The Supreme Court last week decided not to review a lower court ruling on electricity transmission, upholding states’ ability to deny permits for new transmission lines. This will allow states to prevent anyone—either the government or private businesses—from building new transmission lines. The United States needs these transmission lines. They would enable Americans to consume more clean energy by bringing it from wind- and solar-powered plants to homes around the country. And a report released last week by the National Renewable Energy Laboratory estimates that we need 20,000 new miles of transmission lines to move carbon-free wind energy from wind turbines to East Coast consumers alone. The United States can’t reap the benefits of clean energy if Americans can’t access it, and these developments reinforce the fact that climate and energy legislation must contain a comprehensive transmission proposal to effectively drive the transition to a clean energy economy.
Transmission lines are the backbone of the U.S. electric grid, carrying high-voltage electricity from where it’s generated to where it’s used, similar to the function of the interstate highway system. The interstate highway system was critical to the U.S. economy and national security in the 1950s, and a modern electric grid is in the same way vital to the United States today. Our electric grid dates from at least the 1960s and most of the pieces are at least 25 years old. New transmission will allow us to utilize new renewable electricity and reduce the coal fired electricity production responsible for a third of U.S. greenhouse gas pollution.
Transmission investment is a key to a country’s economic competitiveness, as well, which is why China is investing $217 billion in their electric grid between 2006 and 2010. New transmission has benefits in its own right, beyond broadening clean energy use. For example, new transmission would relieve electricity congestion that costs the eastern United States $16.5 billion each year and would create redundancies that are necessary to keep the electric grid active when one small part stops working. Building transmission lines is also a significant job creator. Studies of three comparable large-scale projects show that, on average, new transmission lines create about 14 jobs per mile of transmission, which means that building the 20,000 miles of new transmission we need could create 280,000 new jobs.
Unfortunately, only a handful of high-voltage transmission lines have been built in the last decade. In fact, electricity sales have gone up 20 percent since a landmark Federal Energy Regulatory Commission ruling that restructured electricity markets in 1996, while the total amount of transmission to carry that electricity has gone up by just 8 percent. One of the biggest barriers to transmission construction is "siting," or deciding exactly where transmission will be located. The 4th Court’s decision makes clear that we need new legislation to fix the siting problem that causes underinvestment.
As an example of siting difficulties for renewable energy, consider what Southern California Edison is going through to get solar electricity to southern California. The utility originally wanted to bring in solar power from Arizona, but Arizona regulators wouldn’t approve the project, so the utility is having to base the entire project within California. This points to the limitations of relying on state regulators for siting approval. Not only are state regulators relatively unfamiliar with conditions outside of their state; many of them also face institutional barriers to regional planning and siting. For example, state regulators are often legally bound to only consider costs and benefits within their state, which makes it exceptionally difficult to build transmission across a state that hosts neither the generation nor the consumption.
It is important to understand exactly what the Supreme Court decision means. The 4th Circuit Court’s decision did not conclude that the federal government can’t have a significant role in siting. Rather, it decided that current law, which comes out of the Energy Policy Act of 2005, doesn’t give FERC the authority to approve a transmission project that a state regulatory commission has already denied. This is sometimes referred to as "backstopping" authority for FERC. This hinges on the EPAct’s language, which gives FERC siting authority in certain cases where a state has "withheld approval for more than 1 year after the filing of an application." The 4th Court simply ruled that a state’s denial of an application doesn’t mean that the state has "withheld approval." In other words, the federal government can not approve a transmission project if a state has denied the request, but it can if the state has withheld their approval for at least one year.
This is a narrow ruling that reaffirms that changes in the law are essential to make it clear that FERC has backstop authority if states fail to act on important proposed transmission projects. Importantly, the court lays out various scenarios in which FERC can exercise siting authority and makes it clear that they’re only ruling on this specific issue: FERC does have siting authority, but the specific language in EPAct doesn’t give FERC the ability to overrule state regulators.
In CAP’s report "Wired for Progress 2.0," we proposed a hybrid siting system, in which FERC would lead the process, but states would be able to place conditions on permits and provide guidance on decisions. State regulators are much more familiar with state and local conditions than FERC, and this can guide where transmission should be located. But we need to plan for future transmission needs at the regional and even national level, which doesn’t fit with state regulators’ abilities.
The National Renewable Energy Laboratory report released last week describes changes that need to be made to the electric grid to incorporate significant amounts of wind energy. We will need to build some 20,000 miles of new transmission lines at a cost of roughly $90 billion—depending on how much offshore wind energy is used—just for the eastern United States to get 20 percent of its electricity from wind generation by 2024.
American Wind Energy Association CEO Denis Bode had this to say about the importance of the NREL study: "This groundbreaking study demonstrates the major role wind energy can provide across the eastern U.S., reducing and stabilizing electricity rates while protecting the environment. It also shows the urgency of transmission reform for both onshore and offshore wind development, because if we wait any longer we will not have the lines soon enough to tap these cost-effective domestic renewable resources."
Transmission reform is urgent. As Congress considers climate and energy legislation in the coming months, they need to remember to include language that creates a system for effectively siting new transmission. Such a system will likely combine FERC oversight with a clearly defined role for state regulators, balancing the need for regional and national planning with respect for state and local conditions.
Senator Harry Reid (D-NV) introduced a bill in March that follows this recommended approach. The Clean Renewable Energy and Economic Development Act gives FERC the authority to site projects that states have denied, but only if a specific set of criteria are met. This bill’s provisions address the 4th Circuit Court’s concern that state regulators are unable to do their jobs if FERC can simply override their decisions. It provides a role for states that could stand up to judicial scrutiny and gives FERC strong "backstopping" authority. These measures are just the types of reform we need for this urgent situation.
(Note: E&E subscribers can read a detailed news story on the Supreme Court decision here.)
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Richard W. Caperton
Managing Director, Energy