Feds Go to Work on Transmission Congestion

By Kathleen Davis, associate editor

The Energy Policy Act of 2005 (EPAct) tweaked the Federal Power Act just a tad: It sent the Secretary of Energy on a quest to study transmission lines coast to coast-except in ERCOT. In this case, Texas really is “like a whole other country.” And, they circled the wagons without Alaska and Hawaii as well, since they aren’t in either the Eastern or Western Interconnections.

The end result of this examination was yet another study, “The National Electric Transmission Congestion Study,” which was completed this summer and submitted for comments in August.

The potential power of this study is palpable. If the mix of information gathered is just right-or “just wrong,” depending on the Secretary’s interpretation-it could lead to a declaration of federal siting power for certain transmission lines, an idea that activist opponents have colorfully labeled “the federal hammer.” The study itself sums it up this way: “The Secretary may designate any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects customers as a national interest electric transmission corridor.”

Those suggestions haven’t been made yet; the hammer hasn’t fallen, but it remains poised and ready.

When We Talk “Congestion,” What Do We Mean?

This peek into possible transmission bottlenecks is slated to be updated every three years. The inaugural version looked at congestion from various angles.

“This study examined transmission congestion and constraints and identified constrained transmission paths in many areas of the nation,” Poonum Agrawal, manager of markets and technical integration for the Office of Electricity Delivery and Energy Reliability at The Department of Energy, told Utility Automation & Engineering T&D. “This analysis was based on examination of historical studies of transmission conditions, existing studies of transmission expansion needs, and unprecedented interconnection-wide modeling of both the Eastern and Western Interconnections.

“The modeling results were compared to the results of the historical review and then the scale and severity of the reliability, economic and social impacts of the congestion were assessed,” she said.

The study’s authors and researchers developed their own congestion metrics “related to the magnitude and impact of congestion (for example, the number of hours per year when a transmission constraint is loaded to its maximum safe operating level; and the number of hours when it is operated at or above 90 percent of the safe level) and the cost of congestion (such as the cost of the next MWh of energy if it could be sent across a facility already at its safe limit).” Admitting that no single metric can show the big picture of congestion, the analysts used a number of different metrics and then identified those paths that were most constrained according to a combination.

According to the study, the cost of congestion varies in real time according to:

  • changes in the levels and patterns of customers’ demand (including their response to price changes),
  • the availability of output from various generation sources,
  • the cost of generation fuels, and
  • the availability of transmission capacity.

“With the publication of this study, the Department of Energy (DOE) expects to open a dialogue with stakeholders in areas of the nation where congestion is a matter of concern, focusing on ways in which congestion problems might be alleviated,” the study reads.

What does that translate to on the nuts-and-bolts level? Essentially, transmission congestion isn’t merely factual; it can be theoretical as well. It can range from not getting enough power through real lines to the concept of even scheduled flows dropping below “desired levels.” This could mean problems with physical capacity of a line, but it can also mean simple operational restrictions from regular maintenance to safeguard reliability.

Additionally, the DOE wants to talk money. Congestion doesn’t just impact whether the lights come on, but how much those lights cost. If congestion is an issue, the power to flick that switch may have been forced to reroute through a more expensive line option, thereby increasing the cost to both the company delivering the power and the final consumer with his fingers on the switch.

The DOE also looked at how constraint-technically defined as high demand with limited local generation-could force grid operators to brownout parts of the grid to protect the system and its impacts on businesses and people at the receiving end of the issue.

“Transmission constraints occur in most areas of the nation, and the cost of the congestion they cause is included to some degree in virtually every customer’s electricity bill,” the study’s authors wrote. “Although congestion has costs, in many locations those costs are not large enough to justify making the investments needed to alleviate the congestion.

“In other locations, however, congestion costs can be very high, and eliminating one or more key constraints through some combination of new transmission construction, new generation close to a major load, and demand-side management can reduce overall electricity supply costs in the affected areas by millions of dollars per year and significantly improve grid reliability.”

All of these considerations went into the study. What came out of the study wasn’t really much of a surprise for any industry insider.

The Results

The DOE broke down their suggestions into three areas in need of attention:

  • Critical Congestion Areas. This one can best be defined as “dire need.” The study uses the word “critical” in a number of aspects in their explanation. They see potential congestion in these areas as ratcheting up to “severe” in the near future.
  • Congestion Areas of Concern. These are areas where the analysts see potential large-scale congestion emerging, but “more information and analysis appear to be needed to determine the magnitude of the problem.”
  • Conditional Congestion Areas. These spots have a bit of current congestion with the possibility of getting worse if we add generation without paralleling it with transmission investment.

As shown in Figures 1 and 2, the DOE has labeled two regions “Critical”: (1.) the Atlantic coastal area from metropolitan New York southward through Northern Virginia, and (2.) Southern California.

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Also shown in Figures 1 and 2 are the DOE’s four Congestion Areas of Concern: (1.) New England, (2.) the Phoenix-Tucson area, (3.) the Seattle-Portland area, and (4.) the San Francisco Bay area.

Click here to enlarge image

Additionally, there are areas for potential large-scale development of wind, coal and nuclear generation capacity to serve distant load centers which may become Conditional Congestion Areas, including: (1.) Montana-Wyoming [coal and wind]; (2.) Dakotas-Minnesota [wind]; (3.) Kansas-Oklahoma [wind]; (4.) Illinois, Indiana and Upper Appalachia [coal]; and, (5.) The Southeast [nuclear].

“For the two areas identified above as Critical Congestion Areas, the Department believes it may be appropriate to designate one or more National Corridors to facilitate relief of transmission congestion in these areas,” the study concluded. The DOE is also considering the possibility of extending that to the Areas of Concern and the Conditional Congestion Areas, but, obviously, the Critical Areas would take the lead in getting that first pounding of the “federal hammer.”

When the study was released in August, the DOE opened the floor to suggestions and comments from those potentially impacted by the study’s conclusions. The responses were overwhelming to the DOE’s first question to the “stakeholders” in the process: “Would designation of one or more National Corridors in relation to these areas be appropriate and in the public interest?”

What the Players Have to Say

“DOE staff is in the process of reviewing comments that have been filed in response to the congestion study and are not able to discuss either those comments or any issues related to National Corridor designation,” Agrawal said, but she added that the complete text of most of those comments will be available to the public on the DOE’s website as soon as they are processed.

Two major players on the critical side of the study-PJM (for the “Atlantic corridor”) and SDG&E (for “Southern California”)-gave UAE a peek into what they had to say about the study and its conclusions.

A PJM spokesperson said, “PJM supports the DOE’s Congestion Study results as they apply to the PJM region, and agrees it is crucial to remedy existing or growing congestion problems in eastern PJM that DOE identified as a Critical Congestion Area.”

Additionally, in its comments, PJM urges the DOE to designate three National Interest Electric Transmission Corridors (NIETC) in its region.

“One NIETC-the Allegheny Mountain Corridor-in particular is urgently needed to avoid transmission system reliability issues in 2011 and beyond,” the spokesperson commented. “PJM’s responsibility is to ensure the reliability of the electric transmission system that serves 51 million people across 13 states and Washington, D.C. For several years, PJM’s planning process and proposals, such as the Mountaineer Concept, have identified growing transmission congestion and the need for major transmission expansion to keep the system reliable.”

PJM’s three requested corridors are:

  • Allegheny Mountain Corridor, which would serve electricity load centers of the metropolitan areas of Baltimore, Washington, D.C. and northern Virginia.
  • Delaware River Corridor, which would serve electricity load centers in the eastern portions of the mid-Atlantic area of PJM, principally northern New Jersey. This area also serves as a conduit for electricity transfers with New York City and surrounding areas.
  • Mid-Atlantic Corridor, which extends northeastward from the Northern Virginia-Washington-Baltimore metropolitan area across the Chesapeake Bay and the Delaware River. Additional transmission capacity in the Mid-Atlantic Corridor would accommodate the requirements of electricity load centers in southeastern Pennsylvania, New Jersey and the Delmarva Peninsula. The Mid-Atlantic Corridor complements the Allegheny Mountain Corridor by providing additional transmission pathways into congested load center in the Mid-Atlantic region.

“PJM particularly urges immediate action to designate the Allegheny Mountain Corridor before the end of 2006,” the spokesperson stated. “System reliability will be threatened and power interruptions could occur in the region unless a new high voltage transmission line is completed by 2011.”

Aside from the challenges of transmission congestion, the PJM system faces expected growth of its electricity demand by an average of about 1.6 percent per year for the next 10 years, according to the agency. Therefore, PJM’s planning experience aligns with the conclusions in DOE’s report. The number and extent of reliability concerns in the Atlantic corridor area “suggest the need for new backbone transmission facilities through all three corridors, rather than a series of lower-voltage transmission upgrades,” PJM suggested.

The second critical congestion area, Southern California, is a bit more volatile than the Atlantic corridor these days. Most of the hubbub centers around the “Sunrise Powerlink,” a 150-mile, $1.3 billion proposed transmission line that SDG&E desires to relieve transmission issues in the San Diego area.

This particular corridor is under contention. Residents along the potential path don’t want to stare down 160-foot towers, and they are not shy about saying so. One website by protest group Rancho Penasquitos Concerned Citizens has a tagline that states “SDG&E’s Sunrise Powerlink: Unneeded, unsightly, unhealthy, unwanted.” And, a number of these citizens see the potential designation of San Diego County as a “national interest electric corridor” as one way the federal government could force them to accept the Sunrise Powerlink, even amid protests.

This is where the term “federal hammer” was coined, in fact. SDG&E could, conceivably, push through the Powerlink-fast-tracking it into being; at least, that’s the fear these citizens have with the designation of San Diego Country as a critical need area.

Jim Avery, senior vice president-electric at SDG&E doesn’t see the potential designation as anything but positive-even in dealing with those advocacy groups.

“If the potential for the FERC’s participation somehow encourages consumer groups and activists against the Sunrise Powerlink to sit down with SDG&E and try to find a workable solution for all, I would call that a win,” he said. “But if these groups simply protest the project without offering a reasonable alternative, I would argue that federal intervention is needed to protect our customers’ interests.

“The DOE is on record as saying “˜something must be done.’ SDG&E has an obligation to use the federal process if the state process fails. Our responsibility to our customers is to keep the lights on. We are hopeful that the state process will result in a solution and that resort to the federal process-at least as far as the Sunrise Powerlink project is concerned-will be moot,” he added.

Avery himself said he agrees completely with the DOE’s conclusions, and he sees this as a real help for his company and his community.

“Congestion today is costing our customers hundreds of millions of dollars each and every year that we delay the construction of new transmission,” he said. “This study is an important step forward toward improving the overall energy infrastructure in our region.”

When asked what he thinks SDG&E’s chances are that the area will pass the test and make the grade of “national interest electric corridor,” Avery responded with one word: “Excellent.”

Does the Designation Have Power?

But, even if Southern California and the Atlantic corridor are named “national interest electric corridors,” what does it really mean? It means FERC gets to have a hand in the process.

“I don’t expect the “˜national corridor’ designation to result in more transmission siting applications,” Avery said. “If the process works as intended-and, so far, it appears to be doing so-the corridors will be designated in areas where transmission is needed. In other words, it’s likely that siting applications would be filed in those areas in any case, with or without corridor designation. National corridor designation should encourage states to consider more than short-term or parochial issues when faced with transmission siting applications.”

The bottom line? If FERC says so, the complicated red-tape state process for line siting could all but disappear-and fast. There will be an extra-heavy federal hand in the process for the chosen few that meet the criteria.

And Avery-as well as other industry insiders-believes that this siting authority will help ease congestion issues.

“The designation of “˜national interest energy corridor’ provides for expedited review and siting, so the federal backstop makes it more likely that transmission needed to reduce congestion will be approved and built. The DOE has said it wants to work cooperatively with the states and regional transmission agencies. I expect the DOE and the FERC will look first to the states and others to help define the solution, but won’t simply stand on the sidelines to see what happens,” he said.

But, right now, that area is a little murky. No one is quite sure what the next level will entail, especially since those expected designations still haven’t been officially declared.

“The statute gives the Secretary the discretion to designate any geographic area experiencing congestion or capacity constraints that is adversely impacting consumers as a National Corridor. The Department is currently considering the appropriate implementation of this discretionary authority including whether any geographic areas should be appropriate to designate as a National Corridor,” the DOE’s Agrawal told us.

But the process-should it ever get under way-is supposed to go something like this: 1) The Secretary of Energy names the corridor; and 2) FERC takes a look at these corridors and may issue permits to construct or modify transmission facilities.

That’s the short version. The trick is those permits rely on a number of contingencies. They will only be issued if:

  • the state (in which the corridor resides) doesn’t have siting authority.
  • the state (in which the corridor resides) has state law that “precludes consideration of interstate benefits.”
  • the applicant does not qualify to apply for siting approval in the state because the applicant does not serve end-use customers in the state.
  • the state with siting authority takes longer than a year after the application is filed to act.
  • the state imposes conditions on the proposal that will interfere with the project’s ability to reduce congestion or make the project economically infeasible.

That’s the fine print: a long list of conditions and “what ifs.” However, the advocacy groups are most concerned with the “one-year” loop, especially those against the Sunrise Powerlink. They fear that the designation of a “national interest electric corridor” will give them no recourse through the state system with a 365-day Sword of Damocles waiting to drop over their head.

FERC chairman Joseph Kelliher doesn’t see it that way, though. “It is important to note that our regulations are intended to supplement the traditional siting process,” he stated. “I would expect that most transmission projects would continue to be sited by states under state law. Our jurisdiction to issue a construction permit applies only under limited circumstances, and our proposed rules respect those limits.”

On the other side of the issue, some industry insiders have stated that the process is complicated and overburdened and could be simplified. (In fact, EEI noted these issues in an earlier comment period with the study.) Additionally, some familiar with similar siting processes with natural gas lines claim that, really, this won’t do much to help expedite the process. At this point, however, all of this is theoretical. No region has been designated a “national interest electric corridor” as of yet. Instead, we are left in a bit of limbo: we don’t know just how the process will work or won’t work. And so, we read and we wait-regionally and nationally.

“The challenge of modernizing and expanding the capacity of the nation’s transmission networks reminds me of the challenge President Eisenhower persuaded the nation to on in the 1950s when he prodded Congress to invest in the interstate highway system, which was then the largest public works project the nation had ever undertaken,” said Kevin Kolevar, director of the Office of Electric Delivery and Energy Reliability at the DOE when discussing this study. “Now, it is time to create the transmission equivalent of the interstate highway network. Regional electric power delivery systems must be upgraded and woven together just as our networks of state and local roads needed to be upgraded 50 years ago.

“[This study] is a good first step toward identifying the areas where congestion must be eliminated to ensure that our nation’s electric power delivery system can continue to deliver reliable power to our nation’s consumers at reasonable costs.”

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