Trade Group Calls for Transmission Policy Change

The American Wind Energy Association (AWEA) called for faster progress on federal policies to ensure that power from new, renewable sources like wind has a fair chance to compete in the nation’s electricity markets. The wind industry trade group estimates that several thousand megawatts of ‘new’ transmission capacity could be obtained in the Midwest alone without building new transmission lines by implementing a series of reforms outlined in a new white paper.

Washington, D.C. – December 31, 2003 [] In the white paper released December 12, the Washington, D.C.-based trade group analyzes transmission policies that are slowing the development of wind power and explains how the Federal Regulatory Energy Commission (FERC) can address these in the Standard Market Design (SMD) that the Commission is currently drafting to guide transmission policy nationwide. The white paper notes that FERC has taken very positive steps toward resolving problems identified three years ago by the industry, and stresses the need for swift progress in following through on those initiatives. The SMD and two Notices of Proposed Rulemaking (NOPR) on interconnection issues are currently pending before FERC. “The utility transmission network is the ‘Interstate highway system’ our electricity generating companies must use to ‘haul their product to market’ in major population centers,” said AWEA executive director Randall Swisher. “That being the case, it’s absolutely critical (1) that electric generators be able to gain access to the transmission network on fair terms along with everyone else, and (2) that the transmission network be big enough to do the job. Lack of transmission capacity is already holding back the development of significant amounts of wind power in the Dakotas.” “Clean, cost-competitive wind energy is a domestic energy source that is renewable, meaning it will never run out. The nation’s transmission policies should treat wind and other renewables fairly, so that these resources can be developed to their maximum potential for the benefit of all Americans,” said AWEA policy director Jim Caldwell. The paper addresses three sets of issues, according to Caldwell: First, the charge that a wind generator must pay to use the transmission system. Most of the rates in use across the country were not designed with “non-traditional” resources like wind in mind, and they impose discriminatory penalties that can be huge, as much as doubling the wholesale cost of wind-generated electricity. FERC is dramatically overhauling the system for setting rates to improve the efficiency of wholesale electricity markets. Its new approach, called the Standard Market Design, will treat wind energy fairly, but there remain many layers of details to iron out for it to work successfully. Second, the allocation of “space” among competing users when portions of the network become “congested,” much like a freeway during rush hour. Today’s “congestion management” rules are inefficient, letting capacity that could be used go to waste while effectively excluding new entrants like wind energy projects. FERC is proposing a new congestion management system that would significantly expand the capacity of the system to serve all users, including wind. Third, the way the building of new transmission lines is planned, permitted and financed. Many organizations including FERC, the National Governors Association, the Department of Energy, and most industry stakeholders agree that the current process for getting new lines planned and built is broken, and that the reliability of the nation’s electricity supply could be in jeopardy. Certainly, the pace of wind energy development will be drastically slowed — especially in the nation’s heartland of the Midwest and interior West.—if the process is not fixed and fails to include “high-wind scenarios” that benefit consumers and increase system reliability. The white paper details the significant progress that has been made over the past two years on these issues, while laying out the remaining work to be accomplished. “On the first two issues (access charges and congestion management), the policy debate is essentially over and the new proposed rules of the road will be much more efficient and treat wind fairly,” Caldwell said. “The real issue is time. Finalizing the details and getting these reforms in place will be a difficult and lengthy process. The third issue, of expanding and managing the nation’s transmission system, is only now coming to a head in many forums across the country.” The complete white paper is available for download from the AWEA Web Site.

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