THE NATIONAL ASSOCIATION OF
STATE UTILITY CONSUMER ADVOCATES
RESOLUTION 2010 – 01
PRINCIPLES OF THE
NATIONAL ASSOCIATION OF
STATE UTILITY CONSUMER ADVOCATES
REGARDING TRANSMISSION PLANNING AND DEVELOPMENT
Whereas, regional transmission infrastructure may require improvements for purposes of reliability, increased economic efficiency and/or to enable the development of new generation resources;
Whereas, development of often remote resources could require construction of long-distance high voltage lines that are expensive to build, difficult to site and have a long lead time;
Whereas, regional transmission planners, transmission owners (“TOs”) and/or generators seeking grid expansion are generally not charged with seeking out least-cost solutions for consumers. Transmission planners may identify projects, but are under no obligation to find the least cost means of building identified projects. Utilities and transmission companies seeking to build transmission are rarely made to compete against other entities capable of building a transmission project, or consider lower cost non-transmission alternatives, and are rarely denied cost recovery for transmission projects;
Whereas, Federal Energy Regulatory Commission (“FERC”) Order 679 provides for a variety of highly lucrative ratepayer-subsidized incentive payments to TOs including enhanced returns on equity for transmission facilities, guaranteed recovery for abandoned projects, the use of hypothetical capital structures that allow debt financing to be charged as equity, the use of construction work in progress costs in rates, accelerated depreciation schedules for long lived assets, and enhanced returns for membership in a regional transmission organization. In many cases, these incentives have not been demonstrated to be necessary to encourage interest in building new transmission and, as a result, unnecessarily increase the cost to consumers of building new transmission facilities;
Whereas, FERC’s recent support for a postage stamp cost allocation methodology for high voltage transmission projects was remanded by the United States Court of Appeals for the Seventh Circuit in Illinois Commerce Commission, et al. v. FERC, Nos. 08-1306 et al. (Aug. 6, 2009);
Whereas, states traditionally have authority over siting and construction of transmission lines, and states retain the power to deny transmission siting applications in many circumstances based upon a variety of factors, including the need and cost for the proposed projects, and this approach has allowed the transmission system to expand and evolve;
Whereas, FERC’s broad interpretation of its own powers to site a transmission line where a state siting authority denies an application in a national transmission corridor was rejected by the United States Court of Appeals for the Fourth Circuit in Piedmont Environmental Council v. FERC, 558 F.3d 304 (Feb. 18, 2009) (“Piedmont v. FERC”), cert. denied 2010 U.S. LEXIS 635, 78 U.S.L.W. 3417 (Jan. 19, 2010);
Whereas, there has been Federal energy legislation proposed that seeks to give FERC authority to site high priority national transmission projects, including 345 KV and above AC lines, 400 KV and above DC lines, and renewable feeder lines at 100 KV designed to connect renewable energy to high voltage lines, ending the states’ long-held authority to site transmission;
Whereas, federal dollars were made available in the American Recovery and Reinvestment Act to support interconnection-wide transmission planning activities, such as the Eastern Interconnection Planning Collaborative and the Regional Transmission Expansion Planning in the Western Interconnection;
Whereas, the just and reasonable rate standard is a longstanding bulwark of regulation intended to protect consumers from being forced to pay for unnecessary or imprudent investments;
NOW THEREFORE, NASUCA RESOLVES:
That NASUCA supports transmission expansion and improvement projects that encompass least cost planning principles where the benefits have been clearly identified and the necessity of the investment has been recognized by the state siting authority to meet mandatory reliability standards as adopted by the North American Electric Reliability Corporation or any regional reliability council, or the project has been shown to facilitate consumer access to the lowest cost sources of generation regardless of the location of those resources and so long as the benefits of constructing the transmission exceed the costs and risks as determined by the state regulatory authority; and
BE IT FURTHER RESOLVED:
That FERC incentives under Order 679 should not be granted where there is no need or justification for such incentives, and where projects would have been built absent an incentive; and where such incentives only serve to unnecessarily increase the cost of building needed transmission for consumers, and
BE IT FURTHER RESOLVED:
That primary authority and control over the siting of transmission facilities should remain at the state level and that state control over siting of transmission lines in national transmission corridors and elsewhere can and should include an assessment of the costs and benefits of the proposed transmission project to ratepayers of that state within the parameters of 16 U.S.C.S. §824p(b)(1)(C)(i) and Piedmont v. FERC, supra; and
BE IT FURTHER RESOLVED:
That any allocation of costs by FERC must reflect the distribution of costs and benefits associated with particular projects, including benefits to resource developers, and must be supported by strong evidence of commensurate benefits to the parties receiving the allocations, in a process that allows for meaningful ratepayer input; and
BE IT FURTHER RESOLVED:
That Congress should refrain from passing legislation that would move current state level authority over transmission siting to the FERC or other federal agency. However, if Congress does pass legislation that overrides state control over transmission siting, then NASUCA urges Congress to develop a robust process for state input into transmission siting decisions, that Congress eliminate FERC ratemaking incentives, and that Congress seek to ensure that transmission is built at the lowest possible cost to consumers including consideration of requiring that all new high voltage transmission be financed with lower cost debt financing, such as government revenue bonds;
BE IT FURTHER RESOLVED:
That NASUCA supports active advocacy and meaningful participation by ratepayer advocates in any state or federal proceeding involving the planning or siting of proposed transmission projects to ensure that the just and reasonable rate standard is not abrogated; and
BE IT FURTHER RESOLVED:
That NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution. The Executive Committee shall advise the membership of any proposed action prior to taking such action, if possible. In any event, the Executive Committee shall notify the membership of any action taken pursuant to this resolution.
Approved by NASUCA: Submitted by:
Place: San Francisco, CA NASUCA Electricity Committee
Date: June 15, 2010