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Second wave of state level policy support -- Getting transmission built is the new focus of leading wind states

New Mexico, Colorado, and Maine all moved forward last month with initiatives to rescue wind power potential stranded on the rock of transmission. Mixed with similar action by the likes of Texas and California, the initiatives are building into a second wave of state leadership on wind energy policy. The states, having led the way on minimum standards for the renewable energy content of electricity portfolios, are now turning to the task of getting the transmission lines built for stranded wind projects to proceed.

New Mexico has formed the Renewable Energy Transmission Authority (RETA) to identify transmission constraints and find solutions. "It's a very powerful entity," says Ben Luce of the New Mexico Coalition for Clean Affordable Energy. It will allow compulsory land purchase, forward planning and financing of transmission. "This isn't just a feel good law, it's going to do some serious work," he says.

The plan is to export the state's wind resources. With under two million people, New Mexico ranks 36th in the US in population but 12th for wind power resources. Much of the wind could be sent west to the metropolis of Phoenix or even farther to Southern California, which provides a big welcome mat for clean power. "We believe the markets exist and the generation potential exists, so it's just a matter of connecting them," says Luce.

Joanna Prukop, New Mexico's energy secretary, says RETA is the first example of a state electricity transmission agency with a specific focus on renewables. Among its core principles is a requirement that at least 30% of new capacity planned for a proposed transmission line must be from renewable energy generators. "We know we have easily five to six thousand megawatts of wind yet to be produced on the eastern plains," says Prukop. "Our goal is to develop that as soon as possible and get it out of state."

The seven member RETA board will orchestrate pre-emptive transmission planning by working with stakeholders, such as wind developers, traditional generators, utilities and transmission providers. Areas of strong wind potential lacking transmission will be identified and wind developments lined up to provide certainty that investment in transmission will be recouped. RETA will work as a deal-maker, identifying areas of congestion and putting the players together to get new lines built. To help finance construction, Prukop says RETA has nearly unlimited capacity to provide bond funding.

Pragmatism in Colorado

At state level, she says, renewable energy policy is moving beyond creating demand to freeing transmission bottlenecks. The Federal Energy Regulatory Commission (FERC) is keen on state action, she adds. "We found [FERC] to be very supportive. They are very interested in anyone and any state looking at building transmission."

New Mexico's neighbour to the north, Colorado, also passed a transmission law last month with a renewable energy focus. It requires investor owned utilities (the dominant one being Xcel Energy) to report to regulators every two years identifying areas of energy potential -- including renewables -- that are blocked for lack of transmission. Within 180 days, the state's Public Utilities Commission must respond to any proposed upgrades. The law also changes the transmission financing structure, allowing utilities to start recouping construction costs immediately instead of when the line is completed.

One way or another, ratepayers are going to pay the cost of transmission, says Craig Cox of the Interwest Renewable Energy Alliance. This way they pay the cost as the lines are being built and save money on the financing costs the utility would have passed on. Cox compares the new plan to consumers paying off credit cards at the end of each billing cycle rather than letting interest accumulate over months or years. "Essentially the cost of the money is higher if you wait. This is truly a consumer friendly law."

The Maine potential

Over in the Northeast, Maine Public Service and Central Maine Power are to study a series of transmission upgrade scenarios with a specific eye on windy Aroostook County, in the far north of Maine. Kurt Adams, chairman of the Maine Public Utilities Commission (MPUC), says wind is a key motivator. "There's a wind angle all right -- it's that there's a developer called Aroostook Wind Energy (AWE) that has had met towers up for a project with five hundred megawatt of potential. They are fairly far along in development, but for them transmission is a big deal."

AWE's Chris Herter could not agree more. "We're going to have to co-ordinate this [project] with the new transmission line," he says. The company sitting quietly behind AWE is Horizon Wind Energy, one of America's leading wind developers and owned by Goldman Sachs. Horizon became involved after the initial groundwork by Herter, who 13 years ago nearly succeeded with a 200 MW project in the same area with Kenetech. When the company folded, the project went with it. "This time what we really tried to do was find an area in New England that could do a substantial renewable energy project and the only place where you can do this is either offshore or in Aroostook."

The transmission needed for the wind project is now being viewed by MPUC as a necessary overall system upgrade, with its costs rolled over to ratepayers in the greater New England Power Pool (NEPOOL). Today, northern Maine is only connected to the rest of the state and NEPOOL via a transmission network winding its way through New Brunswick, Canada, a circuitous route that would hit wind power with "pancake" rates for use of the wires. That and the basic transmission requirements makes AWE's project a financial non-starter without the upgrade, says Adams. Herter says he initially considered a 120 mile, $110 million line to southern Maine as a possible project cost, but with proposed power contracts to satisfy Northern Maine coming in at higher than expected prices, the MPUC has stepped in with a better idea.

Meantime, AWE has submitted interconnection requests with Maine Public Service for 500 MW in stages. "For a producer to file an interconnection request, that means they are beyond the preliminary stages," says the utility's Brent Boyles. "Clearly Maine could not afford to bear the cost of the line of the magnitude we're speaking of," he says. New generation is needed to help pay the costs.

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