Transmission remains the single biggest obstacle to realizing the full potential of wind and other forms of renewable energy. The latest proof of this thesis is a decision announced late last week by the Federal Energy Regulatory Commission. The case involved two utilities and several wind generators in the Midwest, and the Midwest Independent System Operator (MISO), the independent entity established by FERC to regulate transmission in a broad area of the Midwest.
The wind generators wanted to connect to the grid, to deliver power to their customers. The companies that operate the transmission in that region, Otter Tail Power Co. and Montana-Dakota Utilities Co. (MDU), a subsidiary of MDU Resources Group, wanted the wind companies to pay almost all the costs for the transmission improvements needed to carry the extra electricity. But the wind companies (and AWEA) argued that since other power generators would benefit from the grid improvements, the costs should be spread more broadly among MISO’s users.
MISO, the grid operator, and FERC, which oversees MISO, sided with the utilities. Their decision--announced quietly late on a Friday afternoon-- illustrates the crux of the “cost allocation” issue that has been a stumbling block for transmission improvements: new transmission infrastructure for wind and other renewables can only be built if the costs are allocated broadly among all transmission users. But getting that accomplished is difficult, if not impossible, under the existing rules (and players) of the game.
AWEA’s Rob Gramlich, senior vice president for public policy, expressed the frustration felt by many in the wind industry, especially since there were less drastic solutions available for solving the problems faced by Otter Tail, and MDU. “This decision is baffling. How did we go from a problem for just two small utilities to a region-wide policy that hinders the transmission investment and renewable energy development that all four Commissioners say they want? It is not hard to guess what cost allocation plan the anti-transmission utilities in MISO will continue to push.”
He added, “At some point FERC and the states will need to exercise some leadership,” and noted that in its ruling last week, the FERC commissioners said their decision was an “interim approach” and that MISO was working on a new cost allocation system that they hope to unveil next year. |
