States have long defended their right to control their own destiny when it comes to electricity. But with a push to increase renewable energy generation and reduce greenhouse gas emissions dominating the federal energy debate, can Congress and the White House overcome the states' objections?

Several calls for national energy policies -- including federal siting authority for electrical transmission lines, a national renewable electricity standard (RES), "decoupling" utilities' revenues from their customers energy consumption or even nationwide appliance standards -- have run aground in recent years when confronted by the argument that each state has special requirements that cannot be addressed by a "one size fits all" policy.

Such national plans were frustrated in the 2005 Energy Policy Act, which provided the federal government with siting authority only in certain designated areas. The 2007 energy law ended up with watered-down language that required states to consider provisions to align electric utility rates with incentives to assure investments in cost-effective energy efficiency, sometimes referred to as "decoupling."

But with President Obama calling on Congress to double renewable energy resources in the next three years and reduce greenhouse gas emissions, the tide in favor of national priorities over state exceptions has grown, and more than a few people say it is enough to overcome parochial objections.

For instance, with the average transmission project taking anywhere from five to 12 years to site and construct under the current state-controlled process, renewable energy advocates say transmission is one of the biggest obstacles to increasing renewable energy generation quickly enough to meet the nation's needs.

At a Center for American Progress event last week, Senate Majority Leader Harry Reid (D-Nev.) dismissed a question from a reporter who asked about possible state and local opposition to transmission even with federal siting.

"Whatever we pass at the federal level trumps all that," Reid said. "This is not a couple years ago. The problems we have in America today, in the world today, are significant, and we cannot let 231 state regulators hold up progress."

Reid, Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) and Rep. Jay Inslee (D-Wash.) have championed the need for a faster siting process and have each said there is a greater role for the Federal Energy Regulatory Commission in the process.

Reid and Inslee are preparing separate but similar bills granting such authority that could be introduced as early as this week.

"The idea is to have a more national response to a national challenge," Inslee said. "Obviously we have to have some more national decisionmaking."

Inslee said he recognized that the transmission siting fight would be more along federal-state lines, as opposed to Democrats versus Republicans.

But while the National Association of Regulatory Utility Commissioners (NARUC) has traditionally opposed federal siting authority, the group of state regulators is actually considering a backup plan of sorts.

A resolution under consideration would reaffirm that NARUC's primary position is to oppose federal regulators' authority to site and build new interstate transmission, but if -- and only if -- federal authority appeared inevitable, state regulators would want to have the first crack at siting projects before federal authorities and a national transmission plan.

"I think [the NARUC proposal] really is a good sign that there doesn't have to be a civil war between the federal government and the states about this," Inslee said. "We all are in this soup together, and we all understand we have to find some way of moving forward. I feel good about it, and I think it has a good prospect for success."

But Garry Brown, the chairman of the New York Public Service Commission, and head of the NARUC Electricity Committee, said transmission is much more complex then it seems.

"It's naive to think the local politics and local opposition will go away -- it won't," Brown recently said at a Environmental and Energy Study Institute event in Washington. "It sounds nice and clean. I think as people begin to understand what the [federal] jurisdiction means it may not be as simple."

Brown cited a recent transmission project in New York where of the more than 1,000 people who submitted comments about the project, only four actually supported the power line.

Decoupling only the beginning

A preview of the state-federal debate came last month as lawmakers considered a controversial provision in the economic stimulus bill that tied state energy grant funds to how state regulators set rates for utilities.

The original sentence in the 407-page stimulus bill, which would have required governors to ensure state regulators "decouple" utilities' revenues from how much energy customers consumed in order to receive $3.1 billion in funding, incensed state regulators and consumer advocates. They argued the measure tied the hands of regulators to use creative rate mechanisms to incentivize energy efficiency, injected politics into setting electricity rates and was harmful to consumers' pocketbooks.

In the end, NARUC utilized their membership on a state and federal level to lobby for the final bill to omit the word "decouple" and instead require regulators to "align" utility incentives with the goal of promoting energy efficiency.

Leading environmental Democratic lawmakers cheered the changes as a satisfactory compromise for both sides. Rep. Ed Markey (D-Mass.), chairman of the Energy and Environment Subcommittee on the Energy and Commerce Committee, said NARUC supported the final language, while Inslee said NARUC was "comfortable" with the language.

But NARUC still does not appear happy with the result, saying the final bill was "ambiguous" and interfered in utility ratemaking procedures, even if it was better than the previous version.

"Just because something is an improvement doesn't mean it was good," said Chris Mele, NARUC's legislative director. "In this case it was just less bad."

Obsolete?

The same local and state pressure is also evident in another national renewable energy policy: the push for a national requirement of electricity generated from renewable energy.

Some lawmakers and utilities from the Southeast allege their states lack enough wind and solar power to meet an RES, which requires power companies to supply escalating amounts of power from renewables. Such utilities would have to purchase credits or make other payments because they cannot meet the targets, which could raise costs (E&E Daily, Feb. 27).

But members from other states have similar concerns. For example, Rep. Mike Doyle (D-Pa.) said RES requirements should include "waste to energy," something that Pennsylvania's current state RES includes. Many environmentalists are against this as a resource as it is not emission-free. Still other states would like nuclear energy or more energy efficiency measures to be included in the requirements.

Although Democratic leaders have said they want to move quickly, the path for getting energy legislation to the White House is ultimately uncertain, leaving plenty of opportunity for state regulators and local advocates to press their case.

Stan Wise, a commissioner on the Georgia Public Service Commission who testified before a panel of the Energy and Commerce Committee against a national RES, said no matter the outcome it was important for states to continue raising the issues.

"We have some allies, but I'm not sure we have enough," Wise said. "Any legislation that is less bad I am for it."