FERC Commissioner William Massey last Thursday said that he is “very concerned” that a state-by-state approach to transmission siting is not going to produce the results that the Commission needs as it works to foster the development of wholesale power markets in the U.S. and said that at a minimum, the federal agency should have some sort of backstop authority on the siting of power lines.

In an interview with NGI, Massey was asked to describe how worried he was that the issue of transmission investment may be getting shunted to the sidelines with everything else that’s going on in energy markets these days. “I’m extraordinarily concerned,” Massey responded.

“Let me be clear, when you have congestion [on the grid], that concerns you,” Massey said. But the solution is not always transmission, he pointed out. “The solution could be [the] site of [a] generator in a particular location, the solution could even be a robust demand response that relieves the congestion, but there are times when the solution absolutely is transmission investment and, unfortunately, we’re not seeing it,” he said.

“I think part of the problem is uncertainty about who the regulatory master of transmission is going to be. Is it going to be FERC? Is it going to be the 50 states? That has to be resolved,” Massey went on to say. He pointed out that the Commission’s nascent standard market design proposes to resolve this matter.

“The second concern is returns — they’ve been too low,” the regulator said. “More recently, FERC has shown greater flexibility for returns on transmission investment in the 11 to 12-12 1/2, 13% range,” Massey noted. “I think that will help.”

The third “big problem” is siting of transmission, the regulator told Power Market Today. “That’s splintered among 50 states and I think that is a very big problem,” he said.

“There are investments in transmission that simply must occur for wholesale markets to thrive and they’re not occuring. And so, how concerned am I? Very concerned that necessary transmission investment is not being made and I think we need to break that logjam,” he added.

Massey highlighted the fact that FERC has been sponsoring regional conferences to “shine a spotlight” on this issue. The most recent conference occurred in the Southeast. “That’s important,” Massey said of the conferences.

“Perhaps some sort of regional approach to siting ought to be explored,” the regulator said. He said Congress will not transfer siting authority to FERC “although I have advocated that Congress do so. We site natural gas pipelines and do so quite successfully.”

Massey supports the idea of giving FERC some type of backstop transmission siting authority. “I think that’s perfectly reasonable,” he said. “The disconnect here is that FERC is responsible for making wholesale markets work for customers. FERC can’t get that job done if necessary transmission facilities are not sited,” Massey went on to say.

“I think there ought to at least be a FERC backstop,” he stated. “Perhaps Congress wants to authorize regional compacts among the states to deal with these matters on a regional basis.”

Such a regional compact could be contiguous with the boundaries of a regional transmission organization (RTO) “and the RTO would plan for the region, make strong recommendations about transmission investment and where it ought to be and then the regional compact organization could make a decision about siting,” Massey added. “I’m very concerned that a state-by-state approach to siting is not going to produce the results that we need.”

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