Challenging Transmission Corridors

March 26, 2008

Ken Silverstein, EnergyBiz Insider

Two lawsuits intend to de-energize parts of the Energy Policy Act of 2005. Environmental and conservation groups are saying that broad transmission corridors that have been authorized by the law are illegal, claiming they allow utilities to bypass state jurisdiction, environmental standards and private property rights.

By expanding the national infrastructure, policymakers also hope to modernize it and bring it in line with a 21st Century economy. Those in the trenches repeatedly express that the capacity of the transmission system is inadequate and will be unable over a sustained period to support huge increases in power demand while also maintaining that the grid is outdated. The issue has been compounded by the difficulties in both winning permits and the necessary capital, thereby increasing the risks of large-scale reliability problems.

According to the National Transmission Grid Study released a few years ago, the demands on the network will grow by 20 percent in the coming decade but the capacity to carry electrons will only increase by 6 percent. At the same time, it is expensive to build transmission lines, estimated to be at least $1 million a mile. To motivate expansion, the energy law provides the Federal Energy Regulatory Commission with the authority to intervene if the states do not approve vital projects within one year.

The lawsuits take specific aim at proposals to build multi-state transmissions projects in the southwest and mid-Atlantic regions, both designated by the U.S. Energy Department in October 2007 as "National Interest Electric Transmission Corridors." As a result, FERC is eligible to use its backstop permitting powers.

Critics of those policies say that they overreach and allocate more land than is necessary to improve reliability. They want the courts to invalidate the Energy Department's designations. They also want to force the department to consider alternative routes that are not as environmentally sensitive.

In the early part of 2008, the Center for Biological Diversity filed one of the suits in the U.S. District Court for the Central District of California challenging the newfound authority of FERC. It says that the "fast track" permitting process would allow utilities to run roughshod over 77,000 square miles in Arizona and Southern California and put at risk national parks and monuments as well as threaten endangered species.

Meantime, 11 regional and national environmental organizations filed a lawsuit in the Middle U.S. District Court in Pennsylvania. The National Wildlife Federation, the Sierra Club and the Piedmont Environmental Council are among those making similar allegations about the mid-Atlantic route covering 116,000 square miles.

"The Department of Energy has failed to do even the basic due diligence and analyze responsible and cost effective alternative ways of meeting the region's energy needs," says Christopher Miller, president of the Piedmont Environmental Council.

Balanced Approach

Allegheny Energy is one of the utilities trying to build a 240-mile, 500-kilovolt line through three Mid-Atlantic States that are Ohio, West Virginia and Virginia. It says that that the line is needed to accommodate an annual growth in electricity consumption along the East Coast of 1.6 percent over the next decade.

The utility says that the transmission line respects that "balance" and emphasizes that it is committed to working with all of the states. In making its case, it is urging the states to view themselves as part of the national and regional economic pictures and not as isolated entities. As such, transmission development along the designated corridor keeps commerce humming everywhere. To use a "band aide" approach to fix inadequate transmission capacity would not only serve to prolong the economic risks but would also necessitate more upgrades down the road.

"Given the fact that our expected in-service date is June 2011, we need to get our application successfully through the states," says Holly Ackerman, director of Allegheny's transmission projects. "To fall back on the FERC would delay that start time. FERC doesn't just automatically step in. You have to go through a process and it would be as rigorous as the one in the states."

Federal officials have also said the southwest needs more transmission to ease congestion there. San Diego Gas & Electric has responded by proposing a $1.4 billion line that would stretch 150 miles. The California's Public Utility Commission, which has been reviewing the Sunrise Powerlink transmission line for more than one year, says that it will make its final decision by the end of summer.

Meanwhile, the threat of a federal appeal hovers over the process. By law, FERC is obliged to ensure that any proposed transmission line within a designated corridor must be used for interstate commerce and significantly reduce transmission congestion. Whether the feds or the states are involved, the review process must be inclusive, thorough and transparent.

At this point, the questions over FERC's backstop authority do exceed the answers. The lawsuits involving the southwest and mid-Atlantic transmission corridors seek to get some resolutions -- answers that would benefit all participants. Those stakeholders, for instance, still don't know how long it would take FERC to review their cases or exactly what stipulations they can put on new construction. More clarity is necessary.

None of that, however, obviates the need for additional transmission -- essential in the effort toward improving reliability and delivering economic prosperity to all regions. Legal battles to decide where and if those systems are built are inevitable. If regulators can assure a proper balance between the environment and the economy, however, then the law compels them to grant approval to expand and upgrade the nation's infrastructure.

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Ken Silverstein
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