August 15, 2008
A major transmission proposal has traversed some rough terrain. The $1.1 billion line that is to stretch 240 miles through the states of Pennsylvania, Virginia and West Virginia has overcome attacks and won over a key regulatory body.
After months of discussion, the West Virginia Public Service Commission has sided with Allegheny Energy, which has said that the 500-kilovolt project is necessary to increase the reliable flow of electricity across the eastern United States. Despite the decision, environmental groups say they will not stop fighting to prevent construction of the line. West Virginia's Sierra Club says that the plan is nothing more than an oversized extension cord that will devastate the state so that wealthier areas of the country can have power.
While the utility must still win approval from the Pennsylvania and Virginia public utility commissions, the West Virginia board's ruling is likely a precursor of things to come. The PJM Interconnection, the organization responsible for the transmission grid for a 13-state area, warns that without the Allegheny project, the stability of the grid and reliable flow of electricity cannot be reasonably assured. This could result in blackouts, voltage disruptions and brownouts.
"This initiative will help the region meet current and future electricity demand, create and retain jobs and enhance our energy independence and security," says West Virginia Coal Association President Bill Raney.
Under the Energy Act of 2005, the U.S. Secretary of Energy can designate national interest electric corridors in those areas that have capacity constraints or congestion. The states still have first crack at the process. But the Federal Energy Regulatory Commission will step in if state law precludes consideration of interstate benefits and if the state takes longer than one year to act after an application is filed.
The commission does not have a blank check. A proposal to build or expand electric transmission facilities brought before it must be used for interstate commerce, be consistent with the public interest, significantly reduce transmission congestion and maximize the use of existing towers and structures. Under all circumstances, the review process is to be extensive and the public is to remain involved.
While the intent of the energy law is to ease transmission development and to ensure more reliability, it is not known if it will achieve that goal. A lawsuit is now pending in the U.S. 4th Circuit Court of Appeals to try and get some resolution as to exactly what backstop authority FERC now has. Fifteen states are part of the suit.
"The more major cities depend on long transmission lines, the more subject they will be to power outages and blackouts due to major contingencies on the transmission system," says George Loehr, engineer with the Piedmont Environmental Council of Virginia.
Intense Negotiation
According to the National Transmission Grid Study released a few years ago, the demands on the network will grow by 20 percent in the coming decade but the capacity to carry electrons will only increase by 6 percent. At the same time, it is expensive to build transmission lines, estimated to be at least $1 million a mile. To motivate expansion, the energy law provides FERC with the authority to intervene if the states do not approve vital projects within one year.
In making its case, Allegheny has urged the states to view themselves as part of the national and regional economic pictures and not as isolated entities. As such, transmission development along the designated corridor keeps commerce humming everywhere. To use a "band aid" approach to fix inadequate transmission capacity would not only serve to prolong the economic risks but would also necessitate more upgrades down the road. The line is to be completed in 2011.
Allegheny had to work hard to satisfy West Virginia regulators. Consumer advocates there, as well as commission staff, had initially objected to the plan, arguing that the state's ratepayers would be overburdened while the electricity would be channeled elsewhere. To overcome those concerns, Allegheny agreed to re-route its line and to provide free power to those residents in which the line invaded their property. The company also promised some rate reductions and low-income assistance.
Internal opposition eased and West Virginia regulators were ultimately persuaded to vote in favor of the project. They generally reasoned that the line would benefit both the state and the region. The state would be able to sell more of its coal while the region would have improved reliability. Commissioners were sympathetic to concerned property owners who feared diminished property values and obstructed views but they said the utility had been fair and upfront throughout the process.
"The siting of electric transmission lines is invariably controversial," the public service commission wrote in its ruling. "Regardless of the route selected, there will be opposition from the affected property owners." They add that the project will "will have substantial and positive economic impacts in West Virginia."
The West Virginia commission will also be deciding a second transmission venture involving American Electric Power. That transmission line, which is extra-high voltage and which would run 290 miles from the state and into Maryland, is undergoing intense scrutiny. While federal regulators have already approved it, opponents are now questioning the effect it will have on property values and views. Regulators are also being urged to consider whether the line would perpetuate the use of dirty fossil fuels.
Transmission projects are never welcome. But the power that flows from them is vital. After a series of tough negotiations, West Virginia regulators weighed the concerns and concluded the Allegheny project is economically justified and that approving it would serve the state's overall interests.
More information is available from Energy Central:
Respond to the editor.
Ken Silverstein EnergyBiz Insider Editor-in-Chief
Read Ken's Blog
