Federal ruling boosts wind energy interests

FERC transmission cost allocation advances multistate wind transmission, regional planning, and RTO coordination, enabling 765 kV interstate grid upgrades, MISO integration, fair rate design, and shared costs across beneficiaries from Iowa to Ohio and ComEd.

Boosters of proposed interstate transmission lines that would take Iowa's wind-generated electricity east of the Mississippi River to Chicago and big markets beyond think they have a winner in a new Federal Energy Regulatory Commission ruling.

FERC laid out a "public policy" status for regional transmission organizations and state regulatory bodies as planning oozes forward on various proposals to test tomorrow's grid in practice, some of which would cost $20 billion or more. The power lines would have up to 765 kilovolts of capacity, double the largest lines now serving Iowa.

Most important, the ruling gives the various authorities a rationale to assign portions of the costs of such a line to all the recipients of the electricity, not just the builders who would start the lines somewhere in the Dakotas, Minnesota or Iowa.

While railroads, highways, and oil and gas pipelines have routinely crossed state boundaries for a century or more, most electricity transmission grid systems have been contained within urban localities or states.

A big multistate line such as proposed for wind would be new, and the idea is often likened to the transcontinental railroad of the 19th century or the interstate highway network of the 20th.

Consensus is emerging slowly on how such a line should be paid for and who would regulate it, amid a power line showdown among stakeholders.

Opponents on what would be the receiving end east of Chicago have expressed misgivings about having to pay part of the cost of the transmission line.

For promoters of a line from Iowa eastward, the FERC ruling isn't final approval. But at least FERC kept the light green.

"This ruling means that we can continue to move ahead on our proposal," said MidAmerican Energy Vice President Dean Crist, who oversees regulatory affairs for the Des Moines-based utility.

MidAmerican and its partner, American Electric Power of Columbus, Ohio, want to build a line that would run from Iowa east to at least Ohio. The venture is working first on the eastern connection from Ohio west into Illinois.

Other contenders in the transmission derby are ITC Holdings of Michigan, which owns the local transmission grid formerly owned by Alliant Energy in Iowa, and Clean Line Energy Partners, a Houston company that wants to build a 4,000-megawatt wind farm in northwest Iowa, amid transmission bottlenecks that can slow projects, and ship the juice to the Commonweath Edison market in Chicago.

ComEd, in turn, is connected through regional networks to eastern utilities in Pennsylvania, New Jersey and Maryland.

All of those proposals still face years of scrutiny from the utility regulators of states they would cross, including North Dakota regulators in the region, and also the Midwest Independent System Operator MISO, the consortium of utilities, independent generators and transmission companies that operates the electric grid from Ohio to the Dakotas and into central Canada.

Somewhere in that stew of regulators and electricity providers is the framework for ultimate approval of a project. "The next step is to work with MISO on the new system of rates and rules," said Crist. "And that will be complicated."

But Crist and other supporters of new wind transmission can at least go forward confident that federal regulators won't shoot down the multistate transmission concept.

FERC Chairman Jon Wellinghoff said approval of the transmission concept "promotes efficient and cost-effective transmission planning and the fair allocation of costs for new transmission facilities. These changes will provide consumers with greater access to efficient, low-cost electricity."

Pro-transmission groups have cheered the FERC ruling, even as a national grid debate remains active today.

President J. Jolly Hayden of Wires, a trade association of transmission providers, customers, and equipment and service companies, said that "the FERC transmission planning removes one of the obstacles to developing the grid that the U.S. needs for the 21st century - narrow cost allocation that does not recognize the way the grid operates and impedes cost recovery for grid investment."

Not everybody was thrilled. Eastern utility interests have railed against Midwestern wind projects, saying they would rather develop their own wind resources offshore in the Atlantic Ocean.

The Easterners object to being handed part of the bill for the interstate transmission project.

The Coalition for Fair Transmission Policy, a group of Eastern utilities and state regulators, said "socializing the costs of transmission lines to access remote renewable resources amounts to an expensive subsidy for some renewable energy developers that distorts the marketplace, and ultimately results in higher electricity prices for everyone."

The Wall Street Journal editorialized last year against the FERC position, saying it would "essentially socialize the cost of transmission lines across 13 states in the Midwest."

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