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By Miriam Raftery
Photo by Dennis Richardson
July 5, 2020 (Sacramento) -- California Attorney General Xavier Becerra, as part of a multistate coalition, slammed the Federal Energy Regulatory Commission’s (FERC) proposal to change the way it awards incentives for the development of electric transmission projects.
The coalition contends that if adopted, the proposal, which violates FERC’s statutory mandate to ensure just and reasonable rates, would fail to incentivize the development of appropriate projects by providing incentives to projects that do little to improve reliability or reduce costs to consumers. In their comment letter, the coalition argues that the proposal is little more than a handout to developers and utility companies that would drive up electricity bills for households and retail establishments.
“The Trump Administration can’t backslide quickly enough to please another special interest,” said Attorney General Becerra. “FERC’s incentive program is supposed to spur investment in our electricity grid. Instead, this undisguised handout to old-school energy interests would increase electricity costs for households and small businesses at a time when they are already struggling to pay their bills.”
As required by the Energy Policy Act of 2005, FERC establishes incentive-based rates for interstate electric transmission in order to promote investment in enlarging, improving, maintaining, and operating transmission facilities, as well as encouraging the use of technologies that increase capacity and efficiency and improve the operation of existing facilities. In order to qualify for incentives, companies must demonstrate that their project will increase reliability or reduce the cost of delivered power for consumers by reducing transmission congestion.
In the comment letter, the coalition argues that the proposal would violate FERC’s statutory mandate to ensure just and reasonable rates and would do little to incentivize truly needed and beneficial transmission projects. For example, FERC proposes to award incentives to utilities for joining or remaining in an Independent System Operator or Regional Transmission Organization, organizations that coordinate, control, and monitor state electricity grids, regardless of whether such membership is required for the utility to operate in that region.
The coalition also highlights that FERC's proposal would violate its statutory obligation to award incentive rates on a case-by-case basis in decisions tailored to the demonstrated needs of each project. Under the current proposal, there would be no tailoring, only a limit on how much return on equity a utility can get.
Attorney General Becerra joins the attorneys general of Connecticut, Illinois, Maryland, Massachusetts, Michigan, and Rhode Island in filing the comment letter.
A copy of the comment letter can be found here.
According to Utility Dive, a website devoted to electric utility news, in 2005, Congress directed FERC through a section in the Federal Power Act to develop incentive-based rates for electric transmission. The commission had implemented incentives in the past, but the latest NOPR would take into account the changes to transmission since the past decade of rapid energy transition.
"Transmission incentives should be reformed to promote necessary investment in the transmission system, ensure grid reliability and resilience, promote economic growth, harness the nation's abundant domestic renewable energy resources and mitigate greenhouse gas emissions," Greg Wetstone, president of the American Council on Renewable Energy (ACORE) said in a statement.
Though some have asked for extensions of the July 1 deadline for public comments, FERC Chairman Neil Chatterjee has thus far not allowed an extension, stating that he wants to "keep the business of the commission going," Utility Dive reported.
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