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New rules worth dancing about

Chances of progress on bettering the aging and underdeveloped US transmission infrastructure have improved. The Federal Energy Regulatory Commission (FERC) has finalised rules that will allow specific incentives for grid development proposals on a case-by-case basis.

"The wind industry is very enthusiastic about these new rules," says Mike Jacobs of the American Wind Energy Association. "They're definitely worth dancing about."

The action essentially adopts proposals put forth by FERC in November 2005 and includes such provisions as incentive rates of return on new investment equity by public utilities and transmission companies, along with several cost recovery provisions that should free up billions of dollars needed to build new lines.

The new rules have two basic components, says Jacobs. The first involves how quickly transmission builders get their money back, what their profits will be and whether they can recover construction costs while work is in progress. The other part deals with risk and being able to recover costs if a line goes unused, a situation that presented itself in the past when nuclear plants were proposed but never built.

"The utility bureaucrats have been very slow on building transmission where there's even a possibility it won't get used," says Jacobs. "FERC has put that concern to rest."

While the Electric Power Research Institute suggests that the US power grid needs some $100 billion in investment in the next ten years, two new transmission proposals could quickly benefit from the new rules. One is American Electric Power's $3 billion, 765 kV line spanning more than 500 miles between West Virginia and New Jersey. Another is Allegheny Energy's $820 million, 500 kV line between Pennsylvania and Virginia. Both lines, which still require final approvals, would become part of the PJM Interconnection grid that serves 13 states in the east of the US and the District of Columbia.

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