An eagerly anticipated comprehensive study of the nation’s electrical transmission highway unveiled last Wednesday by the Department of Energy (DOE) recommends that the federal agency review the grid every two years to pinpoint “national interest” transmission bottlenecks. The report also says that Congress should give FERC limited federal transmission siting authority and recommends that regional transmission organizations (RTOs) be made responsible for ensuring that transmission bottlenecks are addressed.

The recommendations included in the study were developed in response to President Bush’s national energy policy directive to Energy Secretary Spencer Abraham to study the nation’s transmission system, identify transmission bottlenecks and identify measures to eliminate those bottlenecks.

The DOE noted that over the past 10 years, competition has been introduced into U.S. wholesale electricity markets with the goal of reducing costs to consumers. But the nation’s outdated transmission system was not designed to support today’s regional, competitive electricity markets, the agency pointed out. Investment in the transmission system has not kept pace with the growth in generation, and the increasing demand for electricity and transmission bottlenecks threaten reliability and cost consumers hundreds of millions of dollars each year, the DOE said.

The study makes 51 specific recommendations designed to address transmission bottlenecks. Included among those recommendations are the following:

The report also recommends that FERC and DOE work with states, pertinent federal agencies and Native American tribes to form cooperative regional transmission siting forums to develop regional siting protocols.

In addition, the study says that federal legislation should make compliance with reliability standards mandatory. Penalties for non-compliance with reliability rules should be commensurate with the costs and risks imposed on the transmission system, generators and end users by non-compliance, the report said. Penalties collected should be used to reduce rates for consumers, the study added.

Also, the study calls on the DOE to work with FERC, state public utility commissions and industry to ensure the routine collection of consistent data on the frequency, duration, extent (number of customers and amount of load affected) and costs of reliability and power quality events in order to better assess the value of reliability to the nation’s consumers.

The study also addresses the recovery of costs for new transmission-related investments. The report states that DOE will work with the nation’s governors, the National Association of Regulatory Utility Commissioners (NARUC) and other appropriate state-based organizations to promote innovative methods for recovering such costs. “These methods should consider situations where rate freezes are in effect and also examine incentive regulation approaches that reward transmission investments in proportion to the improvements they provide to the system,” the study said.

The DOE also will continue to work with governors and NARUC to remove regulatory barriers to voluntary customer load-reduction programs, and targeted energy efficiency and distributed generation programs that address transmission bottlenecks and lower costs to consumers, according to the report.

In addition, the study states that the DOE will create an Office of Electric Transmission and Distribution.

Jimmy Glotfelty, senior policy advisor at the DOE, earlier this year said that the agency has felt stifled in terms of making recommendations in the areas of transmission and reliability.

“Most of our work is in generation, we do very little with transmission and distribution,” Glotfelty told a gathering of state regulators meeting in Washington, DC, in February. Glotfelty indicated that a transmission and distribution entity at DOE would work on these issues full-time.

The complete report and related issue papers can be downloaded by going to the following DOE web site: https://www.ntgs.doe.gov.

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