Feds Try Fast-Tracking Energy Transmission Approvals — Again

By: - September 28, 2011 12:00 am

Previous efforts to speed up approval of interstate power lines didn’t work out as planned. The Obama administration has a new plan, but many states are skeptical.

In Montana, where powerful winds fly down the Rocky Mountains and whip across the plains, wind power could be a boom industry. The state  ranks near the top  of most lists of states with wind energy potential, a standing that President Barack Obama was aware of when he recently touted the possibility of Montana becoming a national leader in developing wind energy.

But that distinction seems a long way away. Although the state’s output is growing, 17 states produce more megawatts from the wind than Montana does. States such as Oregon and Pennsylvania, blessed with a fraction as much wind energy potential, have substantially more in the way of installed capacity.

A big reason why Montana is lagging is that there aren’t enough transmission lines to connect the remote plains where windmills might go with the bustling cities where lots of people need power. Long distances from major markets are holding back other potential wind producers such as Kansas and the Dakotas.

Some in Montana, as well as federal officials and energy executives, say state-level regulatory processes are preventing the construction of long-distance power lines. Proposals that stretch across several states are especially cumbersome, making energy companies skittish about investing the huge sums of money necessary. “There’s so much uncertainty — especially in the Western United States,” says Travis Kavulla, chairman of the Montana Public Service Commission. “No one wants to bear the risk of having someone pull the rug out from under them.”

Now, the Obama Administration is pushing a plan to consolidate federal authority over transmission line siting, in hopes of not only fast-tracking new renewable energy projects but also alleviating congestion on electric grids and adding jobs in a weathered economy. But a  recent draft of the plan has been greeted with skepticism from energy officials in at least 30 states, who say it would circumvent state authority to safeguard the concerns of landowners, ratepayers and others who might prefer to have decision making reside in state capitals rather than in Washington.

Past efforts unsuccessful

This is just the latest chapter in a long-running state-federal battle over who should oversee expansion of the nation’s energy grid. As recently as 2005, Congress tried increasing the federal role with the Energy Policy Act. A provision in the law gives the U.S. Department of Energy the authority to study and designate national energy corridors as “severely congested.” It also gives the Federal Energy Regulatory Commission, an agency that regulates interstate energy projects, so-called “backstop authority” to permit projects in those corridors if a state has withheld approval for more than one year.

The provision hasn’t fast-tracked permitting of the most crucial projects, as supporters had hoped. No permits have been issued under the new mechanism, and parts of the provision were twice challenged successfully in federal courts.

The 4th U.S. Circuit Court of Appeals ruled in 2009 that FERC had no authority to permit projects states had rejected — only projects that states had not acted upon were fair game. And the 9th Circuit ruled this year that the Department of Energy failed to consult with state stakeholders for its study of congested corridors. The department should have produced an impact statement under the National Environmental Policy Act, the court said.

Even the author of the 2005 provision, U.S. Senator Jeff Bingaman, acknowledges its problems. In a letter to the Department of Energy, the Democratic chairman of the Committee on Energy and Natural Resources called the new decision-making framework “flawed and ineffective.”

The Obama administration is now proposing to streamline the federal backstop process. It would give the Department of Energy’s authority to designate congestion corridors to FERC, in addition to the commission’s existing authority to permit projects. The proposal also calls for simultaneous state and federal review, creating a “more efficient, directed process,” according to draft plan.

Some energy experts say this would be a positive development. “FERC has a lot more grasp on those issues,” says Jim Rossi, who teaches Energy Law and Policy at Florida State University and has written extensively about transmission siting law. “You’re going to have better coordination if you have simultaneous review.”

Mixed reactions

Many but not all energy developers support the plan, which was originally drawn up by wind and solar energy developer NextEra Energy, whose executive vice president, Joseph Kelliher, is a former FERC chairman. Some argue that the proposal would prevent cases like one in 2006 when Arizona regulators denied a permit for a 270-mile transmission line that would have brought nuclear power generated in Arizona to California. Regulators cited negative impacts the transmission line would have on local plants, wildlife and archaeological sites without benefitting Arizona electricity customers.

But the proposal has drawn a flurry of criticism on several fronts. Many states fear that FERC would not be as responsive to local concerns as state regulators would be. Charles Gray, executive director of the National Association of Regulatory Utility Commissioners,  wrote to FERC  that its new proposal “relies on a tortured reading” of current law and “would cause uncertainty, litigation, damage to state and federal relations, and delays in transmission development.”

Gray’s group argues the rule change would enable transmission companies that fail to get state approval for their projects to apply for a FERC permit. Or the companies might bypass the state altogether, eliminating local input on projects. Officials in 20 states and two regional organizations representing 11 more states have  written letters  to FERC opposing its proposal. The National Association of State Utility Consumer Advocates submitted similar concerns.

Responses from environmental groups have been mixed. The National Resources Defense Council, for example, says it favors the policy because it will accelerate approval for renewable energy projects. Meanwhile, the Land Trust Alliance worries the proposal will hinder conservation efforts by leading to construction of transmission lines on public lands. Other environmental groups worry that the proposal wouldn’t only add renewable energy to the grid, but emissions-heavy coal power as well.

The U.S. Congress may also put up resistance. Bingaman, while supportive of increased federal authority to site transmission projects, wrote a  letter to FERC  expressing his “serious concerns” with the proposal. “Congress has been reluctant to transfer that authority to the Commission,” he wrote, noting that the system of checks and balances Congress set up in the 2005 law between FERC and the Department of Energy was “an essential part of the hard-won compromise.”

More uncertainty ahead?

The Energy Department says it hopes to finalize a plan within a few weeks. But without significant changes to the draft, the controversy will likely continue in the courts. Such legal battles could delay new projects and add yet another layer of uncertainty for transmission project developers.

More uncertainty is exactly what Montana officials hope to avoid. Several transmission projects, which can take as long as a decade to develop, are in the planning stages. Some of those have encountered legal wrangling.

That’s the case for the million Montana-Alberta Tie Line, which would send Montana’s wind power north to Canada. Battles over eminent domain laws have halted construction, as locals try to keep their property. 

Also stalled is NorthWestern Energy’s Mountain States Transmission Intertie, which is supposed to send mostly wind energy from central Montana to Midpoint, Idaho. The Montana Supreme Court is expected to rule later this year on the question of whether the state failed to consult with Jefferson County officials in its planning stages.
Kavulla says he’s not sure what the federal government’s answer to such predicaments should be. Maybe, he says, it should make it easier for energy companies to develop on federal lands, which has long been an issue. But in the meantime, he just hopes for a bit of consistency. 

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