By Mark A Davidson

There is little question that the electric transmission system in the Western United States is badly in need of upgrade and expansion. Given the vast amounts and quality of renewable resources available in the Western Interconnect, adequate transmission is imperative to enable renewable resources to accommodate load as part of the “new energy economy.” The demand for energy in the Western Electricity Coordinating Council (“WECC”) area increased 35% from 1992 to 2007. Demand for electricity in the US as a whole is projected to increase from 18% to 39% by 2030. Recently, the minimal expansion of the electric transmission system can be attributed to the construction of natural gas power plants near load centers.

However, future generation additions involving large amounts of renewable generation will be located much farther from load centers requiring additional transmission facilities, upgrades of existing facilities and, potentially, load following conventional gas-fired resources. Substantial challenges face developers of major transmission projects in the US. The daunting list of hurdles to overcome starts with current state siting regimes, which reflect a system largely built to move power within local utility systems on behalf of those utilities’ customers, as well as to connect to neighboring utilities to increase reliability between neighboring utility systems. This type of arrangement is not designed to address interstate and regional transmission siting on the scale required today. The challenges include: increased demand for location constrained renewable energy to power concentrated urban areas; the “not in my back yard” (NIMBY) syndrome; conflicts between local, state, and regional interests; inconsistent and conflicting state and local regulatory requirements; federal and state environmental reviews; federal land authorizations; lack of timing coordination among siting entities; inconsistent state policies regarding greenhouse gas emissions and renewable portfolio standards; short-term capacity versus long-term need; uncoordinated siting of transmission lines and renewable generation; and, the timing of “need” determination.  Each of the foregoing considerations can serve as an insurmountable obstacle to the siting of sufficient transmission facilities to accommodate the growing demand for renewable resources. While the national interest in developing renewable resources has been stimulated by the efforts of the current Administration and some in Congress, the difficulties in securing state and local authorizations for major transmission construction often impede the development of high-capacity transmission facilities, which require development on a regional basis—at a minimum.Traditional considerations of whether a project directly benefits the state or local government within which it is located have impeded the regional considerations necessary for the development of adequate transmission facilities to accommodate the addition of large renewable energy projects. Congress has attempted to address these issues in part by enacting Section 1221 of the Energy Policy Act of 2005, which gives the Federal Energy Regulatory Commission (FERC) “backstop” authority to supersede state and local action or inaction to permit an electric transmission project in a designated National Interest Electric Transmission Corridor (NIETC). Only two NIETCs have been designated so far by the US Department of Energy, the Mid-Atlantic and Southwest Area NIETCs. Both NIETCs were immediately challenged by a number of states, members of Congress, as well as other groups, and litigation challenging the designations is pending. It remains to be seen whether the NIETC process will ultimately facilitate the development of transmission capacity enhancements, or be so tangled in legal and political controversy that it will never have any practical effect. A possible resolution of the difficult issues in transmission siting for renewable resources is the creation of a regional multi-state approach to transmission siting approval. One such approach is the Western Governors’ Association and various federal agencies Siting Protocol developed in 2002 for “a systematic coordinated joint review process for siting and permitting of interstate transmission lines in the Western Interconnection.” The Siting Protocol sets forth procedures for interagency cooperation, but does not contain uniform substantive siting provisions. The Energy Policy Act of 2005 authorizes three or more contiguous states to enter into an interstate compact to “facilitate siting of future electric transmission facilities within those states,” and to “carry out the electric energy transmission siting responsibilities of those states” (see www.westgov.org/wga/initiatives/wrez). The Energy Policy Act’s authorization of an interstate compact could be a powerful tool to maintain state control over the siting process while establishing regionally consistent policies and procedures. Another possible approach would be the development of uniform transmission siting guidelines for adoption by various contiguous states. These guidelines, perhaps in the form of a Model Transmission Siting Act, would include provisions for evaluating the regional or national interests in considering a major interstate transmission facility and would also deal with critical corridor designations, environmental reviews, and the paramount role of the state in making overall siting determinations. There is a serious need for a coordinated and rational approach to transmission project siting that accommodates the need to assure protection of environmental and other critical interests, incorporates ample opportunity for input from affected stakeholders, allows for reasonable recovery of costs, and places a priority on the compelling interest in modernizing the transmission grid. A multi-state approach through an interstate compact or the adoption by each state of a model siting regime will facilitate the development and transmission of renewable energy to meet the demands of ever-growing urban areas and secure robust interconnections with the national transmission grid.Mark A Davidson is a partner at Holland & Hart LLP. Holland & Hart LLPwww.hollandhart.com