RENEWABLE ENERGY:

Sparks fly as aides try to untangle a power lines dispute

Senate aides and staff for the governors of five Western states are trying to to mend a dispute over transmission policy for renewable power that has provoked a sharp exchange of letters over the past month.

A conference call is planned between aides of Senate Majority Leader Harry Reid (D-Nev.) and Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, and representatives of the governors of Arizona, California, Nevada, Oregon and Washington, to take up the transmission policy controversy. It bears on how the Senate may deal with transmission if the Bingaman energy bill, S. 1492, gets to a Senate floor debate this year.

The opening salvo came from the governors, led by Arizona Gov. Janice Brewer (R), who wrote a Nov. 29 letter to Senate leaders opposing federal attempts to order a broad sharing of major new inter-regional transmission lines to move renewable power. Stripped to essentials, the governors' letter says "hands off."

"Region wide cost allocation proposals are untested, fraught with controversy and likely to be litigated, and thus would delay, rather than advance, our progress in meeting environmental goals. They may also hinder our states' efforts to develop renewable resources and establish federal jurisdiction in an area traditionally handled by states," the governors said.

"In the West, new transmission is generally paid for by the customers using it. We believe it is inappropriate to assess the cost of a transmission build-out to customers that cannot make use of the facilities, or who elect not to because they can access more cost effective options that do not rely on large, new transmission investments to meet environmental objectives."

A Western way vs. the federal way

On Dec. 16, Reid and Bingaman replied in a joint letter suggesting that the governors didn't know what they were talking about. "We are concerned that your letter ... misunderstands both the intent of our proposal and current law," they said. The Federal Energy Regulatory Commission has been approving regionwide transmission project cost sharing for years, they added.

"Your letter also states that region wide cost allocation may 'establish federal jurisdiction in an area traditionally handled by the states.' ... FERC (the Federal Energy Regulatory Commission) now has jurisdiction over cost allocation and has had since 1935," when the Federal Power Act was approved in the New Deal. "Existing law allows FERC to allocate costs across regions." Their transmission proposals would allow FERC to allocate costs broadly across a region or regions unless costs for new transmission "were disproportionate to benefits," the two senators wrote.

Reid and Bingaman added with some asperity that the West and the nation could "benefit immensely" from developing the West's renewable energy, but noted, "that will require a more cooperative and fact-based approach to developing renewable energy and the transmission needed to integrate it."

The next day, FERC Chairman Jon Wellinghoff weighed in more diplomatically. In a letter to Brewer, Wellinghoff said that state regulators and regional planners should have primary responsibility for designing the grid in their regions. "I disagree, however, that increased clarity regarding federal authority over cost allocation is inconsistent with these goals," he added.

"The Commission's historic practice is to encourage entities to work together with their region to develop cost allocation mechanisms that garner wide support," said Wellinghoff, who was Nevada's consumer advocate for public utility customers for two terms.

Who pays remains a knotty question

Some close to the situation believe the governors' initiative may have begun in Arizona, where the 107-year-old Salt River Project in Phoenix, the nation's third-largest public power authority, leads a strong body of industry opinion in the state that favors local control over transmission. By long tradition, transmission projects are worked out by consensus, and costs are voluntarily taken on by the projects' participants, based on their size and the capacity of a new line, Western energy experts note. "It does result in transmission getting built and paid for -- by those who see benefit from a project," one Western energy official put it.

The approach has worked even for long-distance transmission bringing coal-fired power to the Southwest, but the cost-sharing there is easier to arrange with generation of known size that runs regularly. The expansion of the grid to accommodate large amounts of intermittent wind or solar power is another matter.

The five governors were not speaking for the entire Western Governors' Association, which includes 19 states and several territories. The WGA has sought to get Congress to approve a "right-sizing" plan for renewable transmission expansion. In the WGA plan, advanced a year ago, major long-distance transmission lines built to carry renewable energy would be built larger than immediately required, and the federal government would pay for the additional capacity.

Then, as renewable energy deliveries increased and the new lines became more fully used, the federal government would sell access to recoup its investment. The WGA proposal has not found support in Congress. But at this point, the senators and Wellinghoff are not confronted by a united West.