Should transmission be another building block for EPA’s climate plan?

By Peter Behr | 03/06/2015 08:00 AM EST

U.S. EPA’s proposed Clean Power Plan, with its four building blocks for reducing carbon emissions, is missing a fifth one — transmission lines.

U.S. EPA’s proposed Clean Power Plan, with its four building blocks for reducing carbon emissions, is missing a fifth one — transmission lines.

So say advocates of an expanded high-voltage power grid that could create more pathways to replace generation from the coal-fired plants that would be retired under the CPP.

States are two or three years away from redesigning their electricity industries to meet the CPP’s goal — assuming the plan goes forward. If additions of new power plants, transmission lines and gas pipelines don’t get underway until then, EPA’s interim compliance deadline of 2020 can’t possibly be met, many state officials and grid managers warn. There will be grid reliability issues even if EPA stretches out the deadlines when it announces a final plan, expected this summer, the plan’s challengers say.


So get started now by launching strategic, flexible transmission projects that increase the grid’s capacity even as state or regional CPP plans are under development, says WIRES, a lobbying group of 13 major transmission operators, renewable energy companies and diversified utilities.

"Indeed, well-planned transmission may eliminate some of the risk and cost of the CPP," WIRES counsel James Hoecker said in a statement for a Federal Energy Regulatory Commission technical conference last month on the EPA plan.

"We certainly know where the oldest and least efficient coal plants are. We know where the best wind resources are," said Johannes Pfeifenberger, principal with the Brattle Group consulting firm.

For example, of 269 gigawatts of coal units in the Eastern Interconnection, the synchronized grid east of the Rocky Mountains, roughly one-third is located in five states — Indiana, Illinois, Ohio, Pennsylvania and West Virginia — according to a study by ICF International. The average age of the coal plants in these states is nearly 50 years, and many are smaller units without pollution controls, the prime candidates for retirement under the CPP’s carbon limits and EPA’s air toxics pollution standard, the ICF report said.

"We know a lot about the basic fundamentals that will be in place" as the CPP takes shape, Pfeifenberger added. "You could plan a grid that would do a good job for almost all of the future scenarios" resulting from the Clean Power Plan, he said.

Standing in the way of a pre-emptive grid expansion are high hurdles of practice, policy and politics, experts note.

The Federal Power Act, the law underpinning FERC policy, says the commission should approve new interstate transmission projects’ rates only when there are demonstrable reasons tied to concrete benefits for consumers, said Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy (CFTP), which represents major power providers in Arizona, New Jersey, Michigan, and the Southeast and Pacific Northwest.

"Our concern is that the cost of the lines be assigned consistent with the Power Act, and we would wish to have Congress clarify for FERC that benefits [of new projects] should be identifiable" and meaningful, Sheridan said in an interview.

Seeking latitude

While WIRES has pressed FERC and Congress to find latitude in the Federal Power Act for an expanded, flexible grid, with costs shared broadly by consumers, CFTP’s position is diametrically opposed. Its members, presenting stiff opposition to FERC policies in the Southeast and Northwest, say consumers should pay for new transmission projects only when the benefits to them are clear and particular, by either reducing electricity costs or relieving strain on the grid.

Does the CPP change this long-running debate within the industry about the justification for big transmission projects?

Pfeifenberger argues that it does. "Clearly, the world is moving toward some sort of more environmentally stringent regulations" of greenhouse gases, he said. The dilemma is how to plan for that uncertain future.

"Most transmission planning is scaled to a reliability mindset," Pfeifenberger said. Grid planners want to base new transmission projects on a clear picture of what power flows will look like at some specific future date. "Fixing one specific need at a time — it’s a Band-Aid approach without asking, is there a bigger picture we should be considering."

Traditionally, transmission planning assumes normal weather and operating conditions, he said. "The planning studies are never done with a polar vortex, or a California power crisis, or a major nuclear outage in mind. We don’t know what the damage from a cyberattack might look like.

"If it takes five to 10 years to build a transmission line, waiting until you know for sure what the future will look like almost assures you will have higher-cost solutions. If transmission is a way to reduce costs in the system, then you have to build it ahead of time," Pfeifenberger said. A forthcoming Brattle Group study for WIRES will make that case, he said.

If transmission policy should evolve to recognize climate threats, who has the authority to change it — Congress, a protector of state interests or FERC? Is this another front in the battle over federal and state powers, now raging over health care and immigration?

In its controversial Order 1000, FERC said major new transmission projects can be justified if they fulfill policy goals such as state renewable energy requirements, adding this to the traditional justifications of improving reliability and lowering consumer costs.

Hoecker argues that FERC has the authority under the Federal Power Act to extend the rationale of Order 1000 to cover advance planning for the Clean Power Plan.

"The fact is, transmission is key to not only doing what the CPP wants to do, but what FERC wants to do under Order 1000," said Hoecker, a former FERC chairman.

Who pays?

"FERC has adopted a policy on which I think Congress and the industry agree — that beneficiaries ought to pay for transmission. But how do you determine who’s a beneficiary? If you ask a half-dozen different utility executives how that’s supposed to work, you get a half-dozen different answers. FERC hasn’t really defined what a benefit is, or how it is supposed to be measured in the planning process.

"It’s going to be a specific problem concerning the CPP. Here we have a changing generation mix. Transmission has to be built to get it to market. It will be driven by public policy. … Who pays? That argument will go on forever unless FERC steps up," Hoecker said.

Sheridan responded that as much as CPP supporters would like to see FERC and EPA support each other, they operate under different laws. EPA is an administration agency. FERC is an independent regulator.

"The Power Act is based on utilities filing rate proposals [for specific transmission projects]. … The bottom line is, you have to file a rate proposal to get approval from FERC on whether or not you collect the charges" from consumers, she said.

EPA, employing the Clean Air Act for climate policy, "has to grapple with a different world. The statutory regimes have very different purposes," Sheridan said.

"We’re finally at the joining of that issue," and it is big enough to call for Congress to step in, she said. "I just don’t know whether the Congress has its arms around these questions."