Fourth Quarter 2016
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In This Issue
The "I" Word for 2017
Interesting Times at FERC
Energy Secretary Moniz Foresees Widespread Electrification of the Economy
FERC Commissioner Lauds WIRES' Diversity
Economists at Brattle Group Emphasize Timeliness of Coming Transmission Build-out
WIRES Celebrates 10th Full Year of Work on Grid
Introducing WIRES New Officers and Directors for 2017
WIRES Winter Meeting to Address New Administration and 21st Century Energy Economy
NEW MEMBER SPOTLIGHT: Citizens Energy Corporation
Shorts / Member News
Transmission News
For the latest on other important events related to the high-voltage transmission grid, see the WIRES Calendar
WIRES Members


An Update on Transmission Law and Policy from WIRES

WIRES Wishes You Happy Holidays 
and a Prosperous 2017!

The "I" Word for 2017

Dear Mr. President-Elect,

We applaud your keen interest in revitalizing the Nation's ports and airports, restoring its highways and bridges, building pipelines, and even improving the rail system. Investment in basic infrastructure is critical to sustaining American greatness in the 21st Century. As you move forward in this area, WIRES urges your Administration and the new Congress to focus on the infrastructure network most vital to American life and the country's future prospects - the Grid or, to be more specific, the high voltage electric transmission grid. Transmission is the platform for bulk power market competition, for the resource diversity that will keep us from over-dependence on one fuel source, and for deployment of advanced technologies that will animate the economy well beyond your tenure in the White House.

WIRES, an international non-profit organization that promotes grid investment, wants you to know that the challenges facing electric transmission are fundamentally different than those facing other infrastructure networks, and won't be solved by tax credits alone, if at all. 

The Grid is the largest privately owned network dedicated to serving the American public. The near-term and long-term benefits that consumers would receive from a more robust, up-to-date, and less-congested transmission grid are enormous. But, it takes a decade or more to bring major projects on line, three times as long as for major pipelines. Rather than a focus on access to capital, we must improve the permitting and siting of these heavily-regulated facilities. More robust transmission infrastructure requires investing, planning, and building for the economy as it must exist in 2035-2050 in order for America to remain competitive. If policy makers continue to assume that not building transmission is always the lowest-cost option, we will end up cheating our posterity -- economically, technologically, and environmentally.

There's no time to waste, Mr. President-Elect. As one of our recent studies stated: "We are in the midst of an investment cycle to upgrade or replace the existing transmission infrastructure, mostly constructed in the 1960s and 70s; this provides unique opportunities to create a more modern and robust electricity grid at lower incremental costs and with more efficient use of existing rights of way for transmission." Your pick for Secretary of Energy, Gov. Rick Perry, has first-hand experience overseeing the transmission infrastructure build-out in Texas, with positive results for grid resilience and service reliability, job creation, capital attraction, fuel diversity, and market flexibility. The same can be done nationally with your leadership.

Best wishes, Mr. President-Elect. Remember, the future is electric!
Yours truly, WIRES
Interesting Times at FERC
FERC logo
More than five years after adoption of Order No. 1000, which requires regional transmission processes and cost allocation in all parts of the industry subject to the Federal Power Act, the Federal Energy Regulatory Commission is undecided about "what's next" when it comes to advancing the infrastructure that supports bulk power markets, fuel diversity, and energy reliability and resilience.  It seemed that, following the FERC Staff's study of transmission "metrics" and the Commission's June technical conference inviting comment on various elements of grid planning and development, the agency was positioning itself to take a fresh look at the success or failure of Order No. 1000 and to improve its effectiveness.  That plan, if it existed at all, has been interrupted by an unexpected period of transition.

The election of Mr. Trump portends a dramatic turn in energy and environmental policy.  The new President will find that, at least for openers, he must pick a Chairman from among the three Democrats remaining on the 5-member agency.  The law prescribes that no more than three commissioners may come from one political party; FERC is currently comprised of three Obama Democrats and two vacancies.  Commissioner Honorable's term expires on June 30, 2017 and her prospects for reappointment are remote.  If other Commissioners choose to resign, FERC could be immobilized - which is a bad thing.  Nevertheless, there is a bipartisan history of Commissioners doing whatever is necessary to maintain a quorum so the agency's critical work can continue.

When it arrives (probably in the April/May timeframe), Republican leadership at FERC could have an impact on:  1) the ongoing implementation of Order 1000; 2) the future of transmission incentives; 3) the willingness of the Commission to exercise backstop transmission siting authority or to provide stronger guidance about the need for interregional transmission; 4) its ability to stabilize transmission rates of return on equity; and 5) any desire to exercise its latent authority over transmission which was identified by the Supreme Court in New York v. FERC nearly two decades ago.  In that light, swift nominations and expedited confirmation processes would be quite welcome for resolving lingering uncertainties.  Independent agencies like FERC are valued for their deliberative processes and reasoned decision-making.  During this transitional period, such agencies are nevertheless hesitant to make big decisions, however reasonable or consistent with the President's infrastructure agenda, if they are likely to court controversy or be reversed by the future Commissioners when the agency returns to full strength.  In the meantime, the industry and its regulators should continue to take a hard look at whether Order No. 1000 has accomplished the pro-transmission goals that FERC appeared to establish in 2011 when it adopted that Order and whether the pro-transmission agenda at FERC remains strong.

Energy Secretary Moniz Foresees Widespread Electrification of the Economy
On November 10 at WIRES 10th Annual Meeting in Washington DC, Secretary of the U.S. Department of Energy, Honorable Ernest Moniz, addressed 100+ executives from all sectors of the energy economy in the U.S. and Canada.  Introduced by WIRES founder and Counsel Jim Hoecker as a brilliant physicist, talented administrator, and an unexpected contributor to nuclear arms reduction, Dr. Moniz began by congratulating WIRES members for supporting DOE's environmental, economic, and security goals through its work advancing the North American electric transmission system.  Dr. Moniz then proceeded to identify several factors he sees driving electric transmission investment.
The innovative Quadrennial Energy Review 1.0 gathered and analyzed data to formulate data-driven, non-partisan recommendations to the White House and Congress.  Of the 69 recommendations made in QER1, twenty-one have been carried out, with one notable result being the marked improvement in transmission reliability, resilience, and recovery in the four years between Hurricane Matthew in 2016 and superstorm Sandy in 2012.

The target release date for QER 2.0 (not released as of this Newsletter) is December 2016.  This work focuses on electricity end-to-end with the fundamental premise that the intersection of the electric system and technology is a "super-infrastructure among infrastructure systems, vital for almost everything that happens in our economy.  The electric grid needs to be modernized to enable new technology," said Moniz.  "Very soon we will have more things hooked up to the grid than we have people.  This will have major policy implications [for transmission planning and development]." 

At the Paris climate change talks, DOE committed to doubling energy research and development over the next 5 years, which will include looking at what it takes to modernize the grid.  "There is a very strong synergy between innovation and policy.  Each is much more effective working together," he continued.

Tri-lateral energy integration of Canada, Mexico, and the U.S. has been a major focus of Moniz' tenure. True integration will revolutionize our energy supply and demand assumptions, likely necessitating more transmission development, stated the Secretary. 

In 2016, DOE endorsed Clean Line Energy's Plains and Eastern transmission project, using for the first time ever the federal siting authority under Section 1222 of the Energy Policy Act of 2005 with the intent of supporting development of a multi-state line that had been found in technical violation of intervening state laws or regulations. The Secretary's actions met with loud objections by affected state delegations on Capitol Hill, although Moniz seemed confident that DOE was entitled to take similar steps with regard to other transmission projects, if there were similar circumstances where beneficial transmission projects would make for good economics or good policy (heretofore rare).

According to Moniz, "[My] overall theme here is that electricity is at the heart of just about everything we do; so, a modern electric grid will be crucial for the electrification of all sectors of our economy.  Now is the time to re-think business models and the regulations governing the grid, so that [transmission] firms like yours can set directions and succeed in the future." 
FERC Commissioner Lauds WIRES' Diversity
WIRES welcomed Commissioner Colette D. Honorable of the Federal Energy Regulatory Commission as a featured speaker at its 10th Annual Meeting celebration in Washington DC.  The Commissioner thanked WIRES for its work providing technical information and policy analysis to policy makers, Congress, and FERC.  " Your organization is very diverse but you seem to find consensus on matters of importance. With regard to our Competitive Transmission Development Technical Conference this past June, when WIRES came together to espouse a single position from such a diverse group, it really resonates with us because it's stronger than any individual firm coming in to see FERC.  WIRES continues to help us elevate our game."  She noted FERC's recent work on energy storage and Order 1000 and the Commission's ongoing interest in transmission.

Commissioner Honorable was nominated to the Federal Energy Regulatory Commission by President Barack Obama in August 2014, and unanimously confirmed by the U.S. Senate in December 2014 for a term that expires in June 2017. An attorney, Commissioner Honorable came to FERC from the Arkansas Public Service Commission, where she served since October 2007, and led as Chairman from January 2011 until January 2015.
Economists at Brattle Group Emphasize Timeliness of Coming Transmission Build-out
Along with more than 50 other organizations, WIRES submitted post-technical comments to FERC on October 3, 2016 on aspects of Order 1000 implementation In our comments, WIRES stressed that FERC must ensure that transmission infrastructure planning is forward-looking and that it examines transmission needs and benefits more expansively than the standard criteria of reliability, market efficiency, and public policy.  A better overall methodological starting point is presented in another study performed for WIRES by economists at The Brattle Group -- Well-Planned Electric Transmission Saves Customer Costs: Improved Transmission Planning is Key to the Transition to a Carbon Constrained Future.

The report explains why the development of a flexible regional and interregional transmission grid will be a critical component of our electricity system to serve electricity customers cost-effectively in the rapidly changing industry and for anticipating and cost-effectively addressing the future public policy needs of individual regions and states.

Brattle explains why regional and interregional transmission planning efforts need to be improved and why the improvements should begin now to fully realize significant future savings. In summary, the Brattle report makes clear why greater and better transmission investment is needed:
  1. Transmission projects require at least 5-10 years to plan, develop, and construct; as a result, planning would have to start now to more cost-effectively meet the challenges of changing markets fundamentals and the nation's public policy goals in the 2020-2030 timeframe; 
  2. A continued reliance on traditional transmission planning that is primarily focused on reliability needs will lead to piecemeal projects instead of developing integrated and flexible transmission solutions that enable the system to meet public policy goals more cost effectively; and
  3. We are in the midst of an investment cycle to upgrade or replace the existing transmission infrastructure, mostly constructed in the 1960s and 70s; this provides unique opportunities to create a more modern and robust electricity grid at lower incremental costs and with more efficient use of existing rights-of-way for transmission.
In its own comments submitted to FERC, The Brattle Group reinforced the message that the industry needs to develop processes able to identify transmission solutions that increase future compliance flexibility while meeting anticipated environmental policy goals at lower costs and lower risks for customers. Unfortunately, the current practice of focusing primarily on system reliability tends to steer policymakers and regulators away from paying attention to regional and interregional transmission planning approaches that can reduce risks and customer costs in the long-term.

This report is part of the WIRES Library of analyses that were commissioned to aid industry and regulators in making better, more forward-looking decisions instead of considering only immediate cost and reliability concerns.  Brattle assembled for the Commission a checklist of transmission-related economic and public benefits that should be considered in both regional and interregional transmission planning processes in another  study performed for WIRES -- The Benefits of Electric Transmission: Identifying and Analyzing the Value of Investments, July 2013 .

Finally, Brattle reviewed what it sees as significant barriers to interregional transmission planning and cost allocation, and recommended a framework of seven "building blocks" needed to support interregional planning and cost allocation. These building blocks are described in more detail in Interregional Cost Allocation: A Flexible Framework to Support Interregional Transmission, April 2012 .
WIRES Celebrates 10th Full Year of Work on Grid
WIRES members gathered in Washington DC in November for business meetings and celebrations, featuring speeches from FERC Commissioner Colette Honorable and Secretary of Energy Dr. Ernest Moniz.  

Pictured are: WIRES Board Member Lisa Barton, Executive Vice President, AEP Transmission; WIRES President Robert McKee, Director of Regulatory Relations & Policy, American Transmission Company; FERC Commissioner Colette Honorable; WIRES Treasurer Gerald Deaver, Manager, Regional Transmission Policy, Xcel Energy and CapX2020; WIRES Vice President Nina Plaushin, Vice President, Federal Affairs, ITC; and WIRES Counsel Jim Hoecker, Husch Blackwell.

During the Policy Session, two panels addressed the breadth of interests and concerns about the transmission grid, its future, and what demands it will need to meet in the coming years.
Introducing WIRES New Officers and Directors for 2017
A highlight of the 10th Annual Meeting was the election of Officers for 2017 and new Directors.  Kathleen Shea, President of Transmission, Eversource Energy , leads the new slate of officers.  Joining Shea are:
Outgoing WIRES President Robert "Bob" McKee, Director, Regulatory Relations & Policy, American Transmission Company , was elected to the Board of Directors.  McKee will join Will Kaul of Great River Energy and CapX2020 , Lisa Barton of American Electric Power , and John Flynn of National Grid on the Board.  WIRES thanks departing Board member Phillip Grigsby of Duke Energy for his time and considerable talent.  All new officers and directors assume office on January 1. 

Jim Hoecker , WIRES Counsel and former FERC Chairman, stated "this remarkably strong group of leaders will take WIRES into its next decade, which promises to be challenging but filled with opportunity. For ten years, we have emphasized the importance of the integrated grid in promoting and deploying new technologies, ensuring the resilience of the electric system, giving planners, markets, and policy makers real optionality, and saving consumers significant amounts of money in the intermediate- and long-run.  WIRES has made an impression but the story of transmission's benefits is still unfamiliar to many policy makers and the public.  That's why WIRES is so important."
WIRES Winter Meeting to Address New Administration and 21st Century Energy Economy
WIRES will conduct a two-day meeting in Washington DC in February, 2017 which will include education meetings on the Hill, and strategic discussions about: 1) interregional transmission planning, 2) the infrastructure build-out, 3) a changing generation mix, 4) ROEs, 5) siting challenges, and 6) new technologies.  
NEW MEMBER SPOTLIGHT: Citizens Energy Corporation
New WIRES member Citizens Energy Corporation , a Boston-based non-profit energy company founded by Joseph P. Kennedy II in 1979, employs a unique business model using profits from successful energy ventures to support a range of charitable programs aimed at making life's basic needs more affordable. Citizens entered the high-voltage transmission business in 2005, partnering with San Diego Gas and Electric to develop the Sunrise Powerlink, a 120-mile, $1.9 billion 500 kV high-voltage transmission project in Southern California that links the City of San Diego to one of the largest sources of renewable power in the United States: thousands of megawatts of geothermal, solar, and wind resources in the Salton Sea region and Imperial County. Citizens Energy channels profits from this project and other projects to homes for low-income families (at no cost to the family) and benefits for other financially challenged people. Citizens is currently developing other major transmission projects in partnership with current and former WIRES member companies, including Pacific Gas & Electric and Berkshire Hathaway Transmission, San Diego Gas & Electric, and National Grid and Anbaric.

"Transmission investments are a crucial part of ensuring our electric grid can reliably accommodate new and renewable generation technologies while power consumption continues to grow," said Citizens Energy CEO Peter Smith  . "As we continue to seek partnerships to develop transmission projects in pursuit of these goals and our charitable mission, we look forward to participating in WIRES' efforts to promote investment in the North American electric grid."
Shorts / Member News
WIRES member American Electric Power Transmission , along with POWER Engineers Inc.  and Valmont Utility, collaborated on an unique 69-kV "rebuild" near the Pro Football Hall of Fame in Canton, Ohio.  The transmission towers that flank I-77 near the Hall of Fame look like bright yellow goalposts, a clever way to deliver power and promote football at the same time.  The already iconic 80-feet-tall goalposts went up during the summer of 2016.  For further information on the project, see " Memorable Structures, " originally featured in the November issue of Transmission & Distribution World magazine.
Transmission News
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If You Need, Own or Depend on Electric Transmission - You Should Join WIRES!
WI 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. 
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