Legalectric

ILSR’s John Farrell is halfway there – he recognizes the federal part of the transmission equation, but the state part is missing, for example, Minnesota’s special eminent domain exemptions for “Public Service Corporations” (particularly where the transmission is for private profit, NOT public service), rate recovery for “Construction Work in Progress” and state regulators refusal to examine the interstate nature of transmission proposals.  And the third part of that unholy trinity — in the Midwest, bulk power transmission would not be being built but for the Settlement Agreement – ME3(Fresh Energy), Izaak Walton League (and Walton’s program Wind on the Wires), Minnesota Center for Environmental Advocacy, and North American Water Office.  This glut of transmission is their legacy.  It takes all three to build transmission.

From Grist, today:

Feds running a high-voltage gravy train for power transmission

by John Farrell
28 Jun 2011 6:00 AM

Even as distributed generation shows economical and political advantages over centralized renewable energy, the Federal Energy Regulatory Commission (FERC) is running a high voltage gravy train in support of expanded transmission. FERC’s lavish program is expanding large transmission infrastructure at the expense of ratepayers instead of looking at more economical alternatives.

Since 2007, FERC has had 45 requests for bonus incentives for transmission development — authorized under the 2005 Energy Policy Act — and has provided all or most of the requested incentives in more than 80 percent of the cases. With the bonuses, the average return on equity for utilities for their new transmission investments is nearly 13 percent. This high rate of return is a full 2.5 percentage points higher than the median utility return on equity [PDF], a value considered just and reasonable by state public service commissions in ordinary times. However, these rewards came during a time when unemployment doubled, the stock market tumbled, and most corporations were lucky to have any profit.

The ratepayer impact of these bonuses is significant. In a November 2010 criticism of FERC transmission awards, Commissioner John Norris noted that the 2 percent bonus FERC provided to the PATH high-voltage project on the Eastern seaboard would “cost [Maryland] ratepayers in PJM at least $18 million per year.” The bonus payments were also given in concert with other incentives that reduced risk, including rate recovery during construction and guarantee of payment if the facilities were abandoned for reasons outside utility control.

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