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United States

Ferc publishes plan for firms to share regional grid costs

UNITED STATES: Federal Energy Regulatory Commission document proposes big changes to regional transmission planning.

A transmission policy published by the Federal Energy Regulatory Commission (Ferc) in July will allow regions in the US to come up with proposals to share the cost of new grid. The basic model has been used in other parts of the country, for example, the Southwest Power Pool, which covers nine central-US states, and the Midwest Independent Transmission System Operator, which covers a dozen more.

The blueprint is central to the commission's overhaul of transmission policy and is intended to greatly improve the way major transmission lines are planned and paid for in a country that sorely needs new wires.

The 620-page document, known as Order 1,000, provides some of the most far-reaching transmission policy since the US grid was opened to wholesale competition in 1996. It requires traditionally insular regional transmission operators to communicate with each other while taking public policy - primarily state renewable-energy standards - into account. Operators are required to submit initial compliance filings for Ferc scrutiny in roughly a year.

Transmission demand

As much as 60% of all generation added to the grid by 2019 will come from wind and solar, according to the North American Electric Reliability Corporation (Nerc), which is charged with ensuring reliable operation of the power system. For that to happen, new transmission lines are needed in some of the windiest and most remote areas of the country.

"A developer in the Dakotas, for example, who wants to move renewables over several regions will have some level of certainty as to how the process will work across those regions to develop the transmission infrastructure," said Ferc chairman Jon Wellinghoff. "Or even somebody who's building offshore wind who wants to ensure that their wind is deliverable farther to the interior of the country."

The cost-allocation measure calls for electricity ratepayers who benefit from transmission to pay, while keeping those who do not benefit from being saddled with costs. "There's one sort of immutable rule as stated in the order and that is - no benefit, no pay," added Wellinghoff.

The order allows regions room to develop their own cost-allocation plans for Ferc's review. It also eliminates the right of first refusal for incumbent utilities to build transmission lines, a complicated situation with an impact likely to remain unknown until plans are submitted. But the intent, said Wellinghoff, is to introduce new ideas and bring competition to the process.

One of those ideas involves long-distance transmission using direct current (DC) rather than typical alternating-current (AC) lines. Although significantly more efficient, DC lines are impractical for short distances because they require converter stations costing hundreds of millions of dollars on each end. "But if you're going a long distance, DC makes a lot more sense," said Michael Skelly, president of US transmission developer Clean Line Energy. "You need about three times as much metal in the air (to move the same amount of power) for an AC solution compared to a DC solution."

The American Wind Energy Association (AWEA) supports Order 1000 but emphasises that it is not a handout aimed at renewables. Tom Vinson, AWEA's senior director of regulatory affairs, noted that Nerc's 2010 long-term analysis identified over 62,000 kilometres of projected new transmission over the next several years with only a third expected to integrate renewables.

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