Transmission Tax Credits Are Dumb

A bunch of schemers who profit from building transmission have announced their "Statement of Principles" for overbuilding transmission.  Big deal.  The "principles" are just so much glittering generalities, such as:

• Policy makers in the United States and its several states and municipalities and in Canada and its several Provinces, Territories, and municipalities are urged to review and improve the regulation of the infrastructure that comprises the electrical grid, to (1) streamline processes governing economic and environmental reviews of projects where possible, (2) promote economic and energy efficiency, (3) deliver important environmental benefits, and (4) ensure equitable sharing of the cost of needed infrastructure, as appropriate;
• As applicable, the Federal Energy Regulatory Commission, the U.S. Department of Energy, and state economic regulators should assess the need to improve upon and revise regulatory processes and corresponding regulations and policies governing the planning and cost allocation of high voltage electric transmission, balancing the public's interest in expedition, cost savings, care of the environment, and an equitable sharing of burdens;
• U.S. States and Canadian Provinces and Territories that adopt renewable electric generation (fuel) requirements for their domestic utilities and other generators should, at the same time, recognize and take into account the extent to which such policies necessitate the development of additional transmission lines and/or the deployment of advanced technologies;
• Canadian and U.S. industry leaders and public policy makers must ensure that investment in grid infrastructure in both countries responds effectively to threats from extreme weather and cyber intrusion.
  

"We want new laws that gut regulation and make it easier for us to do whatever we want."  Why use 1,000 words when 18 will do?  Really, there's nothing in the "principles" that a good lobbyist couldn't cure.

These "principles" were supposedly cooked up at the first "International Summit on the Electric Transmission Grid."  Apparently, it was a frothy good time! 

"This will be a frothy presentation of new planning approaches driven by new technological developments."

WTF?  Frothy?  Who wrote this garbage?  An intern who moonlights at Starbucks?

All the usual suspects were there...  trade groups, unions, and environmental organizations.  These guys will support anything that makes them money or checks a box on a grant deliverable.  Doesn't make it necessary or needed.  Oh, c'mon, quit pretending that your money making goals benefit anyone other than yourselves.

Sounds like this "summit" was a bit of a joke and the only guys there that weren't biased towards more transmission as a money maker or grant deliverable made fun of the other speakers.

“The turf wars and feuds between RTOs are legendary; MISO and SPP, these people, for reasons that are often lost to the mists of time, they don’t really like each other that much, and they don’t work well together,” Skelly said. “So the notion that FERC’s going to pass something that says, ‘Hey, you guys, coordinate and work together’ … come on. It has not happened, and it’s not going to happen.”

In a later panel, MISO President and COO Clair Moeller disputed that, saying, “I’d submit we don’t actually have a planning problem. We have an objective problem. The reason we don’t get the answers that everybody agrees with is that people’s objectives are different.
“Lanny and I had a fistfight in the bathroom because RTOs don’t get along well,” he joked, referring to Lanny Nickell, SPP senior vice president of engineering, who was in the audience. “Well, that’s simply not true. The simple fact is the objectives are different.

Making crap up... and being called out on it.  Way to go, Mikey!  RTOs are set up to serve their own regions.  They're not set up to provide benefits for other regions.  Just because Skelly failed to find any economic need for his interregional transmission projects doesn't mean there's a problem with the RTOs.  There's just a problem with Skelly.  He keeps trying to pin his own failure on everyone else.

Skelly also had this terrible idea:

Skelly also described the confusion that state regulators have to endure when being pitched multiple interstate lines. “We need policy mechanisms so that the RTO shows up and FERC shows up. Somebody needs to show up from some sanctioned body to say, ‘Yes, this makes sense.’”
But FERC commissioners “hate telling state regulators what to do,” Gensler said. “That is a fate worse than death for most FERC commissioners.”

FERC Commissioners hate telling states what to do because they have no authority or jurisdiction to do so.  It doesn't matter what FERC or the RTO thinks about a transmission project.  The state doesn't care.  Its regulators are following state laws and policy.  In fact, the heavy handed interference of FERC and RTOs in state regulatory proceedings can have the same compelling effect as your mother suggesting you wear a hat and boots to school when you're a teenager.  It inspires secret rebellion for rebellion's sake alone.

Lots of "formerly" important people were there, such as former DOE Secretary Ernest Moniz, who got all excited reminiscing about the Paris climate change thing and an "absolutely beautiful" attempted rape of Arkansas.

“For the United States, the integration with Canada, and the opportunities for getting additional carbon-free electricity is absolutely essential” to reaching the targets under the 2015 Paris Agreement on climate change, said Ernest Moniz, former secretary of energy under President Barack Obama. “We have to get the infrastructure to support it.”

He talked about “an absolutely beautiful case” under Section 1222 of the Energy Policy Act of 2005, Clean Line Energy Partners’ Plains & Eastern Clean Line. “It was a beautiful example to implement, and the only problem was called ‘Arkansas.’”

Maybe it's the hair?  Why didn't Arkansas just submit to Clean Line's advances?  Why did Arkansas think it had any rights to say "no?"  Next thing you know, Arkansas is going to start smoking cigarettes and thinking it should have the right to vote!

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But maybe this was all about something else...

As a potential solution, Skelly pointed to Sen. Martin Heinrich’s (D-N.M.) announcement that he would introduce bills to create an investment tax credit for “regionally significant” transmission projects and to direct FERC “to improve its interregional transmission planning process.” Heinrich, however, has been introducing similar legislation since 2015 to no success.

Oh, right, Martin Heinrich, legislative utility pet.  This guy has more electric utility and energy company and environmental group political donors than any fossil fuel company I know.  He could make a Koch brother blush!

But, as RTO Insider tells us, Heinrich's legislation is rarely successful.  Thank goodness for that!  Especially because Heinrich's new "idea" that came out of this ridiculous transmission-lovin' circus is completely unworkable.

“Where this is right now, I have floated this with people across the industry who have done this type of work, and they have said it would make a real difference,” Heinrich told E&E News in a brief hallway interview.

Right.  All the folks at his Transmission Summit never look their gift horse in the mouth.

So, what makes this idea so bad?

Heinrich said the general framework of his bill would enable an investment tax credit for transmission development that meets a “regionally significant” threshold.
Such an incentive, he argued, would represent a more cost-effective way to help promote transmission development than other measures, although the New Mexico Democrat admitted he’s still working out the exact bar for how much the credit would be worth and what projects would qualify.
The need for additional transmission lines to help move power from rural outskirts to more heavily populated corridors has increasingly come to the forefront of energy planning and the push to add more renewable energy onto the grid.
“It could potentially be a game changer,” Heinrich said. “We are going to have to build a lot more transmission to have a completely green grid. You have to be able to move those electrons from where they are generated to where they are used.”

How are we going to define "regionally significant," and who is going to make that determination?  Let's face it, your real purpose is to build transmission for renewable energy.  But the electric transmission grid is "open access" to all kinds of energy, and it is completely impossible to separate "clean" electrons from "dirty" ones.  An electron is an electron.  Any tax credits for transmission will also support "dirty" energy.

As well, lack of investment isn't the problem.  A number of investors wasted over $200M (that's two hundred million dollars!) on Clean Line Energy Partners and never recouped a dime.

Heinrich envisions this working similar to the federal production tax credit for wind energy, where energy produced generates tax credits.  Except we're doing away with the PTC.  It expires at the end of this year.  Why would we need a new tax credit for transmission?

Especially when FERC already administers a generous transmission incentives program that awards all sorts of financial benefits to transmission owners.  At least those incentives are paid for by the users of the transmission in question.  One of the first principles for cost allocation is determination of benefits.  The cost of transmission shall be paid for by those who benefit from it.  Under Heinrich's brilliant idea, all the tax payers in the U.S. would pay for transmission that only benefits a handful of users.

Houston, we have a problem.  This idea is one of the dumbest! 

That infrastructure has hit hurdles, both political and regulatory, that have added years and millions of dollars to development, resulting in the abandonment of more than one high-profile transmission project.
An example is the proposed Plains and Eastern Clean Line project, a $2.5 billion, 705-mile transmission line from Oklahoma to Tennessee to deliver up to 4,000 megawatts of wind electricity. It stalled last year after running into individual state permitting problems.

And what do federal tax credits do to solve state siting and permitting problems?  Actually, nothing.  Less than nothing, because a state is likely to reject a project that is made more costly through added incentives.

Dumb, dumb, and dumber!

What is the solution?  Building renewables closer to load as distributed generation.  No transmission needed.  Ratepayers will save a bundle while the energy supply gets cleaner.  But then again, it wasn't called the Frothy International Distributed Generation Summit.  And none of those people donated to Heinrich's political campaigns.

No matter how badly these people want to overbuild transmission, they will never be successful.  We simply don't need it.  There are much better ideas!