Challenges in Developing New Electricity Infrastructure to Deliver Power from Renewable and Conventional Resources to Customers

< Back to Session Summaries List

One of the thorniest issues facing the industry is how to gain acceptance for a multitude of new transmission lines to connect renewable and conventional generators that often are located long distances from population centers. Many of the lines would likely intersect states or regions that would not necessarily benefit directly from the power passing through them.  The panel focused on the issues surrounding these issues. 

The Honorable Patrick Oshie, Commissioner of the Washington Utilities and Transportation Commission and Vice Chair of the NARUC Committee on Energy Resources and the Environment, served as moderator of the panel discussion. He remarked that the transmission system is becoming a key enabler of environmental policy due to state Renewable Portfolio Standards (RPS) and emission standards. Furthermore, he stated that clean energy would not be available on the market without investment in new transmission.

The Honorable Dian Grueneich, Commissioner of the California Public Utilities Commission, presented the California perspective on infrastructure challenges in delivering power from renewable and conventional resources. California has an RPS of 20 percent by 2010 and has adopted a loading order to pursue all cost-effective energy efficiency, demand response, and renewable energy options before utilizing conventional resources to meet demand. Additionally, all emissions from entities that serve California must meet emissions standards.  The California RPS will be 33 percent by 2020. Commissioner Grueneich concluded by stating that the single largest challenge achieving the RPS is transmission.

Nick Brown, President and Chief Executive Officer for Southwest Power Pool, Inc., believes that the narrowly defined least cost analytics must be broadened from a snapshot of today to a vision for tomorrow.  Most infrastructure options have a negative cost price tag due to the delayed onset in value.  However, he contended that the focus should be on value rather than cost.

Will Kaul, Vice President of Transmission for Great River Energy, discussed CAPX 2020: a collaboration of 11 utilities in the northern Midwest. The duties of CAPX 2020 include planning and expanding the grid, undertaking scenario studies for locating generation, providing formula rates for investor-owned utilities (IOUs) to recover costs, forming independent transmission companies, and achieving 25 percent electricity from renewable energy resources by 2025. Mr. Kaul informed the audience that the Midwest Independent System Operator (MISO) is involved in development of a tariff for wind transmission. In summary, Mr. Kaul stated that planning and permitting has been adequate in the upper Midwest, but there has been a lack of new transmission construction.

William McCollum, Chief Operating Officer of the Tennessee Valley Authority, believes there is a need for greater diversity of supply and transmission. He indicated that part of the answer to questions – such as how are we going to get intermittent renewable generating resources connected to the grid – has to be regional planning as, in his opinion, it really does need to focus on what is the best overall regional solution.  Mr. McCollum argued that the nation needs a dialogue to understand who is benefiting and who is paying.  He said that an improperly structured solution that will simply transfer wealth from one area of the country to another is not going to serve consumers well in the long run because will create winners and losers.

The question of "who pays" was a recurring theme during the conference with some panelists insisting that those who benefit from a project that relieves problems in a region should shoulder the costs. Others suggested that all utility customers – whether they benefit directly or not from projects in their region – should absorb some of the costs. Still others believe the industry should focus less on the costs of expanding the transmission system and more on the value of a stronger grid.

Commissioner Oshie asked the panelists if the U.S. is in a position to facilitate a more secure network to promote green energy.  The panelists agreed that the U.S. is in the position to promote green energy and the key is to develop a portfolio of projects so that everyone can share in benefits.

The panelists were then asked to comment on who should be responsible for financing new transmission if the generation developers cannot.  It was posed that transmission companies would finance new lines as long as state regulators and the Federal Energy Regulatory Commission provide cost recovery rules. Commissioner Grueneich added that backstop rate recovery is approved in California. 

A member of the audience asked the panel if there is concern regarding potential stranded transmission investments. Mr. Brown said there was no major concern regarding potential stranded transmission investments in the Southwest Power Pool.  However, there will be distributed generation options once plug-in electric vehicles (PHEVs) are widely in use that may pose some issues. Panelists agreed that the cost advantages of bulk power supply and the diversity of location of renewable energy demand a robust transmission network, that distributed generation alone would not achieve all goals, and finally that transmission lines are needed as well. Commissioner Grueneich responded that in California there is a formal policy to achieve zero-net energy buildings: the goal for residential buildings is by 2020 and commercial by 2030. Another audience member asked what the grid will look like if buildings are more efficient and employ distributed generation. Commissioner Grueneich responded that California is examining the issue and is concerned about potential stranded costs if widespread distributed generation is deployed in the State.