UTILS LOOK FOR WIND WIRES

With Washington Pressing for Wind Energy, Companies Fight Over Infrastructure; Utilities Grapple With How to Pay For, Install Lines to Move Wind Energy From West to East
Andrew Restuccia, September 8, 2010 (Washington Independent)

"…[T]he Obama administration has made clear it wants to ramp up the use of renewable energy…And some in Congress are hoping to pass a federal renewable energy standard [RES], requiring the production of more wind, solar, biomass and geothermal energy…Utilities recognize the shift to green energy as a major growth prospect…[and] an impediment…[A]cross the country, utility and energy companies are preparing for a massive fight over how to deliver clean energy to people’s homes…[and over] who will pay for the necessary infrastructure...

"…Despite efforts by federal regulators to referee the fight [over how to allocate the costs of the new high-powered electric lines necessary to move wind energy from one part of the country to the other], some experts foresee further delays in the construction of the new electric, or transmission, lines they say are essential for meeting federal and state renewable energy mandates…"

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"Many utilities in the wind-rich Midwest would like to move excess electricity to the Northeast on new, high-powered lines. But utilities in the Northeast see Midwestern wind as a threat to its nascent offshore wind industry. While offshore wind is plentiful in the region, it has been plagued by regulatory delays and high costs. Cheap wind from the Midwest could keep the Northeast from developing its own local source…

"Utilities on both sides of this divide are drawing the battle lines over so-called cost allocation policies, which lay out a structure for how the costs for these lines are spread among ratepayers. One faction (including some Midwestern utilities and renewable energy advocates) proposes spreading the costs broadly over an entire region, arguing that new lines deliver broad economic and electric reliability benefits to all ratepayers. The other faction (including many Northeastern utilities) says costs should be paid by the specific beneficiaries of the new line."

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"Electric industry stakeholders — utilities, renewable energy developers, transmission companies — stand to lose or gain billions of dollars based on the structure of these policies. As a result, they are pouring significant lobbying resources into their development…[It could] cost at least $43 billion to upgrade the nation’s electric system…At the center of this fight is the Federal Energy Regulatory Commission, or FERC, a little-known agency that…has far more power over shaping the country’s energy policy [than DOE]…

"…FERC released in June a cost allocation proposal meant to assuage utilities’ concerns. It drew on elements of both utility factions’ proposals…For the most part, industry stakeholders say they can work within the framework FERC set up [if an RES is passed and national demand grows]…Rob Gramlich, senior vice president for public policy at the American Wind Energy Association, the wind industry’s national trade group, says…FERC is working to expand a “Balkanized” electricity grid that was meant only to work on a local, rather than a regional basis…But Gramlich notes that any rulemaking that FERC finalizes will likely be challenged in court…"