Assemblyman Chris Holden (pictured left) briefed WIRES members and guests about energy generation and delivery in his district in southern California, including the work LA County is doing to establish Community Choice Aggregation in 2018. As Chairman of the Utilities Committee of the California Assembly, Holden has been instrumental in the state's decisions about the role of the California ISO in the energy imbalance market emerging in several states across the West.
Transmission Planning in the West
WIRES' meeting was focused on the development of transmission across market seams and between regions. Interregional transmission can expand access to diverse resources, lower energy prices, and improve resiliency of energy systems. Nowhere is this trend stronger than in the West.
Lawrence Berkeley National Laboratory
believes FERC's Order 1000 affirms this idea and creates an obligation for regions to identify seam and other interregional projects through a needs-based approach. Eto stressed the need for improved monitoring and tracking of these projects to ensure positive benefit-to-cost ratios and fair cost allocation. Eto and colleagues at Berkeley Lab recently released a report on this: Regional Transmission Planning - A review of practices following FERC Order Nos. 890 and 1000.
and Carl Monroe, from Xcel Energy and Southwest Power Pool respectively, talked about how the West can reach consensus on transmission cost allocation and revenue sharing between the companies in the Mountain West group and the SPP. Monroe is optimistic that Mountain West and its customers will enjoy the same 3.5:1 benefit-to-cost ratio it has measured in the existing SPP region.
from London Economics admitted that she used to describe the U.S. electricity system as a patchwork / quilt, but that it is quickly becoming more integrated because of trade. She defines trade as follows - you can do better tomorrow than you can do today if you are willing to trade with somebody. Frayer previewed several key findings from an upcoming study for WIRES on the benefits of indicative interregional transmission projects. She concluded that:
- The economic benefits of transmission are quantifiable, very substantial, and long-lasting
- Transmission expansions and upgrades have very large and geographically diverse benefits for customers across entire regions
Transmission and the Environment
A second panel clearly projected major benefits of transmission to the environment, to achieving public policies focused on addressing climate change and fewer carbon emissions, and to technological diversity.
||Pictured above: Laura Manz, Navigant; WIRES' Jim Hoecker; Neil Millar, CAISO; and Carl Zichella, NRDC.
, President and CEO of the Great Plains Institute, broadly introduced this topic with a shared goal - less carbon, more electricity. He identified the following trends in the electrified economy of the future: 1) new natural gas generation will predominate the immediate future; 2) renewables continue to compete remarkably well; 3) market momentum behind renewable energy is growing; and (4) a more digital, distributed energy system is flexible, it's cleaner, it diversifies fuel sources, and it relies more heavily than ever on transmission.
, Director of Western Transmission for
the Natural Resources Defense Council, noted that public policies favoring lower carbon remain in place, consumer interest remains high, energy prices are dropping, and the technology is constantly improving. He stressed the importance of a robust grid to that generation sector.
shared with the group several big questions that his team at DOE's National Renewable Energy Lab are studying:
- Can we achieve 2.5-3:1 benefit-to-cost ratio on investment if the grid is more integrated?
- What is the potential if North America works together, as described in the NREL "North American Renewable Integration Study"?
- What if the energy economy becomes more deeply electrified?
- What investments are necessary to achieve 100% renewable electricity?
Bi-partisan Policy Council Forum (October 31)
In response to Secretary of Energy Perry's proposal to FERC asking for financial incentives that would delay retirement of arguably critical baseload electric generation, the BPC held a day-long forum to gather the opinions of experts and policy makers on the matter. Former FERC Chairman and WIRES Counsel Jim Hoecker participated in the forum and, as one of several former FERC Chairs who had commented on the proposal, commented that DOE's procedural options were not as clear or easy as the Secretary had predicted and that implementation of the proposal would have deleterious effects on energy markets and FERC's historical policies favoring markets. Also participating in the forum were former FERC Commissioner Nora Mead Brownell, former FERC Chairman Pat Wood, and former Chair Betsy Moler.
Watch the forum here.
Americans for a Clean Energy Grid Webinar - The Truth About Transmission (December 13)
In September, WIRES issued the London Economics paper attacking myths about the value of investing in the North American transmission grid. In December, ACEG supported the pro-transmission messages in the study by producing a webinar on the principal concepts.
Former FERC Chairman and WIRES Counsel Jim Hoecker and London Economics Managing Director Julia Frayer talked about the need to maintain the reliability and resilience of the grid, by expanding it, modernizing it, and integrating it as the central nervous system for an increasingly electrified, digital and sustainable society.
Frayer and Hoecker noted that, while the patterns of energy consumption have nearly flattened due to increased energy efficiency, there is increasing appetite for energy at data centers, for transportation, heating, iCloud server farms, consumer electronics, and renewable energy production, among other uses. Hoecker predicted a demand 'explosion' in next 20-30 years which will require an electricity delivery system that is much more dynamic than we have today. "We have to start planning now for this electrified future," said Hoecker.
Of the myths surrounding "non-transmission alternatives" or off-the-grid solutions, both Frayer and Hoecker stress that the new technologies actually depend on transmission. "They are complementary, not substitutes. We need transmission and generation and technological enhancements," according to Frayer. Hoecker added, "Transmission gives us the most optionality to adapt to a known or unknown future."
In the decade since WIRES was founded, interest in electric transmission has increased markedly - more than 2000 people read this WIRES quarterly newsletter! As new technologies and sources of electric generation drive the evolution of the industry, the transmission grid nevertheless remains at the heart of the discussion, often unheralded and unsexy, but still the enabler and integrator of most everything else developing on the system.
2018 promises to be an exciting year for the electric industry and WIRES. Congress is once again rumored to be thinking about bolstering the nation's infrastructure. A new collection of decision makers at FERC will take a fresh look at the "end results" the agency wants to achieve with respect to energy delivery. And, the electric industry is poised to launch a new round of investment and consolidation and diversification that will render utilities more or less unrecognizable a decade or two from now. All this suggests that there are tremendous opportunities for WIRES and its members to help craft the electricity future. I am confident that WIRES will grow and remain a thought leader, communicate actively about the need for transmission, and advocate vigorously for the kind of integrated infrastructure network that the 21st Century electrified economy will require. We will not rest on our laurels.
Best New Year's wishes to all our readers and supporters, Jim
- About That National Conversation on Resilience of the Electric Grid: The Urgent Need for Guidance and Action (Utility Dive, 12/13/17)
- EEI Report Urges FERC to Review Returns for Private Investment in Transmission Infrastructure (Daily Energy Insider, 12/13/17)
- PJM Subsidiary Looks to Western Markets, with New RTO a Possibility (Utility Dive, 12/8/17)
- Utilities Say CapX2020 Transmission Project Prompting Wind Energy Growth (Midwest Energy News, 11/30/17)
- Transmission Developers Power Forward in West As Move to Single Market Inches Along (Utility Dive, 10/12/17)
- In Minnesota, Transmission Vision Becomes Reality (SNL, 10/10/17)
- Why and How to Invest in U.S. Infrastructure (Forbes, 10/1/17)
- Generation and Delivery: The Economic Impact of Transmission Infrastructure in Rural Counties (CFRA, 10/1/17)
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RES is the transmission industry's voice on key public policy issues at all levels of government. During this time of change and challenge in Washington and across the country, your support for WIRES - and participation in its educational and advocacy programs - are essential to building America's electrical grid to meet both current and emerging challenges.