July 27, 2011 - why FERC issued Order No. 1000, and what it means

I've been covering FERC Order 1000, a landmark regulatory decision that will reshape the U.S. electric grid.

To understand what FERC's Order No. 1000 means for the U.S. transmission system, you need to understand the direction in which the electric industry is changing.  A shift in the generation mix coupled with a sharp uptick in transmission line construction are largely responsible for the need for reforms.

Utility investment in transmission lines is booming.  For example, utility members of the Edison Electric Institute reported $55.3 billion in new transmission facility investment, while another report commissioned by EEI suggests about $298 billion in new transmission facility needs between 2010 and 2030.  In the next five years, new transmission line mileage will be built at a rate nearly three times higher than the historical average.

Why is so much new transmission line being built?  FERC points to changes in the generation mix.  Between air emissions regulation, state renewable portfolio standards, and fuel costs, the mix of energy resources used to generate electricity is shifting.  An increasing reliance on natural gas and large-scale integration of renewable generation means new transmission lines are needed to connect these new generators to markets.  Meanwhile, while coal-fired generation continues to be significant, some facilities like the Salem Harbor Power Station are being retired.  The existing electric grid was not built to accommodate these shifts in the energy mix.

With so much transmission line development underway, the stakes are high.  How lines are planned affects whether society finds the least-cost solution to our electric needs.  How the costs of new transmission lines are split affects whether users of the electric grid -- including both consumers and generators -- get fair treatment.  In issuing Order No. 1000, FERC concluded that the status quo can lead to inefficient and higher-cost decisions being made:

We conclude that the narrow focus of current planning requirements and shortcomings of current cost allocation practices create an environment that fails to promote the more efficient and cost-effective development of new transmission facilities, and that addressing these issues is necessary to ensure just and reasonable rates.

Order No. 1000 aims to fix these shortcomings through new requirements on the transmission planning and cost allocation processes.

April 11, 2011 - Northern Pass transmission

The Northern Pass project - a proposed high-voltage DC transmission line capable of sending about 1200 MW of power from Hydro-Quebec into New England - continues to be controversial.  The $1.1 billion line from the Canadian border has been proposed by Public Service of New Hampshire's parent Northeast Utilities, along with utility NSTAR and Hydro-Quebec.  These utilities promote the line as empowering New England markets to buy renewable power from Canada - primarily from Hydro-Quebec's nearly 40 gigawatts of hydro capacity.  Opponents raise concerns both about local siting issues related to the line - which runs through the White Mountain National Forest and a number of communities - as well as about the impact of importing gigawatts of Canadian renewable power on the development of renewable power projects in New England.

Now, two of New Hampshire's Congressional delegation, Senator Kelly Ayotte and Representative Charles Bass, have sent a letter to Secretary of Energy Chu expressing opposition to the project in its current form based on the public hearings that have been held.  They call on the Department of Energy to study alternatives to building towers along the Northern Pass's route through New Hampshire - alternatives like burying the lines or using existing rights-of-way.  The Congressional delegation points to a need to protect New Hampshire's north country lands as "prime economic assets and pristine landscapes."

If the Northern Pass project is to be developed, proponents may have to navigate the political waters as well as the regulatory process. 

February 14, 2011 - renewable energy and transmission needs

As more renewable energy projects are built around the nation, the increase in energy produced - as well as shifts in where that energy is produced - may drive the need for new transmission lines to connect green power to customers.  For example, in New England, these pressures are behind transmission projects like the Northern Pass and the Champlain-Hudson Power Express.  This kind of transmission development raises questions like who should pay for these lines, as well as whether the lines will provide any benefit to the people living in states they cross.

Utah is facing these same questions, thanks to the proposed $3 billion TransWest Express transmission line project.  If built, this 725-mile long 600 kilovolt DC transmission line would connect Sinclair, Wyoming to a substation near Boulder City, Nevada.  The line is designed to transmit energy from up to 3,000 MW of wind projects east of the Rocky Mountains to customers in southern California, Arizona, and Nevada.  Although 429 miles of the transmission line would cross Utah, the project as currently proposed would not include any offramps to connect Utah customers with that renewable power.

 

Utah does not have a renewable portfolio standard (RPS).  RPS programs require utilities to source certain amounts of the electricity they sell to customers from renewable power.  Utah does have a statutory renewable goal of 20% of adjusted retail sales by 2025, but utilities are required to pursue renewable energy only to the extent that it is "cost-effective" to do so.  California, Arizona, and Nevada - the states that will be served by the TransWest Express transmission line - do have RPS requirements, as do most other states in the nation.

How will Utah respond to the TransWest Express proposal?  Is there desire in the state to be able to buy the renewable power that will be winging its way westward through the transmission line?  Can the state obtain any benefits in exchange for permitting the line to cross its lands?

November 22, 2010 - Champlain Hudson Power Express

A recurring theme this year is that Hydro-Quebec has a large amount of hydroelectricity that it would like to sell us.  In order to sell Canadian hydro on the scale HQ envisions, as an engineering fact more transmission lines need to be built.  Of these, what is now called the Northern Pass transmission project - effectively a high-voltage DC line capable of carrying 1,200 MW of steady imports into the US - has received a lot of attention.  This imported power would be primarily generated by HQ's extensive network of hydroelectric facilities -- with an installed capacity and available supply of over 42,000 MW.

Another similar HQ-inspired transmission project is proposed just west of New England: the Champlain Hudson Power Express, a 300-320 kV DC line, consisting of two 5-inch cables to be buried at a depth of 3 feet.  One unique aspect of this HVDC project is that it will be entirely underwater and underground, buried three feet into the substrate.

The proposed route interconnects with a proposed $400 million line project in Quebec.  (The Canadian side will be developed by TransÉnergie, which is Hydro-Québec's transmission business.)  The route runs from the Richelieu River in Quebec, south through Lake Champlain.  Then, to avoid stirring up PCB-contaminated sediment in the Hudson River, the route leaves the water and runs under railroad right of ways.   The line will be developed by a private developer (called Transmission Developers, Inc.) supported by the Blackstone Group. Users of the line (primarily utilities using the line to transmit power, or large industrial users who buy their own power) will pay for it. The line developer says its analyses show New York ratepayers will save $8.1 billion on their electricity bills between 2015 and 2024, by providing less expensive Canadian renewable power, which will force older and less economic domestic generating units offline.

Will these lines be built as proposed?  What will their effects be on power prices in the U.S.?  What effects will the imports have on the development of renewable generation in New England?  The answers to these questions remain to be seen.  With its large surplus of generation over domestic load, we can be sure that Hydro-Quebec will remain open to selling us power for the foreseeable future -- but the cost of that power, in both cents per kilowatt-hour and in terms of societal impacts, may be hard to calculate.