Subcommittee Examines Transmission Siting and Cost Allocation Issues

October 13, 2011

WASHINGTON, DC - The House Energy and Commerce Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), continued its American Energy Initiative series with a hearing to discuss electric transmission issues. Today's hearing examined a path forward toward building the electric infrastructure necessary to support a strong economy for future generations.  
 
Today's witnesses included representatives from the Federal Energy Regulatory Commission, the Department of Energy, state regulators, and the electric power sector. The hearing focused on two main issues related to building new transmission facilities: the siting and permitting of transmission lines and determining who should pay for such lines.
 
The hearing comes just days after Energy Secretary Chu issued a decision rejecting a proposal to delegate additional transmission authorities to FERC. Members of the subcommittee welcomed this decision as it preserves powers Congress specifically delineated to DOE under the Federal Power Act.  As an alternative to the proposal, Secretary Chu pledged greater collaboration between DOE and FERC to make the statute work more efficiently. Lauren Azar, Senior Advisor to Secretary Chu, stated, "DOE recognizes that it can administer its Section 216 powers better, faster, with more transparency and more effectively."
 
The majority of today's discussion centered on the question of who should plan and pay for new transmission infrastructure. FERC recently finalized a new rule, Order 1000, which outlines changes to FERC's regional transmission planning and cost allocation requirements for public utilities. This rule attempts to remedy perceived deficiencies in the complex regional transmission planning and cost allocation processes. Many electric industry stakeholders, however, voiced concerns that Order 1000 raises more questions than it answers.  In particular, some state regulators and utility interests fear that regional transmission plans developed pursuant to the rule could limit state and local resource planning options and force electricity customers to pay for new infrastructure, even when they may not receive any commensurate benefits.
 
Michigan Public Service Commissioner Greg White acknowledged FERC's efforts to improve the transmission planning and cost allocation processes under Order 1000, but believes the "devil is in the details." White expressed concern that new regional cost allocation methods may not include an appropriate nexus between costs and benefits. He stated, "The cost allocation of projects included in regional plans needs to be fairly assigned to those that benefit."

John DiStasio, testifying on behalf the Sacramento Municipal Utility District and Large Public Power Council, voiced concerns that "Order 1000 undermines efforts to invest in local energy solutions." DiStasio testified that rule's broad allocation policies could impose additional and unnecessary costs on utilities that will "ultimately be passed on to consumers with no real benefit."
 
"It is important that any federal action to support the development of transmission infrastructure should strike the appropriate balance between the various stakeholders, including preserving the proper roles of state and local governments," said Whitfield. "The permitting, planning, and pricing of electricity transmission infrastructure are important issues that will undoubtedly have implications for the future of energy policy in this country."

 
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