The U.S. Senate should pass the Reliable Power Act (H.R. 3616/S. 3034) to give the Federal Energy Regulatory Commission, in conjunction with the North American Electric Reliability Corporation, a formal role in determining the reliability impacts of federal regulations, the American Public Power Association said in a statement for the record for a Senate Energy and Natural Resources Committee hearing to examine the state of the bulk power system.
The hearing was held on March 25.
Noting that NERC’s warnings of a power supply shortage have grown increasingly dire over the last two years, APPA said that to address these sobering analyses, it believes that that Congress should not force the premature retirement of existing generation resources.
“Under the Reliable Power Act, should FERC determine a proposed regulation would adversely impact the reliable operation of the bulk-power system, the issuing agency would be required to make necessary modifications,” APPA said.
“Given the critical responsibility of FERC in assisting electric customers in obtaining reliable, safe, secure, and economically efficient energy services at a reasonable cost, APPA believes FERC must have the appropriate authority to determine and mitigate significant reliability impacts of major regulations,” it said. “This would allow electric utilities, including public power utilities, to comply with such regulations without adversely affecting regional or local electric system reliability.”
Transmission
With respect to the topic of transmission, APPA said it supports building new electric transmission infrastructure “where doing so is cost-effective and has clear, quantifiable benefits to the consumers who will pay the costs.”
And APPA supports expanding existing bulk-power system capacity using advanced transmission technologies (ATTs) “in situations where they are truly effective and can be implemented consistently with maintaining safe and reliable electric service.”
But neither interregional transmission nor ATTs “are a panacea for affordability and reliability. Congress and FERC should also consider two cost-reduction strategies: limiting financial incentives for transmission investment and encouraging joint ownership of transmission assets,” APPA said in the statement for the record.
APPA said that transmission incentives should not become “FERC candy” paid for by consumers without a clear showing of customer benefit.
“FERC must ensure that consumers pay only for prudent transmission investments and do not pay for transmission investments that do not benefit them. Congress directed FERC to create certain incentives for transmission development in Federal Power Act section 219 but properly instructed that the purpose of the incentives is to benefit consumers and that resulting rates should be just and reasonable,” APPA said.
And the courts “have clearly held that ‘incentives’ that do not induce any beneficial behavior are just handouts to corporate investors. Congress should refrain from creating new financial incentives and should provide oversight of FERC’s use of incentives.”
APPA also said that joint ownership is one of the most constructive ways to build needed transmission while protecting affordability and improving project success.
“Many of the challenges involved in transmission planning, siting, and cost allocation could be mitigated if new transmission lines were jointly owned, with partial ownership by public power utilities where feasible.”
Joint ownership allows all load-serving entities in the relevant footprint -- including public power utilities -- to participate in the ownership and development of new transmission projects, APPA noted.
Joint ownership “produces a collaborative and inclusive process for planning, development, and financing that can result in a more efficient grid serving growing demand reliably. It can eliminate weak spots, make it easier to garner support for transmission projects, lay a foundation for prompt siting, help manage cost-allocation issues by demonstrating multiple benefits, and attract political support for state and local approvals. For public power utilities facing rising transmission charges, joint ownership can also provide a hedge against those costs.”
FERC and Congress should pursue policies to promote public power joint ownership where feasible, APPA said.
Infrastructure Neutral Permitting Reform
While estimates of the amount of demand increase over the next five-to-ten years vary widely, “there is no doubt that demand is increasing and it is increasing fast,” APPA said.
To meet rising demand, all forms of generation and transmission must be built as quickly and affordably as possible, it said.
“APPA strongly supports infrastructure neutral permitting reform and believes that the House-passed SPEED and PERMIT Acts (H.R. 4776 and H.R. 3898, respectively), as well as the Fix Our Forests Acts (H.R. 471/S. 1462) should be packaged together and approved by the Senate.”
These bills have passed the House with bipartisan support.
APPA included its most recent updated Permitting Reform Principles in the statement for the record to provide more detail.
“In addition to reducing costs and regulatory burdens, any final permitting reform package should include provisions providing permitting certainty for energy projects of all types,” APPA said.
Details on Hearing
Witnesses at the hearing were Todd Snitchler, President & CEO, Electric Power Supply Association, Travis Fisher, Director of Energy and Environmental Policy Studies, Cato Institute and Liza Reed, Director of Climate and Energy Policy, Niskanen Center.
At the hearing, Chairman Mike Lee (R-UT) opened by noting that the country has seen the retirement of dozens of gigawatts of dispatchable generation over the last decade.
He said that was “manageable” when demand was relatively flat but that is no longer the case.
Lee said that there is “shrinking headroom” between supply and demand as structural changes in our economy require large amounts of electricity around the clock. He opposed calls to limit data center development and instead said that, “if we allow supply and demand to function, if we modernize permitting, and if we ensure that markets are truly competitive, we can solve this challenge.”
Lee noted that “there seems to be some bipartisan consensus in this committee that we need to build more transmission in addition to generation,” but that there was disagreement as to “exactly how much transmission build out should occur.”
Fischer said that there is an opportunity to leverage a new set of large load customers with a “very high willingness to spend and very high time preference” to help build.
Democrats, as well as Reed, touted the benefits of grid enhancing technologies (GETS), dynamic line ratings, and reconductoring.
Reed also spoke in depth about the value of high voltage direct current (HVDC) lines for dispatching power over long distances. Reed also bemoaned that FERC has not “set the expectation that these technologies can receive compensation for the benefits that they provide.”
Senator Bill Cassidy (R-LA) raised the issue of federal backstop siting authority, asking “should we at the federal level be essentially endorsing eminent domain to take private property in order allow high-voltage lines to go through?”
Fisher said it made him “nervous,” which is why he is advocating for a “new parallel path to allow private grids,” which he thought could “solve a lot of problems.”
Snitchler said that EPSA did not have a position on the use of “private grids.”
Lee said the federal government already has backstop siting authority over some lines through section 216 of the Federal Power Act. He said that while it has not yet been used, “it most certainly will be in the future.”
Reed said that section 216 authority has not been used because of overlapping federal requirements that have rendered it unworkable. Instead, she said that Congress should make the process for siting transmission lines similar to that used for natural gas pipelines.
Later, Lee asked if section 216 authority would benefit from additional reforms to environmental statutes, such as the National Environmental Policy Act (NEPA) and the Clean Water Act, to which Reed agreed.
On the issue of private grids, Reed said large loads should have both private grids and a robust national grid to provide reliable and affordable power.
When asked by Sen. Catherine Cortez Masto (D-Nevada) if there are certain regional transmission organizations or regions of the country panelists believed are taking an “innovative approach to queue management,” Reed and Fisher held up the Southwest Power Pool as an example.
