Second thoughts on transmission’s golden egg.
Bruce W. Radford is publisher of Public Utilities Fortnightly.
With its Order No. 679, issued in 2006 at the urging of Congress to help expand the nation’s electric grid, the Federal Energy Regulatory Commission has granted billions in financial incentives and fostered a boom in transmission line construction that continues today.
So why should FERC now want to tighten the purse strings and risk a key policy success?
The numbers, at least, offer strong evidence that FERC has achieved what it set out to do. According to the Edison Electric Institute, Order 679 helped boost annual transmission line spending from $6.5 billion in 2005 (inflation-adjusted, 2010 dollars), to $9.3 billion per year in the four years since 2006—a 42 percent increase (see Figure 1). Program incentives expanded so fast, in fact, that by June 2009 FERC Chairman Jon Welllinghoff found himself answering a formal inquiry from Congressman Ed Markey, then the chairman of the House Subcommittee on Energy and Environment, hinting that awards had become too generous. Markey wanted precise data on what rewards FERC had then granted to date. By that time, 58 projects had won incentives, Wellinghoff said, representing 10,700 in line-miles and $40.7 billion in total costs.