Will the Federal Energy Regulatory Commission's recent proposal for grid modernization socialize the costs of expanding renewable energy use and building new transmission lines? During today's OnPoint, Bill White, manager of the National Clean Energy Transmission Initiative for the Energy Future Coalition and a representative of the Coalition to Modernize the Electric Grid, explains why he believes FERC's proposal is a fair policy that benefits all regions of the country.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Bill White. Bill manages the National Clean Energy Transmission Initiative for the Energy Future Coalition and he's also a representative of the Coalition to Modernize the Electric Grid. Bill, thanks for coming on the show.
Bill White: Thanks for having me, Monica.
Monica Trauzzi: Bill, FERC recently proposed a draft rule that would create a new framework for modernizing the electric grid here in the U.S. And in response the Wall Street Journal ran an op-ed saying that the draft rule could effectively socialize the costs of paying for multibillion-dollar transmission lines to connect remote wind and solar projects in the nation's electric power grid. You see the issue differently however. Why do you think that FERC's proposal is a fair one?
Bill White: Thanks, Monica. FERC's proposal is going to help build the transmission grid, which really is the infrastructure for the electricity market. The transmission grid is really the superhighway system through which electricity commerce takes place. FERC's rule is going to open markets, make them more efficient, allow more resource to enter the markets, lower prices for consumers, give them more choices. And that's why we support it. It's a sensible reform, it's a good market reform, it's good for consumers, it's good for the environment, and it's good for the country.
Monica Trauzzi: And you took some real issue with the Wall Street Journal's opinion piece. You actually wrote your own opinion piece in response to that. They feel that FERC's proposal would spread the cost out a little too broadly and it's making too much of a general rule and not focusing enough on the regions and the individual concerns of the utilities.
Bill White: Well, that's not correct, Monica. First of all, FERC's rule is an incremental step from the way we do planning today. Today planning is done on a utility, state, and regional basis. And FERC's rule would simply increase the scale and scope of planning incrementally from the way we do it today. And the principles that are applied today at the state, local, regional level are the same principles FERC is proposing to apply at this larger scale. We need to do this. Just as we went from county highways to state highways to interstate highways, so we're progressing the same way with our transmission system. All FERC is doing is proposing that we do this at a larger scale. The benefits to Americans are enormous. We have tremendous renewable energy resources that are located largely far from where people live. We need transmission lines to move those resources to where people can use them. They're cost effective, they're homegrown, they create jobs here at home and they lower prices for consumers. When consumers have more choice, which a transmission grid gives them, they save money, just as consumers save money when they have more choice in any other market.
Monica Trauzzi: So, is this policy fair though for different markets in different regions in the U.S., some which may produce more renewable energy and some which may not produce quite as much?
Bill White: There are great renewable resources all over the United States and every major study of how to use those resources best concludes the same thing, that transmission will help us develop those resources wherever they are. Those resources need transmission to find markets. We can't put electricity in a rail car. We can't put wind or solar or sunlight in a rail car. We have to put it on a power line. And so developing this infrastructure is really essential to developing those resources wherever they are.
Monica Trauzzi: Are there certain customers, certain regions that would benefit a bit more by this type of proposal?
Bill White: That's difficult to say, but the market will decide where the best resources are. Over time we need a lot of these resources. We need very large amounts of renewable energy to protect our environment, to improve our national security, and to save money for electric customers, consumers, and businesses all over the country. We're going to develop these resources all over the country and the market will decide, just as it does for other resource development, where the best resources are and where the next ones are and where the next ones are. So we'll let the market decide that.
Monica Trauzzi: How much of an increase in utility costs could consumers see?
Bill White: Intact, the failure to develop transmission that we see today is costing consumers money right now. Right here in the mid-Atlantic region PJM estimates that congestion on the grid is costing consumers 6 percent of their electric bill. Transmission, all transmission on average in the country represents less than 10 percent of the average consumer's electric bill. So, building transmission not only is a very good investment and a relatively small investment in the context of a consumer's electric bill, failing to build it cost consumers money right now. Let me just give you one example of how this is working in practice in Texas where more wind has been developed than in any other part of the country. The grid operators there estimate that a $4.9 billion investment in transmission will be saving consumers about $1.7 billion a year in fuel costs. That's paying for itself in less than three years. That's a good investment. And we believe that nationally those kinds of investments are going to be good for consumers all over the United States.
Monica Trauzzi: This is getting pushback from the utilities however. The policy would, in essence, create a little more competition in the market for utilities. What do you think that means overall for business?
Bill White: We think competition in the power market is good for business. When consumers have choices they save money. When businesses have choices on where to get their power they save money. We're in the holiday shopping season right now. If shoppers were told you have to shop here or you could shop anywhere you want via the Internet or any of the retail outlets, we know what consumers are going to choose and we're very confident that businesses and consumers are going to make the same choice when it comes to their electricity. A robust, secure transmission grid gives everyone the most choice and is really the best thing for the economy and for everyone.
Monica Trauzzi: Okay, we'll end it there. Thank you for coming on the show.
Bill White: Great, thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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