White: Follow FERC’s Lead on Nation’s Electric Grid

Posted November 9, 2011 at 6:06pm

Our nation’s electric grid is suffering from decades of underinvestment. The majority of our high-voltage transmission lines — the “interstate highways” of our electric system — were built long before we fell in love with smartphones and iPads and before technologies such as electric cars were a viable solution for American families.

This outdated system is costly, vulnerable and inadequate to the urgent task of tapping America’s virtually unlimited domestic clean energy resources.

More than two years ago, utilities, regulators, ratepayers and other stakeholders across 13 Midwestern states started working together to find solutions to this challenge and build a more modern grid in the country’s heartland. Last month, the Federal Energy Regulatory Commission spoke loud and clear in support of their efforts.

The Midwest Independent Transmission System Operator spent 19 months developing a plan to overcome the two main challenges to building transmission lines: 1. how to plan for large projects and 2. how to ensure that everyone who benefits shares in the cost of development. MISO used a fair and transparent process to identify a portfolio of “multi-value projects” that will help keep the lights on and strengthen the grid across the region.

FERC’s approval of the plan — after months of deliberation and challenges — is a statement of support that everyone should be listening to.

Our transmission system is the backbone of competitive energy markets. It allows customers to choose from more, cheaper and cleaner resources. The grid is also integrated, meaning that investments in one area can benefit ratepayers far away by making the whole system more efficient. And at just 7 percent of the average customer’s electric bill nationally, transmission is a bargain. Generation makes up about two-thirds of a typical bill — more than 10 times as much.

It’s easy to see how small investments in transmission can yield large savings by giving customers access to cheaper power in competitive electricity markets.

The integrated nature of our transmission system — and common sense — tells us that local planners working cooperatively over broad regions will identify solutions that are more cost-effective for ratepayers than individual utilities or states could develop on their own. It’s only fair that families and businesses in every state reap the benefits of a modern and efficient electric grid, from more clean energy to a lower monthly electric bill.

FERC is listening, and it is encouraging regional organizations such as MISO to solicit stakeholder input to chart a clear path forward for a modern grid. Why, then, is there still so much noise surrounding the issue?

As it turns out, most of it is coming from just a few voices in Michigan who stand to benefit from restricting access to competitive energy markets. Hiding behind misleading claims that transmission will raise electricity costs, incumbent utilities in the state are looking to protect their power plants from competition and from holding Michigan businesses and families hostage to high rates in the process.

The facts tell a different story. Michigan currently has the highest electricity rates in the region, and transmission makes up a tiny 4 percent of a Michigander’s bill. Since 2006, inflated power prices cost Michigan businesses and consumers $160 million — a competitive penalty for the state that goes directly into the pockets of electric utilities.

MISO’s open and inclusive MVP planning process helped everyone in the region recognize that regional transmission investments would generate economic benefits far exceeding costs. For Michigan ratepayers alone, an investment of $1.3 billion would reduce fuel costs and congestion by $2.5 billion.

FERC has not only heard what MISO is saying, it is applauding the region for taking a lead role in upgrading critical national infrastructure and for delivering big economic benefits to consumers and businesses. And to further protect ratepayers, the commission’s approval added a requirement that MISO conduct regular and transparent reviews of the benefits of regional transmission projects to ensure that their costs are distributed fairly.

The opposition may be noisy, but it isn’t right. In Washington, small and vocal interests too often wield outsized power. By approving the MVP portfolio, FERC cut through the noise and got it right. It recognized MISO’s plan as a hard-earned consensus on shared investments that will lower electricity prices and meet future needs. The region spoke with a single voice, and FERC listened. Let’s hope the ears of Congress and the courts are as finely tuned.

Bill White is a senior adviser for Americans for a Clean Energy Grid.