A recent article in Climate Wire raised the possibility that the new “highway-byway” plan for sharing the costs of building large high-voltage power lines might serve as a good example for federal legislation.
Last week the Southwest Power Pool (SPP) announced a cost allocation methodology that would make it easier to modernize the grid by assigning cost sharing plans based on the size of new transmission lines. Among other things, this new methodology of spreading the cost of high voltage lines would make it easier for transmission developers to build long-distance lines that transmit renewable energy across multiple states to population centers. The Federal Energy Regulatory Commission (FERC) is now reviewing the methodology and will rule early this summer.
Currently, cost allocation practices differ across all regions of the country and this new SPP methodology is garnering tentative approval from developers as an effective solution to the critical question of “who pays for the new transmission.”
The cost allocation issue continues to be contested in Washington, and both Congress and FERC could contribute to the final solution. An energy bill passed last year by the Senate Energy and Natural Resources Committee contained a new policy on cost allocation for FERC to adopt. With the future of energy legislation unknown, how FERC rules on SPP’s “highway-byway” plan could send a message to the rest of the country.
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