Feds say utilities must take planning seriously

by Zak Sonntag

Casper Star-Tribune

Via Wyoming News Exchange

CASPER — The Federal Energy Regulatory Commission, the nation’s top utility regulator, issued a sweeping new rule last week requiring regional utility operators to plan for long-term transmission build outs in preparation for an anticipated nation-wide surge in electricity demand.

The rule now requires transmission providers, including Wyoming’s largest utilities — Rocky Mountain Power and Black Hills Energy — to plan for a 20- year time horizon identifying transmission needs and ways to pay for them in order to reliably meet projected load growth.

“Our country is facing an unprecedented surge in demand for affordable electricity while confronting extreme weather threats to the reliability of our grid and trying to stay one step ahead of the massive technological changes we are seeing in our society,” FERC Chairman Willie Phillips said in a statement.

The rule comes after two years of public hearings and marks the first time in more than a decade that the federal agency has waded into regional transmission policy.

The change was welcomed by clean energy advocates, who say long-term transmission planning is an essential part of connecting new clean energy projects to the grid, which is hoped to both lower carbon emissions and bring down power costs for consumers.

But critics, including Wyoming’s Senator John Barrasso, worry the rule will disproportionately benefit urban areas at the expense of rural communities.

Barrasso said he believes the rule “will force customers — often in rural states — to pay for new transmission lines even when those lines don’t provide any meaningful benefit to them. It is the holy grail for liberal politicians in California and New York and corporate executives who want others to foot the bill for their climate obsession.”

Advocates counter that added transmission capacity will bring the cost of electricity down for all consumers by allowing more energy production to find its way to market while simultaneously creating more distribution efficiency, minimizing peak power challenges and regional price spikes.

PacifiCorp, the parent company of Rocky Mountain Power, says transmission constraints are a growing concern on the western grid and has been one factor driving price spikes on the open energy market.

When a utility’s proprietary generation facilities are insufficient to meet the demand from its own customer base, for example, it must purchase power from regional energy hubs.

In 2022, PacifiCorp’s expenses for open market energy purchases soared by 500%, according to company filings.

“In order to provide the service, we sometimes have to go to the market and buy the power to deliver. But we’re seeing constraints in that overall market in the West increasing costs, driven partly by demand and load volatility and many other factors,” President of Rocky Mountain Power, Dick Garlish, said in April, adding that investments in transmission will help mitigate its open market power purchases.

Some even say the rule falls short of the challenge ahead.

Former FERC Chairman Jon Wellinghoff argued that by addressing transmission planning in isolation, FERC has made little progress on resolving the grid resilience issue in a satisfactory way.

“There’s no doubt that grid resilience is becoming an increasingly fraught issue in the face of climate change, increasing electrification and the growing impact of renewables on the grid. While this FERC ruling is to be welcomed as it addresses long-term grid planning, it falls woefully short of what is required,” Wellinghoff said in a statement, adding that it may result in “a patchwork of rules and significant differences between one authority and the next.”