Scott Corwin, president and CEO of the American Public Power Association, and Jim Matheson, CEO of the National Rural Electric Cooperative Association, on Nov. 13 sent a letter to Sens. Joe Manchin (I-WV) and John Barrasso (R-WY) outlining strong concerns with provisions in S. 4753, the Energy Permitting Reform Act of 2024.
Manchin is Chair of the Senate Energy and Natural Resources Committee, while Barrasso is Ranking Member of the Committee.
APPA and NRECA “support efforts in Congress to streamline the federal permitting and siting process, eliminate excessive regulatory barriers, and ensure more predictable and timely decisions from relevant federal agencies.These reforms are urgently needed for co-ops and public power utilities to meet growing electricity demand and ensure system reliability,” they wrote. “We know the sponsors and supporters of S. 4753 share these important objectives.”
“However, to achieve our shared goals, transmission policies must continue to recognize that co-ops and public power are different from other electric utilities, not only because they are not-for-profits, but also because they are primarily regulated at the state and local levels and are therefore not subject to full regulation by FERC. Current law accounts for these differences by allowing FERC to require co-ops and public power to adhere to a comparability standard in the transmission of electricity.”
Under this system, in exchange for access to another electric utilities’ transmission facilities at nondiscriminatory rates, the transmission rates a co-op or a public power utility charges must be comparable to the rates it charges itself, they noted.
In addition, the terms and conditions a co-op or a public power utility offers other utilities must be comparable to those it provides itself, the letter noted.
“FERC is authorized to ensure the comparability standard is followed. This approach allows co-ops and public power to continue to set their rates, terms, and conditions at the local level, with appropriate oversight,” Corwin and Matheson said.
Moreover, existing FERC rules that establish processes to produce regional transmission plans “respect these jurisdictional boundaries and differences by incentivizing co-ops and public power to participate voluntarily, and many have chosen to do so when it is in the best interest of the communities they serve,” the letter said.
Voluntary participation allows public power utilities and co-ops to retain their local decision-making authority.
“Unfortunately, S.4753, the Energy Permitting Reform Act of 2024, fails to recognize these differences and establishes a one-size-fits-all, top-down approach by expanding the jurisdiction of FERC over co-ops and public power in an unprecedented fashion,” Corwin and Matheson said.
As an example, the bill would require non-jurisdictional entities to subject themselves to additional FERC regulation to receive a FERC permit to build a transmission line designated to be in the national interest, they noted.
“Contrary to S.4753’s goal to build more infrastructure, this regulatory burden significantly reduces the likelihood that co-ops or public power would participate in the construction or modification of national interest electric transmission facilities,” the letter said.
As not-for-profit entities not seeking a return on their transmission infrastructure investments, participation by public power and co-ops can help reduce overall project costs and help keep electricity rates affordable for all customers, they noted.
“However, forcing co-ops and public power to subject themselves to additional FERC oversight instead of their own established and regulated rate processes, could diminish interest from not-for-profit utilities.”
The legislation would also give FERC “unprecedented authority to require currently non-jurisdictional public power and co-op utilities to participate in a new interregional planning process on a mandatory basis, even when doing so is not in the best interest of the communities they serve,” Corwin and Matheson said.
“Replacing the existing voluntary participation standard with mandatory participation intrudes on public power and co-op critical local decision-making authority” and would likely lead to higher rates for customers.
For these reasons, APPA and NRECA have proposed amending the bill to ensure the unique structure of not-for-profit utilities is recognized and the current, long-standing precedent for FERC oversight is maintained, they went on to say.
“We strongly believe our concerns about expanding FERC jurisdiction over non-jurisdictional entities can be addressed without sacrificing the purpose of the bill, or its bipartisan support,” wrote Corwin and Matheson.
“We urge you to support these critical changes so that co-ops and public power utilities can build the necessary generation, transmission, and distribution infrastructure needed to provide affordable, reliable, and sustainable electricity to the millions of Americans they serve.
