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It is hard to imagine a topic that would more effectively silence a Thanksgiving dinner table conversation than the intricacies of how to plan, permit, and pay for electric transmission facilities. Even that garrulous uncle of yours might decide that those are not questions worth sharing his opinions on.
And while I would not encourage readers to test that proposition empirically, there is still a lesson or two to be drawn from the thought exercise.
I would start with the fact that, for understandable reasons, we tend to talk about electric transmission development using narrow, case-specific terms. Electric transmission is the paradigmatic natural monopoly, and its costs are overwhelmingly paid by captive customers. Our regulatory paradigms are designed with those facts in mind. Electric transmission projects are developed and reviewed project-by-project, on an as-needed basis, and with an eye toward allocating the costs to the specific customers who can be shown to benefit, at least where we can.
There are understandable reasons why we have adopted that framework. Project-by-project review can facilitate a careful balancing of the competing incentives between companies that build transmission and customers who pay for it. Similarly, to insulate projects from challenge in court, case law encourages lawyers (myself included) to advocate for as careful and precise an accounting of the costs and benefits of new transmission facilities as possible, which too can be easier to do on a project-by-project basis.
But that narrow aperture, understandable as it may be, doesn’t reflect the role and importance that electric transmission facilities play in our society, our economy, and, indeed, our national interest. Whether you believe that electric transmission is the infrastructure needed to support a low-emissions future, to enable our nation’s artificial intelligence dominance, or for some other reason entirely, the importance of developing transmission infrastructure is increasingly difficult to capture within the relatively narrow aperture we use to plan, permit, and pay for those facilities. And that is especially true for the high-voltage, long-distance facilities that form the “backbone” of our transmission grid.
It is time to think of major new transmission facilities as something closer to a public good. That is because a robust electric transmission grid is the necessary foundation for supporting quintessential public goods:
Everything from clean air and a stable climate to the national security and economic growth benefits that come from artificial intelligence and data centers. Understood as a quasi-public good, it makes sense that the benefits of electric transmission, and backbone facilities in particular, cannot be fully captured or accounted for among the entities that take service over those facilities. Instead, electric transmission is national interest infrastructure.
The initial comments submitted to FERC in response to the Department of Energy’s Section 403 proposal regarding large load interconnection underscore that point. While there is plenty of disagreement about what FERC should do in the proceeding, companies as diverse as Google and WIRES’ member American Electric Power highlight the critical importance of building electric transmission to our national security and economic development goals. As they point out, while interconnection is undoubtedly important, if we take too narrow a focus when it comes to transmission, we will underinvest in the infrastructure needed to serve our national interest.
To be clear, I am not suggesting that cost doesn’t matter or that rigorous scrutiny of multi-billion-dollar investments isn’t important. If anything, in a time of rising power prices, convincing all stakeholders that the benefits of energy infrastructure outweigh the costs is more important than ever. But, partly for that reason, it is time to step back and do so with an appreciation of electric transmission infrastructure’s contribution to and foundational support of public goods that are in our national interest and not just the interest of the ratepayers who fund those projects.
What policies follow from conceiving of electric transmission as national interest infrastructure is another kettle of fish altogether—and a discussion well beyond the word count that WIRES graciously offered me for this insight. But, at the very least, that perspective counsels in favor of stepping back from some of the relatively narrow debates into the interstices of the three Ps of transmission development and starting with the big picture perspective. It might even make for an interesting dinner table conversation.
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