Siting Transmission Lines in a Changed Milieu: Evolving Notions of the 'Public Interest' in Balancing State and Regional Considerations
47 Pages Posted: 6 Aug 2009 Last revised: 2 Feb 2010
Date Written: August 4, 2009
This Article discusses how state public utility law presents a barrier to the siting of new high voltage transmission lines to serve renewable resources, and how states could approach its evolution in order to preserve a role for state regulators in a new energy economy in which renewable energy will play a significant role. The traditional approach to determining the "public interest" in siting transmission lines is well on its way to obsolescence. Two developments over the past fifteen years have begun to challenge this paradigm. First, policies at the federal level and in many states have encouraged increased competition in generation, contributing to de-monopolization of the bulk power side of the industry. Second, the increased emphasis on environmental, energy independence, and other public policy objectives, has resulted in a dramatically increased demand for renewable energy, particularly given heightened attention to climate change. Given that wind power -- the most economically viable renewable resource on a bulk power basis -- is feasible predominantly in locations far removed from, load centers, the demand for new multistate transmission facilities has been brought clearly into focus.
After an introduction in Part I, Part II describes the existing arrangements in several resource rich Western states for siting new transmission lines, and the coexistence of those arrangements with a conventional understanding of the public interest in determining need and addressing environmental concerns under traditional state transmission siting laws. Part III discusses transmission issues related to the competitive wholesale market and increased attention to climate change and highlights how federal law has expanded to accommodate some of these concerns. Part IV emphasizes the need for a new definition of the public interest which might better reflect these new market circumstances and opportunities, and highlights the two main barriers to this: 1) legislative and/or regulatory inertia and 2) an outdated cost-allocation model. The public interest under most state siting statutes is sufficiently capacious to give regulators some flexibility to evolve, but in other instances legislative action may be needed. In addition, the state cost-of-service ratemaking model must evolve to a more regional approach to allocating the costs of new transmission.
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