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FERC OKs utilities rate incentives
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The U.S. Federal Energy Regulatory Commission on Thursday approved transmission rate incentives for several power and gas utilities, including a major Californian renewable energy project.
FERC said the incentives will improve reliability of the interstate transmission system.
Southern California Edison Co. requested rate incentives for three proposed power transmission projects in California and Arizona. Additional requests were made by Baltimore Gas and Electric Co. and from Pepco Holdings Inc.
Southern California Edison is a unit of Edison International Inc. MBaltimore Gas and Electric is a unit of Constellation Energy Group Inc.
“Today’s actions will help strengthen our nation’s transmission grid, helping consumers by improving reliability and enhancing competition that will reduce the cost of electricity,” FERC Chairman Joseph Kelliher said.
Commissioner Philip Moeller said the approvals were part of FERC’s responsibility to help the nation’s grid expand to meet burgeoning demand.
“Possibly the most important thing that we are doing right now is to get transmission built,” Moeller said, adding, “It’s probably the number one infrastructure priority in this country.”
Southern California Edison has proposed building three projects: the Devers-Palo Verde II Project, the Tehachapi Project and the Rancho Vista Project.
FERC said the Tehachapi Project will allow significant amounts of wind generation to interconnect with the company’s transmission system. The project is intended to support compliance with California’s renewable portfolio standard and the state’s efforts to require reductions in greenhouse gas emissions.
Southern California had requested an additional 1.5 percent return on equity for new transmission investment for the Devers-Palo Verde II and Tehachapi projects. The company requested an additional 1 percent return on equity for new transmission investment for Rancho Verde.
Although Commissioner Suedeen Kelley approved the first two projects designed to encourage renewables, she dissented on the Rancho Verde project, saying its was part of normal load expansion.
Kelliher said that although FERC policies were helping to encourage grid expansion _ grid investment in the U.S. has roughly doubled since 2002 _ “to some extent, we are still playing catch up for the sustained level of under-investment that only recently came to an end.”
“While the level of investment is much higher, it is still not at the levels we need to assure grid reliability and support competitive regional power markets,” Kelliher said.
FERC’s chairman also said the commission would consider changing its rules to allow for more types of renewable energy technology, including power from wave and tidal energy.
Commissioner Jon Wellinghoff said current interconnector rules may discriminate against some types of renewable energy.
Associated Press
15 November 2007
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