BPC Report Calls for Regulatory Overhaul for Electricity Grid
Photo credit: TEEIC
On February 7, the Bipartisan Policy Center (BPC) released its new report, “Capitalizing on the Evolving Power Sector,” which lists a series of recommendations on how to improve the nation’s electricity grid. The focus of the report is on how to overcome regulatory hurdles to allow swifter construction of transmission lines, with a careful balance between state and federal authority.
The impetus for the report is the recognition that many of the electrical grid’s ills have worsened in recent years, and the last major piece of legislation aimed at the electric power sector – the Energy Policy Act of 2005 – needs reform.
The BPC released the report at a launch event in Washington D.C. The speakers included former Congressman Rick Boucher; Allison Clements from NRDC; and Curt Hébert a former FERC Chairman and now Partner at Brunini Grantham Grower & Hewes. Congressman Boucher discussed the role he played in passing the Energy Policy Act of 2005, in which he was a fierce defender of states’ rights, resisting efforts to give federal authorities more power.
However, he explained, he has come to believe that Congress must act to grant more federal power to FERC for several reasons. First, the reliability of the nation’s electricity grid has deteriorated, with associated costs to the economy. Second, to improve reliability and flexibility, significant investments are needed in “non-transmission alternatives” – demand response initiatives, smart grid technologies, energy storage, distributed energy, energy efficiency. Incorporating these initiatives will require upgrading the distribution system.
Finally, with 30 states plus the District of Columbia passing renewable portfolio standards (RPSs), the need to integrate a growing quantity of renewable energy into the grid requires large investments in transmission capacity.
There are multiple recommendations, but one of the more interesting ones pertains to siting authority.
Under current law, states possess the authority over siting transmission lines. Any state can essentially veto a new high-voltage transmission line, effectively holding up an entire project even if other states are on board. Recognizing this bottleneck, in the Energy Policy Act of 2005 Congress gave the Federal Energy Regulatory Commission (FERC) “backstop” authority – which would overrule the state’s rejection – to site a transmission line if it was in a congested area and the project was deemed to be in the national interest.
However, the problem with this is that FERC only had the authority to issue permits for projects that were located in pre-designated areas outlined by the Department of Energy. In practice, the backstop authority proved to be difficult to interpret. As a result, FERC has never actually exercised its authority for a single project.
This brings us to the BPC report. The BPC recommends that Congress amend the law to give FERC the authority to approve any high-voltage transmission line project if 1) a state rejects the project and does not offer an alternative route, and 2) the project has been approved in at least one other state. This would prevent one state from holding up a project. This is a significant expansion of federal powers over siting transmission projects, one that is controversial.
As for the political context, Rep. Boucher, Allison Clements, and Curt Hébert all sounded optimistic about the chances of their recommendations reaching members of Congress. They said that when the electric power industry agrees with environmentalist on the need for reform, the measures stand a good chance of passage.
Check out the report for the full list of recommendations.
