Can EPA’s climate plan work without a national transmission plan?

By Peter Behr | 01/09/2015 08:21 AM EST

The $300 million high-voltage "V-Plan" transmission line running 122 miles across Kansas opened last month, adding capacity to connect more generators to the grid. It has taken more than four years to complete — a sprint as big power line projects go.

Charted by the Southwest Power Pool, the grid operator in nine states from Nebraska to Louisiana, the project exemplifies the long lead times such projects require — eight years is not remarkable, officials say.

That is a central issue raised by SPP and other opponents of U.S. EPA’s proposed Clean Power Plan, with its requirement to replace older coal-fired power plants with gas turbines or wind power, some of them in new locations requiring new transmission.

It also represents a lost opportunity to build a stronger power grid that could help the CPP succeed, says Kristine Schmidt, president of ITC Great Plains, which built the V-Plan project with Sunflower Electric Power Corp. and Mid-Kansas Electric Co.

Her company, part of Michigan-based ITC Holdings, initially proposed a 765-kilovolt line, which would have had three times the capacity of the new V-Plan line. But energy planners objected to the costs of the bigger project, and ITC was directed to downsize it. ITC expects the V-Line to be fully utilized this year.

"If we’d built the 765 line, we would have had some more headroom to allow for growth and more interconnections and the ability to transfer power," Schmidt said in an interview. "It’s not a criticism of any RTO’s planning process. It’s just that we as a nation continue to build to what we need today versus planning for a long-term modern transmission infrastructure."

FERC to review CPP

On Feb. 19, the Federal Energy Regulatory Commission will begin a series of high-level conferences digging into the impact of the CPP on grid reliability. The agenda for the first session, in Washington, was released yesterday.

A key issue: Do FERC-regulated regional transmission owners like the Southwest Power Pool have the planning tools and policies to build the new lines the CPP may require? Or, more fundamentally, as Schmidt put it, can a national climate policy plan for the electric power sector work without a national transmission plan?

The transmission issue was "Exhibit A" in SPP’s tough critique of the CPP, filed with EPA in October. Based on one of its planning studies, SPP said by the time a CPP compliance plan with the EPA plan was concluded, perhaps as late as 2018, there would not be enough time to build needed transmission before the CPP’s initial 2020 deadline for carbon emission reductions. Portions of its system in the Texas Panhandle, western Kansas and northern Arkansas "would be so severely overloaded that cascading outages and voltage collapse would occur," the SPP analysis said.

"The findings in this Assessment make it very clear that new generation and transmission expansion will be necessary to maintain reliability during the summer peak conditions if EPA’s projected generator retirements occur," SPP stated.

"At a minimum, the imposition of the proposed interim goals beginning in 2020 should be extended at least five years," said SPP Chief Executive Nicholas A. Brown.

SPP’s dire outlook rests on unrealistic, worst-case assumptions about the retirements of coal plants in the region, said John Moore, senior attorney for the Natural Resources Defense Council.

In its first impact scenario, SPP assumed that all of the coal-fired generation listed as "at risk" in EPA’s calculations would close in 2020, Moore said. That would add 6,000 megawatts of new retirements to the 3,000 MW of coal plant closings that SPP already projects, before the CPP’s impact is considered, SPP said. The study assumed power from the closed coal plants would be replaced by existing units, and no new generation was added in the scenario.

That stacks the deck, Moore contends, because SPP isn’t considering the other tools that EPA cited for reducing carbon emissions, including more gas-fired generation and renewables, and demand reduction. SPP "is missing an analysis of all the building blocks that the states would use to meet the goals of the CPP," Moore said. "Not surprisingly, if it’s missing all the ways states can comply, SPP is going to find reliability problems.

"There is nothing in the CPP that requires all of those plants to close, let alone by 2020," he said.

SPP’s second scenario assumed that new gas-fired plants and wind generation would be built to replace shuttered coal plants — but no new transmission lines would be added beyond those that are already approved and in the construction queue, Moore said. The result: overloaded lines.

SPP’s new study

SPP’s board has approved a new study beginning this year to evaluate possible projects that would be required by the Clean Power Plan, said Lanny Nickel, SPP’s vice president of engineering.

SPP currently has $5.7 billion of new transmission projects awaiting construction, approved without consideration of CPP requirements, he said in an interview. Some of those projects presumably could be upgraded in anticipation of future transmission needs related to the CPP.

"There is always that potential," Nickel said. Another option is adding circuits to an existing line whose towers are in place. "There is some of that opportunity," too, he added, although that potential has not been studied.

"The question really becomes, are those opportunities in the right place? Would they be useful in accommodating additional generating capacity?" Nickel said.

"There are always opportunities to fast-track or speed up, so to speak, any of our current processes. But there are also risks associated, so we try to be very careful about any approach we take," he said. (SPP projected the coal plant closings based on EPA’s list because, with EPA’s deadline on comments approaching, there wasn’t time to survey state authorities on how many of the plants were likely to close, he said.)

Transmission is "very stakeholder-intensive," he added — no overstatement in a region like SPP’s, with many cost-conscious municipal and cooperative power providers. "One of our philosophies of how we operate [is], it’s a lot better to get stakeholder involvement on the front end, rather than barge ahead. The intention is to get buy-in on the front end" to reduce the risk of lawsuits at the back end.

The newest assessment is likely to take until 2017 to complete. "That would give some time to more fully consider — not perfectly, maybe — the impacts of the CPP and identify transmission needs as a result of that," Nickel said. But it wouldn’t give much time for major new power lines.

Schmidt agrees that the way transmission planning goes on now, it is time-consuming. "The amount of assumptions that would have to be made for those retirements, you’re doing a great deal of speculation. And then also, you’re speculating on where will the new resources come from," she said.

Demonstrating need

The V-Plan only had to deal with Kansas’ requirements. "For transmission to get the necessary siting approvals that in most states — not all states — we have to demonstrate a certificate of need. With that much speculation, you’re not going to be guaranteed any type of cost recovery. For transmission investment we need to have a little bit less uncertainty and a lot more certainty that we can better determine where the resources are going to be sited in the future."

FERC, in its path-breaking Order 1000, adopted new transmission policies on planning and cost allocation intended to open up more competition to construct transmission lines and spell out that new lines could be justified as meeting state energy policies, in addition to economic or reliability benefits.

SPP and other RTOs have complied with the order, but some energy companies remain opposed, particularly to sharing the costs for long transmission lines that pass through their areas without compensating customer benefits as they see it. Most proposed new transmission lines inevitably spawn controversy not just because of where the towers will go, but because they change the competitive landscape within the industry.

"That long time frame is very concerning to many of us," Schmidt said. "We’re not paying enough attention to what transmission infrastructure is going to be needed and the time frame to build out that transmission infrastructure in meeting the public policy requirements.

"For starters, we would have to have, first of all, a national energy policy. Quite frankly, do we agree as a nation this is how we want to handle all the [energy] infrastructure? With that comes a transmission planning processes that is consistent across the nation."