The rule assures that only those who benefit from new transmission facilities pay for them.
A new federal rule adopted this week, which allows companies other than local utilities to build electricity transmission lines, could lead to more transmission lines being built, according to energy regulators. So reports The Wall Street Journal.
The new rule should help wind- and solar-energy projects, in particular, as they are often built in remote locations where there aren’t any intra-state transmission lines, according to Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission (FERC).
Some 60% of the new U.S. generating capacity expected to come on line by 2019 will be derived from solar and wind energy projects. But those projects can’t succeed without new electricity transmission lines being constructed, Wellinghoff said. Regulators hope that by removing barriers to the construction of new intra-state lines, they will promote competition and lower construction costs.
The rules are meant to shift the cost of the lines to the customers who stand to benefit from them. To date, utilities in rural areas have not wanted to participate in projects in which their utility customers would have helped finance lines that are used to send power elsewhere, according to the Journal.
Wellinghoff says he’s had developers tell him they want to build major transmission lines from renewable resources in remote places like the Dakotas so energy could be shipped to consumers in Chicago. Establishing a more equitable system of paying for those lines would encourage developers to proceed with those projects, Wellinghoff said.
Joseph Kelliher, exec. v.p. of regulatory affairs for NextEra Energy and a former chairman of FERC, said the new rule will “unlock transmission investment.” Not only will it promote transmission line construction but it will help ensure power marketers have access to what he called a “robust grid.” For the last decade or two, energy regulators have tried to guarantee power marketers that they would have access to the electric grid and that it wouldn’t just be reserved for utilities moving their own electricity. But marketers often found they were getting access to a “bottlenecked grid.” Kelliher believes the new rule will change that, the Journal reports.
Rhone Resch, president of the Solar Energy Industry Association, a trade group, said there are more than 25 gigawatts of projects currently in the pipeline. The new rule should help his industry overcome some of the hurdles that had been impeding those projects.
To read the full article by The Wall Street Journal cited in this story, click here.