In anticipation of a Senate energy policy and climate debate this summer, a major lobbying fight is increasing over how to pay for power lines needed to expand renewable energy.

Some of the largest utilities are battling renewable power companies, environmentalists and transmission system developers on the issue. Their positions are miles -- and potentially billions of dollars -- apart. Green groups want infrastructure costs shared by essentially every electricity user who could access the renewable power. Utilities argue that only those customers that specifically seek renewable power should foot the bill.

Both sides have hired lobbyists with important political ties, launched websites detailing their positions and are lobbying lawmakers and their constituents.

Transmission issues will need to be resolved for any comprehensive climate policy to work, analysts said.

"You have to have a way to get the power from where the resource is to generate it to where the demand is," said Karen Palmer, Darius Gaskins senior fellow at Resources for the Future, who noted that wind farms often are in more remote areas. In addition, Palmer said, existing lines often lack capacity to carry more power.

"Who is going to pay for it is one of the biggest questions about it," Palmer said.

Although the issue has percolated for months, another push came as Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) finalized their climate and energy bill that was unveiled last month.

Concerned they would be forced to pay for power lines, an alliance of 11 utilities and power company interests known as the Coalition for Fair Transmission Policy in March hired lobbyists with Atlanta-based Energy Policy Group. Sue Sheridan, former chief counsel to the House Energy and Commerce Committee under Rep. John Dingell (D-Mich.) leads that lobbying effort.

The Energy Policy Group spent $20,000 on lobbying in the first three months of the year, according to its House disclosure report. That influence effort came on top of what members of the coalition spent on their own lobbying shops. Southern Co., one of the largest utilities in the group, by itself paid $4.1 million for lobbying in the first quarter of this year, although that was on a variety of issues. Progress Energy doled out $880,000 for lobbying in January through March.

The alliance also includes PSEG Corp. of New Jersey, CMS Energy Corp. in Mississippi, Connecticut-based Northeast Utilities, Alliant Energy Corp. in Wisconsin, PPL Corp. in Pennsylvania, SCANA Corp. in South Carolina, ConEd in New York, Indianapolis Power & Light Co., and Detroit-based DTE Energy Co.

Renewable power companies, environmental groups and labor unions meanwhile are working together on transmission funding as one of the goals of the Energy Future Coalition. That group spent $50,000 lobbying in the first three months of this year, with transmission lines as one of the issues lobbyists pursued. One of that group's lobbyists, David Gardiner, previously worked as executive director of the Clinton White House's Climate Change Task Force and as an assistant administrator at U.S. EPA.

Members of that coalition also have separate lobbing groups, including the American Wind Energy Association, which spent more than $1 million on influence efforts in the first quarter. Like the power companies, it lobbied on a number of issues, but transmission upgrades were a top priority.

The Energy Future Coalition plans to hold community forums next month, one in the Northwest and one in the Midwest, with the hope of generating greater grass-roots support for its positions. Details had not yet been finalized.

Working on language

Lobbyists are targeting both the Kerry-Lieberman bill and S. 1462, the bill the Senate Energy and Natural Resources Committee passed last June. The Kerry-Lieberman measure would create the framework for increases in renewable energy production but does not specifically address how grid upgrades would be funded.

To meet the goals of "improved energy security, the reduction of greenhouse gas pollution, and the creation of jobs," the bill says, measures are needed that include "transmission provisions to allow electricity to flow freely from areas of great renewable energy potential to load centers."

The Energy and Natural Resources Committee bill from Sen. Jeff Bingaman (D-N.M.) included new policies for transmission planning, siting and cost allocation. It would allow for, but not require, transmission costs to be shared broadly. But it also contains a controversial amendment from Sen. Bob Corker (R-Tenn.) that would require the Federal Energy Regulatory Commission to allocate costs of "high-priority national transmission" projects regions only if costs "are reasonably proportionate to measurable economic and reliability benefits."

"The simple goal of Senator Corker's amendment, which passed with strong bipartisan support out of committee, is to ensure that consumers don't have to pay for a service they don't receive," said Corker spokeswoman Laura Lefler Herzog. "Since Senator Corker's amendment is part of the energy bill that was passed out of committee, it is our hope and our expectation that it will be included in the bill that reaches the Senate floor."

Senate Majority Leader Harry Reid (D-Nev.), who will make the ultimate decision on what bill -- if any -- comes to the floor this year, has come out in opposition to the Corker amendment.

"Senator Reid supports the Energy Committee reported provisions on this issue minus the Corker amendment that was added in the committee," said Reid spokeswoman Regan LaChapelle last month. "He plans to work with Senators Bingaman, Dorgan and other interested members to fix the language."

FERC Chairman Jon Wellinghoff has called the amendment language too restrictive and said that trying to measure the benefits would hamper FERC's ability to approve transmission costs in an efficient manner. In December, he and Corker agreed to work together on the wording (E&E Daily, Dec. 11, 2009).

When it was approved in committee, Corker's amendment drew support from Sens. Ron Wyden (D-Ore.), Maria Cantwell (D-Wash.), Mary Landrieu (D-La.), Blanche Lincoln (D-Ark.) and almost all of the Republican members. There is division between Republicans and Democrats on the issue and also within the Democratic Party, setting the stage for a floor battle if a bill makes it that far.

So far, the Energy Committee vote has been the only time senators have had to take a position of power line funding, said Bill White, senior vice president with David Gardiner & Associates and the lobbyist coordinating Clean Energy Future Coalition's work on transmission.

"We are not completely convinced that everyone had fully considered the ramifications of Corker," White said, adding that as he talks to lawmakers he shares his view that the provision would be a huge obstacle to the development of renewable energy. "More and more elected officials are going to come around to our way of thinking," White said.

Others are more skeptical of that. Both the Corker proposal and the approach renewable companies want probably lack the votes needed for Senate passage, said Peter Fox-Penner, principal and chairman emeritus at the Brattle Group, a consulting group with a variety of utility interests.

"The right answer is actually neither the Bingaman sort of language of 'spread it very, very wide,'" across an area as large as half the United States, Fox-Penner said, nor the Corker proposal that is "the smallest group that can measure the benefits of that line."

Charged arguments

Both sides argue that the cost of new transmission should be paid by those who would benefit, but they have a widely different view of who those people would be.

"New Jersey customers who want Montana wind ought to be the ones to pay for it," said Bruce Edelston, executive director of Coalition for Fair Transmission Policy and president of the Energy Policy Group.

And while power lines carrying electricity from Montana to New Jersey would need to pass through many other places, Edelston said, "if the customers along that line have no need for that wind, there's no benefit.

"If customers in Indiana, Ohio, have no use for that transmission improvement, why should they be required to pay for it?" Edelston said. "They essentially want to put a surcharge on every customer's bill to pay for that transmission."

By creating a funding system that spreads costs across all electricity users who connected to a power line, he said, the government would be deciding that the lowest cost source is, for example, wind generated in North Dakota, South Dakota or Montana and sent to the East Coast.

"We think it would just be a tremendous waste of money," Edelston said. "The government has never been very good at picking winners and losers."

Renewable power interests would like to see electricity customers "across a broad geographic area," pay for the power lines, said Rob Gramlich, senior vice president for public policy at the American Wind Energy Association. AWEA and various renewable energy companies argue that the benefits of new lines are distributed widely.

"Transmission in almost all cases provides consumers with access to lower cost resources from a broader geographic area," Gramlich said, adding "new transmission provides access to a lot of sources, not just wind ... it allows you to access the lowest cost.

Utilities are fighting the move because it will bring competition, Gramlich said, adding that language like the Corker amendment "is a way to guarantee that no transmission gets built and they know it." If new transmission lines bring in lower cost power, Gramlich said, wholesale electricity prices drop and "incumbent generators get less money."

Utilities, however, are mostly regulated and would likely be compensated for any transmission costs they had to pick up, Fox-Penner said. But they do not want to have to pay for transmission built in other parts of the country, he said.

Fox-Penner and his Brattle Group colleagues have proposed a compromise option. They suggest that the federal government should require states to come together in groups of five to 10 and produce a plan that would include funding new transmission. The plan must meet reliability standards and renewable energy targets. But the groups of states could decide where to build the lines and how to allocate costs. It could help deal with local opposition to building transmission lines, he said.

"We didn't feel like either answer was sort of economically and policy-wise correct," Fox-Penner said of the proposals from some utilities and the renewable power companies.

The Brattle Group colleagues submitted their proposal to FERC and the National Governors Association. But Fox-Penner concedes he could be "a Don Quixote tilting at a windmill."

The highway model

Transmission upgrades are vital to the growth of renewable power. The Energy Department's National Renewable Energy Laboratory in Golden, Colo., earlier this year said that wind power could provide 20 or 30 percent of generation capacity in the Eastern Interconnection by 2024, but only with a major transmission build-out.

That 20 percent target could be reached in 2024 under several scenarios, NREL said. But hitting that target would require as much as 17,000 to 22,700 miles of high-voltage "overlay" lines to be built, costing between $65 billion and $93 billion in 2009 dollars.

The infrastructure probably won't be built without a way to make electricity ratepayers fund it, said Adele Morris, policy director for climate and energy economics at the Brookings Institution, adding that which ratepayers are included is "sort of a fundamental conundrum in the creation of all kinds of infrastructure.

"The question is, is electricity a public good or a private good?" Morris said. The argument in some ways is similar to ones made over telecommunications infrastructure, Morris said.

There are also comparisons made to the highway system, which mostly was funded by taxpayer dollars through federal law because it is used by most people, analysts said. There are privately funded toll roads where drivers are charged per trip. But while it is possible to measure where a car enters and exits a road, electricity does not work that way, said Palmer with RFF.

"There's a lot of sense saying the people who benefit from the electricity should pay for it," Palmer said. "It's harder to identify who those people are. It's not necessarily just the people on either end of that [power] line. It could benefit a lot of people. Electricity kind of goes where it goes."

Electricity, Palmer said, when it leaves a generation facility takes "the path of least resistance" and takes multiple paths.

"You don't charge people per trip," Palmer said. "You put it in and it goes off a whole bunch of different places."