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Industrial Customers: Energy Bill a 'Potential Fall-Back' for Climate Change

Industrial Energy Consumers of America (IECA) sent a letter last Thursday to Senate leaders urging them not to accept legislative language that would give FERC the authority to approve transmission facilities interconnecting with renewable energy sources and to require that the cost of the new facilities be shared with customers system-wide.

IECA President Paul Cicio is raising the concerns more than eight months after the Senate Energy and Natural Resources Committee passed the legislation (The American Clean Energy Leadership Act of 2009), which included provisions that would have given the Federal Energy Regulatory Commission such authority.

The bill (S. 1462) cleared the Senate committee last June and has been languishing in the chamber since, but it has taken on a new significance as it is being considered as a "potential fall-back bill if climate change legislation doesn't move" in the Senate, Cicio said (see NGI, June 22, 2009).

"I'm hearing [from Democrats] that this is a high priority to move this bill" just in case climate change fails to gain traction, he noted. The Senate, however, remains hopeful about the climate change bill being crafted by Sens. Lindsey Graham (R-SC), John Kerry (D-MA) and Joe Lieberman (I-CT), Cicio noted.

If the Senate energy bill is chosen as the legislative vehicle, "we urge you to not accept these [S. 1462] provisions because, among other things, this subsidization could favor selection of less favorable [transmission] projects," Cicio wrote in his letter to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell of Kentucky.

"Transmission decisions should be made locally using regional policy processes and we do not think it is appropriate that some portions of the country would subsidize other regions. Instead each region should bear the costs of their transmission-siting decisions. Each region and utility should be held accountable for its plans to keep the delivered cost of electricity low and reliability high," Cicio said.

"A key underpinning of this drive to socialize costs of transmission is to increase the supply of renewable energy. Increased supply of renewable energy in our nation's electricity supply mix is a good thing. However, it is important that each new electricity source, whether it is a natural gas-fired power plant, a coal or nuclear plant or a wind farm, bear its own costs. Renewable energy is already highly subsidized and remains more expensive than alternatives," Cicio told the Senate leaders.

A group of 28 utilities, transmission providers and electricity customers expressed similar concerns in a letter to Reid and McConnell in early February. They called on the Senate leaders to delete language from S. 1462 that would allow FERC to approve or modify an interconnection-wide transmission plan that may conflict with local or regional plans.

And "with respect to cost allocation, while our organizations strongly support the development of renewable and other clean energy sources, we believe that national policy should not be biased toward building remote generation resources connected to population centers with long, multi-state transmission lines," said the companies, which included Consolidated Edison, DTE Energy Co., Entergy Corp., Southern Company and CMS Energy Corp.

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