FEDS APPROVE POWER LINE PAY PLAN

U.S. Backs Plan to Divvy Up Power-Line Costs
Naureen S. Malik, December 16, 2010 (Wall Street Journal)

"Federal regulators Thursday cleared a plan to spread the costs of new interstate, high-voltage power lines to utility rate payers in several Midwestern and Western U.S. states, even if the electricity bypasses most of those customers.

"The approval by the Federal Energy Regulatory Commission, or FERC, comes as power companies, states and the federal government wrestle with the challenge of upgrading the nation's aging power grid and connecting solar and wind generation with distant urban centers."

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"Divvying up the costs of new lines has proven contentious, with some state regulators arguing residents shouldn't have to shoulder additional costs if a new power line bypasses them or is planned hundreds of miles away. That opposition has sunk or stalled several projects…

"The plan approved by FERC calls for the costs of new interstate transmission lines to be divided among 13 states from Montana to Ohio. The share paid by rate payers in each state would vary, depending on the amount of generation capacity in the state…The more power plants a state has, the greater the cost its consumers would shoulder. Michigan, in particular, has opposed the plan, contending the cost of new power lines would outweigh the benefits to its residents."

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"This Midwest cost-sharing strategy could serve as a template for how transmission costs will be shared in other regions. FERC is in the process of developing nationwide rules that are expected to be released in spring of 2011…[It] was developed by the Midwest Independent Transmission System Operator, or MISO, which operates the region's power grid and market. The agency had been tying the cost of a project to the area where it would run. But that approach drew opposition as more wind projects clustered in rural areas…[S]everal transmission projects have been stalled, including the Brookings line to move power from wind farms in South Dakota to Minnesota…

"The elimination of barriers to developing new transmission lines should help advance [proposed] projects…[and] help jump-start wind-power development in places such as Buffalo Ridge, an elevated strip of prairie stretching from South Dakota into Minnesota and Iowa…[T]ransmission developers for each project still need to win approval for the actual paths of the lines, which can be thorny."