Federal Agency’s Proposed Transmission Planning Beneficial, But Reduced Role for Competition Could Cost Customers Billions, People’s Counsel Says in Filing
BALTIMORE – With improved regional planning and greater competition, the approximately $25 billion spent annually on the electric transmission system could go much further in producing benefits for consumers and facilitating the transition to a decarbonized electric system, the Office of People’s Counsel told the Federal Energy Regulatory Commission in a filing today. Better planning will improve electric reliability, resiliency, and the long-term efficiency of the transmission system, OPC said.
“Existing planning for investing in the transmission system is driven by the financial interests of incumbent utility transmission owners, is inefficient, and lacks transparency,” said People’s Counsel David S. Lapp. “The solution is a strong, empowered and truly independent regional planner with meaningful public participation in all phases of transmission project development. FERC’s proposal is a big step in the right direction.”
Maryland’s utilities are part of the regional transmission organization called PJM. PJM runs a regional planning process, but FERC has allowed a loophole through which PJM’s transmission owners can control which transmission projects are part of PJM’s planning process. That allowance has caused a proliferation of utility-designated, self-approved “local” transmission projects, OPC’s filing pointed out. Spending on utility self-approved transmission projects has ballooned and is four times greater than projects planned through PJM’s regional process. At the same time, hundreds of renewable energy projects are waiting to connect to the system, facing barriers that will cause some projects to not be developed and making it more difficult and costly for Maryland to achieve its clean energy goals.
In many respects, FERC’s proposed new regulations on regional planning—the subject of OPC’s filing—will improve the current situation and facilitate the development of renewable energy, largely by establishing long-term planning requirements that account for the benefits of a more robust system. Such planning should account for Maryland’s ambitious decarbonization policies, OPC said.
OPC’s comments, filed jointly with the D.C. Office of People’s Counsel, pointed out that transmission costs have more than doubled in the past decade, and cost estimates for decarbonizing the electric system to achieve carbon neutrality by 2050 are in the range of $2-$4 trillion.
The extraordinary costs of building a carbon-neutral system can be mitigated through robust competition for building and owning transmission system enhancements. Where competitive solicitations have been used, the evidence shows substantial cost savings, ranging from 15%-60%, according to studies cited in OPC’s filing, but utilities have avoided competition through the loophole for utility self-designated “local” projects. Unfortunately, however, FERC’s proposed rulemaking moves backward on competition by enabling utilities to avoid competition even for regionally planned projects.
“FERC’s proposal heads in the right direction on long-term planning, but the wrong direction on competition for building out the transmission system,” Lapp said. “The proposal yields to the financial self-interest of utility transmission owners, allowing them greater ability to avoid competitive procurements, and thus rewards the same players who have perverted regional planning and competition.”
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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