FERC’s High-voltage Gravy Train Rolls On

Date: 7 Jun 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Mid-May proved beneficial for many high-voltage transmisison developers, as the Federal Energy Regulatory Commission’s “high-voltage gravy train” kept delivering the cash.  Five additional transmission projects received incentives, including bonsues to the project’s return on equity or rate recovery during construction.

Earlier this year, I wrote about FERC’s program of incentives for new transmission projects, noting two serious failings.  First, FERC asserts it has no role to require utilities to study (less-costly) alternatives to their transmission projects, such as distributed generation.  FERC also states that it has no obligation to determine whether the incentives it provides are actually necessary to drive transmission development.  From the earlier piece:

The most likely outcome of FERC’s lavish program for transmission development is a significant increase in utility shareholder profits at the expense of ratepayers, with only marginal improvements in the amount of available transmission capacity for new centralized renewable energy projects.  The program may actually decrease utility interest in expanding transmission capacity, because offering them a higher ROE increases the total cost of new infrastructure, decreasing the demand for it and reducing investment.

Distributed generation can provide more renewable energy more quickly and at lower cost than centralized renewable energy generation.  Lavish rewards for new transmission development undermine state goals for domestic clean energy and economic development.

It would do a lot for distributed generation if FERC’s high-voltage gravy train would derail.

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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.