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FERC Chair Glick On Electric Transmission: It Is ‘The Hot Topic These Days’
May 24, 2021
Delivering the keynote address at WIRES’ recently held Spring Meeting, FERC Chairman Richard Glick said that similar to the popularity experienced by wind energy in the past, particularly during the 2008 Democratic National Convention in Denver, “Electric transmission is kind of like the hot topic these days.”
Glick noted that President Joe Biden’s infrastructure plan, for instance, has a significant amount of focus on transmission development, as well as investment, and that “we’re seeing bills introduced” frequently in Congress on electric transmission matters, including tax incentives.
As TransmissionHub reported, Biden’s “American Jobs Plan” calls on Congress to invest $100bn to, for instance, build a more resilient electric transmission system, according to a March 31 fact sheet from the White House.
“As the recent Texas power outages demonstrated, our aging electric grid needs urgent modernization,” the fact sheet said, adding that a U.S. Department of Energy (DOE) study found that power outages cost the U.S. economy up to $70bn annually.
According to the fact sheet, Biden’s “plan will create a more resilient grid, lower energy bills for middle class Americans, improve air quality and public health outcomes, and create good jobs, with a choice to join a union, on the path to achieving 100 percent carbon-free electricity by 2035.”
Also, as reported, U.S. Rep. Steven Horsford (D-Nev.), U.S. Sen. Martin Heinrich (D-N.M), and U.S. Rep. Susie Lee (D-Nev.) have introduced the Electric Power Infrastructure Improvement Act, which would provide an investment tax credit of 30% for regionally significant transmission projects, as noted in an April 8 statement posted on the websites of Horsford and Heinrich.
The statement noted that projects that would qualify for the investment credit are:
As noted in the legislation, the qualifying electric power transmission line credit for any taxable year is an amount equal to 30% of the qualified investment for such taxable year with respect to any qualifying electric power transmission line property of the taxpayer. The amendments made by the legislation are to apply to property placed in service after Dec. 31, 2021, the legislation said.
During WIRES’ meeting on April 27, Glick said that FERC has a relatively significant role to play on transmission, through such policies as Order 1000. He also said that from his perspective, FERC should spend time on modifying its current policies or proposing new ones that are aimed at further incentivizing investment or developing additional transmission capacity.
He noted that there is clearly a big need for transmission as the country quickly transitions to the clean energy future, in which more renewable resources, for instance, will be connected to the grid.
FERC needs to take a look at what barriers exist in terms of transmission investment, including planning and cost allocation, he said.
Noting that FERC needs “to revisit our planning approach,” Glick said that improvement is needed on interregional transmission planning to figure out a way to encourage, and even possibly require, additional interregional planning for big interregional transmission projects.
On cost allocation, for instance, he noted that FERC is constrained “by several court rulings in terms of requiring that we have to allocate costs to transmission in a manner that’s roughly commensurate with the benefits.”
A big part of what FERC needs to do is step back and ask what are the benefits associated with transmission facilities, who are the beneficiaries, and are the costs being allocated in an appropriate manner today, Glick said.
Among other things, he noted FERC’s April 15 supplemental notice of proposed rulemaking (NOPR), which, as reported, proposes to codify the commission’s current practice of granting a 50-basis-point increase in return on equity (ROE) as an incentive for utilities that join a transmission organization. FERC added at the time that a utility would be eligible for the incentive for the first three years after the utility transfers operational control of its facilities to the transmission organization.
In response to a question regarding FERC’s timeline on moving forward on examining planning or cost allocation issues, Glick said that his goal is to have something in place — at least a plan of action, whether it involves a rulemaking or another policy approach — before the end of the summer.
