Federal authority over transmission siting may be reshuffled

Tuesday, October 11, 2011

U.S. Department of Energy Secretary Chu is considering a policy change that will affect how electricity transmission lines are sited and built.  Since the dawn of the electric power industry, states have had the authority over whether the siting of a given transmission facility should be permitted within their boundaries.  That traditional states’ right may be shifting away to the federal level.

Since the Energy Policy Act of 2005, the Department has had “backstop” authority to approve transmission line routes when states fail to issue approvals.  In 2007, the Department of Energy used this authority to designate corridors of highly congested transmission lines in the mid-Atlantic area (parts of Delaware, Ohio, Maryland, New Jersey, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia) and the southwest (parts of southern California and western Arizona).   

Proposed new transmission facilities located within these designated National Interest Electric Transmission Corridors can apply to the Federal Energy Regulatory Commission for siting approval if a host state does not approve the project within one year.  This could happen if a state regulatory proceeding drags on for longer than a year, or if state regulators condition project approvals in a manner that is not “economically feasible” – both results more likely to happen in connection with larger and more controversial transmission line projects.  While the Commission initially approved some transmission line siting applications that had been denied by state regulators, a federal appeals court held that the Commission lacked authority to approve a project in the face of a state’s affirmative denial (as opposed to mere regulatory delay).

At issue now is whether the Department of Energy should delegate its corridor designation function to the Federal Energy Regulatory Commission.  Proponents of the measure point to the need for increased transmission development, citing the growth of renewable resources located far from customer loads as well as transmission congestion; they believe the Commission will be better suited to the task of studying congestion and designating national corridors than the Department is.  Others oppose this proposed delegation, noting that Congress specifically divided the corridor designation and project approval functions between the Department and the Commission, and that states retain the ultimate rights to deny a siting application.  A number of comments have been submitted to the Department on this proposed delegation.

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