Why Transmission and Renewable Energy Project Developers Should Care About DOE's New Proposed Rule

Early this month, the Department of Energy (DOE) issued notice (81 FR 5283) of a proposed rule aimed at streamlining the pre-application process for transmission developers to obtain federal authorization to construct and operate interstate transmission facilities on federal lands. Comments on DOE's proposal are due April 4. According to DOE, the improved process will “help transmission developers determine the likelihood that they would successfully obtain permits” – a prerequisite if their proposals hope to win approval “in the competitive regional planning processes.” The question is why -- and perhaps more importantly, where -- might this initiative have an impact on transmission development?

Under section 216(h) of the Federal Power Act, DOE is charged with the responsibility, as lead agency, to enhance and increase coordination among federal agencies authorized to site transmission facilities. “Coordination of Federal Authorizations for Electric Transmission Facilities,” as the proposed rule is titled, builds on initiatives contained in several Executive Orders. It also expands on a 2009 Memorandum of Understanding between the eight federal agencies that have some role in permitting or authorizing the construction of transmission facilities – DOE, the Departments of Agriculture, Defense, Interior and Commerce, the Federal Energy Regulatory Commission, the Environmental Protection Agency, the Council on Environmental Quality and the Advisory Council on Historic Preservation.

The proposed rule establishes a simplified two-step, voluntary consultative process between the private developers and affected agencies. Under the proposed process, the developer would provide basic project information to DOE, and in turn, DOE would coordinate all involvement between the developer and the relevant federal agencies, including selection of a lead agency to conduct the environmental review. The rule would only apply to transmission projects that are 230 kV and above, or that are “regionally or nationally significant,” and that cross jurisdictions administered by more than one federal entity. But it does not apply to projects that proposed for “national interest corridors” (and are therefore subject to approval by FERC under FPA section 216(b)) or to facilities constructed by federal power marketing agencies.

What is the potential importance of the proposed rule?

In the eastern United States, frankly not much. The proposed rule only covers permitting on federal lands. Only 4 percent of the land located east of the Mississippi River is owned by the federal government – in many eastern states the figure is less than 2 percent.

But the picture is very different in the western half of the country. The federal government owns almost half the land in the West, and developers looking to build significant transmission projects there will likely need federal approvals. In some western states, in fact, the federal government owns most of the land, making federal involvement in any sizable project virtually inevitable.1

DOE is almost certainly banking on the prospect that there will be new large transmission projects built in the West that will require the approval of agencies including the Forest Service, Bureau of Land Management, Fish and Wildlife Service and National Park Service. DOE's March 2015 report, “Wind Vision: A New Era for Wind Power in the United States,” reiterates its 2008 projection that by 2030, wind resources will account for 20 percent of the nation’s electricity supply. To reach its 2030 target, DOE estimates that 10 million MW-miles of transmission will have to be built by 2030. That, it says, is comparable to the 900 circuit miles built per year since the 1990s. Its 2015 report assumes 900 MW of transmission capacity is equivalent to a 345 Kv line. In other words, the types of transmission projects envisioned as necessary to meet DOE’s targets are the same types of transmission projects (245 kV and above) covered by its proposed rule.

A January 2016 study by the National Oceanic and Atmospheric Administration (NOAA) and the University of Colorado2reinforces DOE’s optimism. The study, led by Alexander MacDonald, the retired director of NOAA’s Earth System Research Laboratory, concludes that, with the large scale construction of new HVDC transmission and existing renewable technology, and without the need for electric storage, the United States could slash greenhouse gas emissions from power production by up to 78 percent below 1990 levels within 15 years. This, the study says, could be accomplished at costs comparable to today’s energy costs. The premise of the study, said MacDonald, is that “the sun is shining or winds are blowing somewhere across the United States all of the time,” making greater reliance on renewable resources feasible by relying on climatic diversity. But, the success of this strategy depends on construction of high voltage DC lines that can carry power across the long distances of the western United States.

Parties interested in commenting on DOE’s proposed rule have until April 4, 2016 to submit their comments.