New Federal Rule Encourages Transmission Access for Renewable Energy

February 21, 2007

The Federal Energy Regulatory Commission (FERC) adopted a new regulation on February 15th that aims to allow greater access to transmission lines for power generators of all types, including renewable energy projects. The new rule exempts intermittent power generators, such as wind power plants, from excessive "imbalance" charges when the amount of energy they deliver is different than the amount of energy they are scheduled to deliver. To help accommodate less-predictable forms of renewable power generation, the rule creates a "conditional firm" service to deliver power from a generator to a customer, allowing the power supplier to provide firm service for most, but not all, hours in the requested time period.

A key aspect of the new rule is that it eliminates the broad discretion that transmission providers currently possess in calculating the unused, available capacity on their transmission lines. Instead, the new rule requires public utilities to work with the North American Electric Reliability Corporation to develop consistent methods of calculating the available capacity and to publish those calculations to increase transparency. It also calls for open, coordinated, and transparent planning on both local and regional levels. The new final rule applies to all public utility transmission providers, including regional transmission organizations and independent system operators, and follows reforms proposed by FERC in May 2006. See the FERC press release, chairman's statement, and the full 1,255-page final rule (PDF 2.7 MB). Download Adobe Reader.

While access to nearby transmission lines is a key requirement for large renewable power facilities, the first step for developing many renewable resources is for someone to actually build a transmission line. Fortunately, a number of efforts throughout the country aim to build transmission lines to connect remote renewable resources to regional power grids. In late January, the California Independent System Operator (ISO) approved the Tehachapi Transmission project, a $1.8 billion project that will increase grid access for large amounts of planned geothermal, solar, and wind generation in southern California. The California ISO has also asked FERC to approve an innovative financing vehicle for new transmission lines, allowing utilities to invest in a transmission line and then having renewable generators pay for the line as they use it. Meanwhile, Sharyland Utilities, L.P. is proposing to build an 800-mile transmission loop in the Texas panhandle that will provide access to 4,200 megawatts of wind power resources. See the California ISO press releases on the Tehachapi project (PDF 32 KB) and the financing proposal (PDF 142 KB) and see the Sharyland Utilities Web site.