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Tuesday, October 14, 2008 6:29 PM ET
Concept of nationwide transmission grid with FERC siting role gains support
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Southwest Power Pool Inc.Little Rock, Arkansas

FERC Commissioner Philip Moeller and former New York Gov. George Pataki voiced support for the concept of a nationwide power grid and called for streamlining the U.S. electric transmission siting process.

While expressing support for the concept of a national grid, Moeller cautioned that getting there will take some time. "Electricity policy in this country is regional, essentially, based on a variety of factors. And I think we're moving back toward policies that are more and more uniform, but it's sure going to take some time," he said Oct. 14 at a meeting in Washington, D.C., on the case for a national grid, which was sponsored by the Center for Energy Policy and the Environment at the Manhattan Institute.

The existing U.S. grid is broken into three largely separate interconnections — eastern, western and Texas — with regional differences within each of those interconnections.

"I think you'll see a trend emerging in the next couple of years," growing out of FERC's responsibility for the reliability of the bulk power system, Moeller said. "It's very, very serious, and underinvestment in the transmission grid and essentially the maintenance of that grid still has a long way to go to a more reliable system."

Moeller predicted that in the next few years companies will be building more transmission to avoid situations that threaten the electric reliability of their service areas. "More transmission makes for a more efficient grid, which helps consumers in ways that are sometimes quantifiable and in many cases are not," he added.

Pataki said that under the federal backstop siting authority provided to FERC by the Congress in the Energy Policy Act of 2005, the United States is "taking important first, small steps on the road to improving and upgrading our interstate electric transmission grid." However, he said the nation must do far more to improve transmission.

"Bold government action is needed in partnership with the private sector," said Pataki, who now serves as counsel to the law firm Chadbourne and Parke LLP. To streamline the process of designating national interest corridors, Congress needs to act to expedite the time needed "to allow vital transmission projects to go forward." The former governor also is the founder and chairman of Pataki-Cahill Group, a consulting firm concentrating on climate change, energy and the environment.

Southwest Power Pool Inc. President and CEO Nicholas Brown also supported the case for a national electric grid. "We feel a great sense of urgency. The pressure just continues to grow day by day," he said. While the transmission system is adequate to keep the lights on, it is not adequate to provide options from renewable resources going forward, he said.

"The current situation is just simply unmanageable," the SPP chief said. He emphasized that plans for a national system are already on paper. "We need national siting and I would propose national siting for what could be designated as national facilities."

Brown suggested that FERC be granted authority for siting the national portion of the power grid and for determining cost allocation. States would then retain jurisdiction over the state-level transmission and distribution facilities.

Moeller said that state commissioners are not universally opposed to federal siting of transmission. "You might have a hard time getting some to go on the record saying that they agree with more federal siting, but if you talk to them, there are regional differences. But if I was a state regulator, I'd give siting to FERC in a heartbeat. Why would you want to deal with that on a state-by-state basis, when, again, it's interstate commerce?" he said.

Pointing to the record, Moeller said that FERC gets interstate pipelines built. "You don't want to have dead rodents left on your doorstep because of siting decisions. Leave that to us," he quipped. "My point is that federalizing it would be more efficient."

Moeller said that the United States needs to have a realistic discussion of transmission costs. "What we're talking about here, cost-wise is relatively minor in the whole context of the final consumer's bill," he said. In addition, he said the nation needs to focus on siting issues. "If you take a look at what FERC's authority is in terms of siting interstate natural gas pipelines, they get built. If you look at what happens with trying to site interstate transmission lines, not a whole lot of them have been built over the past 20 years. Now there are a number of reasons for that, but siting is probably by far the top one."

Ashley Brown, executive director of the Harvard Electricity Policy Group at Harvard University's John F. Kennedy School of Government, argued that there are many obstacles to siting new transmission besides just objections by state regulators and local governments. In addition, he charged that "there are no national principles" to guide transmission policy.

Arguing that FERC might have drawn "overly broad conclusions" from the failure of its standard market design, which "got shot down from a lot of different places," Brown said that the United States needs common national principles, rather than "regional clubs." While sympathizing with FERC's being "a little gun shy" about standard market design — after former FERC Chairman Pat Wood and Commissioner Nora Brownell got bruised for trying to champion it — he nonetheless urged FERC to enunciate national principles or rules.

"I agreed with you," Moeller responded. "It would be certainly less complicated if we had more national standards."

Moeller added: "Pat and Nora didn't just get beat up. They were bloodied over that." In reaction to the fierce opposition to the standard market design, Moeller said that the commission has deferred more to the regions.

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