Laws making the grid more difficult to modernize

The posts on the grid and all of its problems are hitting ‘high’ recently as the continued fallout from Texas echos thru government chambers. Utility Dive put out an opinion piece today that struck a chord on how state laws have made a mess of the grid.

Here’s the nutshell of the problem, quote: “Interstate transmission development is fragmented by local utility service territories. Parochial interests are impeding large-scale transmission projects, which in turn is slowing wind and solar deployment. The combination of discriminatory state laws and Federal Energy Regulatory Commission transmission planning rules shields utilities from competition within their local service territories and induces them to focus on developing small-scale local projects. These protectionist policies reinforce an anachronistic utility-by-utility approach to transmission planning that is failing to develop the regional transmission necessary to effectively decarbonize the power sector and mitigate the impacts of extreme weather.”

Let’s be clear. States are fighting to preserver their protectionist laws and policies. Quote: “If the Court takes the case and finds Minnesota’s discriminatory scheme unconstitutional, it will overturn a wave of anti-competitive transmission laws. Texas is currently in federal court defending its own ROFR law. In Iowa, the state legislature gave utilities similar handouts a few months ago, reinforcing the existing protections the state already offers utilities from non-investor owned utility (IOU) developers. At least six other states have granted in-state utilities ROFRs since FERC issued Order 1000 in 2011. Meanwhile, the Colorado legislature considered giving in-state utilities ROFRs just last year, and senators in Michigan introduced a ROFR bill earlier this month.

This set of problems is a great example of local optimization that screws the more global (national) optimization. Utility Dive did have a recommendation, quote: “FERC should change its policy. Requiring IOUs to prove prudence would threaten their service territory safe harbor. Although FERC has legal authority to require competitive development for all transmission projects, allowing IOUs to maintain monopolies for a limited scope of small-scale projects may be a practical approach. But FERC should subject IOU spending on those projects to heightened scrutiny before allowing IOUs to charge ratepayers. With the benefit of automatic profitability for projects within their state-granted service territories, IOUs are poised to rebuild the small-scale power networks of the past rather than develop the large-scale transmission needed to meet today’s energy challenges. Local, anti-competitive protections for IOUs should not constrain the evolution of our energy system.”

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