Why Obama's Plan to Help Renewable Energy May Backfire and Aid Big Coal

By David Morris, AlterNet. Posted February 6, 2009.

The states complained that in designating transmission corridors, the DOE had refused to consider non-transmission solutions to congestion problems, something their own state laws require, as does the Federal Power Act. The FPA specifically directs the DOE to issue its report only "after considering alternatives."

The New Jersey Board of Public Utilities asked the DOE to refrain from designating corridors "until after it analyzed whether alternative means, including energy efficiency, demand response and clean local generation within the critical congestion area could relieve congestion more effectively, at lower cost, with less harm to the environment, with better assurance of the reliability and security of our electricity supply, or with less vulnerability to uncertainties such as future fuel costs, future environmental requirements and other variables."

The DOE claimed that an examination of non-transmission solutions was outside its jurisdiction. According to the DOE's perverse interpretation of the law, the federal government can pre-empt state authority but it cannot take into account the same factors states do in deciding whether to approve new transmission lines, even though almost everyone agrees that consideration of those factors results in better decisions.

The Mid-Atlantic Area National Interest Electric Transmission Corridor that the DOE designated encompasses nearly all the state of Maryland and New Jersey. New Jersey complained, arguing that the DOE's own data indicated that much of these areas are not experiencing transmission constraints or congestion. The DOE did not deny New Jersey's allegation but maintained, "(T)he statute does not appear to foreclose the possibility of national corridor designation in the absence of current congestion ... even without congestion, DOE can approve a line where it wants to encourage 'desirable generation.'"

In this case, the DOE decided that coal-fired power plants constituted desirable generation. The uncongested parts of the DOE's designated corridor were largely in areas of Ohio, Pennsylvania, Virginia and West Virginia that account for more than two-thirds of the coal produced in the Appalachian region.

'National' or 'Smart'?

This is the context for Obama's presidency. It is unclear whether he will emphasize "national" or "smart." Obama's fiscal stimulus plan calls for $11 billion for what he calls a smart grid investment program. The program specifically mentions spending on new high-voltage transmission lines, but it also encompasses investments in smart grids. Since the federal government has direct control over high-voltage transmission lines through the Federal Energy Regulatory Commission  but not over the retail subtransmission and distribution networks, it might find it easier to push money toward the former ("national") rather than the latter ("smart").

The DOE's decisions to date on national interest transmission corridors have come while George W. Bush was president. It is unclear where President Obama stands on the growing state-federal controversy. At his confirmation hearing, Secretary of Energy-designate Steven Chu declared a nationwide grid "in the national interest" and insisted the country needed a "new way of doing business" to get it built quickly.

However, when Sen. Robert Mendendez, D-N.J., protested about the DOE's process in declaring most of New Jersey a federal pre-emption corridor, Chu acknowledged the problem and ended up saying that new lines must be sited "in a way that takes into consideration the local feelings but yet also recognizes the national needs."

Will Chu require the DOE, and will President Obama ask FERC, to evaluate petitions for new transmission lines using the same least-cost-planning process now used by many states?

Will the federal government require all utilities to undertake the same analysis done in Minnesota to identify the capacity of existing transmission lines to absorb more renewable energy?

Will fiscal stimulus spending on upgrading the electricity grid emphasize smart over national?

The shape of our electricity future might depend on the answers to these questions.

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David Morris is the author of three books on the history and future of the U.S. electricity system. The most recent is Seeing the Light: Regaining Control of Our Electricity System. David is vice president of the Institute for Local Self-Reliance.

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