Electric Power Transmission - Government Policy

Government Policy

Historically, local governments have exercised authority over the grid and have significant disincentives to take action that would benefit states other than their own. Localities with cheap electricity have a disincentive to making interstate commerce in electricity trading easier, since other regions will be able to compete for local energy and drive up rates. Some regulators in Maine for example do not wish to address congestion problems because the congestion serves to keep Maine rates low. Further, vocal local constituencies can block or slow permitting by pointing to visual impact, environmental, and perceived health concerns. In the US, generation is growing 4 times faster than transmission, but big transmission upgrades require the coordination of multiple states, a multitude of interlocking permits, and cooperation between a significant portion of the 500 companies that own the grid. From a policy perspective, the control of the grid is balkanized, and even former energy secretary Bill Richardson refers to it as a third world grid. There have been efforts in the EU and US to confront the problem. The US national security interest in significantly growing transmission capacity drove passage of the 2005 energy act giving the Department of Energy the authority to approve transmission if states refuse to act. However, soon after using its power to designate two National Interest Electric Transmission Corridors, 14 senators signed a letter stating the DOE was being too aggressive.