E&E News PM
October 11, 2011
Chu Rejects FERC Bid for Expanded Siting Authority
In a Joint Public Statement issued by the Department of Energy and the Federal Energy Regulatory Commission (FERC), U.S. Energy Secretary Chu rejected a proposal to delegate additional authority to FERC and instead indicated that the Department of Energy “will work more closely with the [FERC] in reviewing proposed electric transmission projects under section 216 of the Federal Power Act.” That section, enacted as part of the Energy Policy Act of 2005, gave FERC “backstop authority” that essentially empowers FERC to trump states in approving new power lines. The statute specifies that the Department of Energy has responsibility for designating “national interest electric transmission corridors” within which FERC could exercise its backstop authority. Under a proposal developed by FERC staff, a fast-track approval process would have been created for major transmission lines serving renewable energy projects. In July and August, the proposal was presented to stakeholder groups to solicit comments. The proposal called for Chu to delegate to FERC the responsibility of conducting certain congestion studies and to designate the national corridors of interest. Under Section 216 of the Federal Power Act, project developers within those corridors can ask FERC to use its backstop authority to permit power lines for which states have withheld approval for more than a year.
In his statement rejecting the FERC proposal, Secretary Chu stated that “[t]his nation promptly needs to build the electric grid of the 21st century to compete in the global economy. Enhanced cooperation between DOE and FERC is the best way to help achieve this goal. I look forward to working with [FERC] Chairman Wellinghoff as we take steps to ease congestion and increase reliability while modernizing the grid.” The statement notes that FERC and DOE will now work together to prepare drafts of transmission congestion studies mandated by Congress, and the two must also prepare drafts of environmental analyses for any proposed national corridor.
The issue of FERC’s backstop siting authority is a very sensitive matter with respect to federal/state jurisdiction, as transmission siting has traditionally been exclusively within the domain of state siting authorities. Section 216 was included as part of the Energy Policy Act of 2005 in an effort to streamline the transmission siting process, and to strip the states of their ability, under their siting authority, to halt badly needed transmission lines. FERC staff has been working for several months to get broad stakeholder input regarding its proposal, which had the support of the Natural Resources Defense Council and transmission developers. The National Association of Regulatory Utility Commissioners, comprising the state regulators, opposed the proposal on the grounds that it would assertedly trample state interests and rights to deny the construction of unwanted power lines. To further undercut the FERC proposal, Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.), an author of the 2005 law, wrote Secretary Chu and expressed the view that Congress intended through the legislation to have DOE – not FERC – take the lead in identifying grid congestion and corridors. Based on this author’s reading of Section 216, Senator Bingaman has a valid point, and Secretary Chu understandably declined to accept the FERC proposal and instead committed the Department of Energy to “work more closely” with FERC. Of course, as a practical matter, FERC can take the laboring oar in performing the required congestion studies and environmental analyses to support the designation of national interest corridors. The outcome of this process is essential to ensure that the necessary transmission is built to integrate new renewable energy projects into the grid.