Getting “Power to the People” – Challenges to Providing Transmission Capacity for Renewable Energy

Introduction

The Western Governors Association (“WGA”) recently unveiled a “Roadmap”[1] for navigating the regulatory and permitting hurdles for much-needed renewable energy facilities in the west. Issuance of the WGA’s roadmap comes on the heels of the Obama Administration’s approval of Phase I of the Sunrise Powerlink, a $2 billion project sponsored by San Diego Gas & Electric. The first phase of the Sunrise project will traverse a 19-mile path through the Cleveland National Forest and required approval from both the U.S. Forest Service and the Bureau of Land Management. Construction is expected to start this fall, though it may be delayed by lawsuits that have already been announced against both agencies. The WGA’s roadmap and the preliminary approval of the first phase of the Sunrise project are the latest events in a long-running struggle to provide the transmission capacity needed to deliver renewable energy to population centers in the west.

Background

Renewable energy project development has frequently been hamstrung by constraints on transmission capacity. To use one example, while state-of-the-art windmills are being developed in the Columbia River Gorge and elsewhere east of the Cascade Mountains in Washington and Oregon, most of the customers for that power live hundreds of miles away, primarily along the I-5 corridor between Seattle and Portland. In 2008, the Bonneville Power Administration announced a major expansion of its transmission system, increasing the capacity of the system to serve the large population centers west of the Cascade Mountains.[2]

The situation in the Pacific Northwest – where availability of transmission is among the key factors in renewable project development – is being replicated all over the country. Utility-scale wind power projects now under construction or under negotiation are expected to add at least 5,000 megawatts of wind capacity in the U.S. over the next five years.[3] As alternative energy development accelerates, the need for additional transmission capacity will also accelerate, with utilities facing challenges to the development of that capacity under NEPA and other environmental review statutes.[4]

Last year’s stimulus bill called for nearly $15 billion in capital investments and loan guarantees for renewable energy projects and new electric transmission lines. But as the WGA Roadmap makes clear, identifying who has regulatory and approval authority for transmission lines, particularly those that traverse state and international boundaries, can be daunting.

Last year, the Federal Energy Regulatory Commission (FERC) announced in its Proposed Policy Statement and Action Plan, that FERC had ultimate responsibility for regulation of the development of transmission lines.[5] In response, the National Association of Regulatory Utility Commissioners (NARUC), which represents State Public Utility Commissions, asserted that any expansion of FERC siting authority should be as limited in scope as possible, claiming that “siting and transmission is one of the most difficult yet essential jobs of a state regulator, and no federal agency will have the resources or local knowledge on its own to balance all the considerations that must be taken into account.”[6]

NARUC’s position was bolstered by a recent 2-1 decision from the 4th Circuit, which held that FERC overstepped its congressional mandate in asserting federal authority over transmission line siting. See Piedmont Environmental Council v. FERC.[7] In Piedmont, FERC argued that the 2005 Energy Policy Act permitted it to order “national interest” transmission projects to go forward, and that Congress’ mandate included implicit authority to overrule state decisions to the contrary. The Fourth Circuit disagreed, finding that if states turn down transmission projects on reasonable grounds, they cannot be overruled by FERC.

The WGA Roadmap

To address some of these challenges, in December 2009, the Department of Energy awarded the WGA a $12 million grant to help 11 states plan for new electric infrastructure, taking into account future demand, diversity of resources, environmental concerns, and energy efficiency. The WGA’s Roadmap, which was produced using these grant funds, outlines the key considerations that western energy developers should be prepared to face.

1. Power Sales and Interconnection Processes

The Roadmap lays out a basic overview of the sale of power to utilities, discussing the criteria likely used to evaluate a project that sells power to a utility via a power purchase agreement.[8] The Roadmap also details the often time-consuming and expensive process of interconnection requests and agreements.[9]

Notably, the Roadmap provides a generic schedule for a major electric transmission project, which lays out the planning, permitting and construction elements of a project over a span of seven years for a project that is 30 to 150 miles in length, involves more than three local jurisdictions, two to three federal agencies, one to three state agencies, and more than thirty landowners. The forecasted timing includes identifying needs in year one, planning analysis and approval for years one through two, preparing for and obtaining a certificate of public convenience and necessity (CPCN) for years two through five, and construction occurring over years five through seven. Preparing for a CPCN includes project scoping, defining the project study area, identifying and compiling environmental information, exchanging information with community leaders, consulting with land use and natural resource management stakeholders, preparing an environmental assessment, and preparing and filing the permit application. The authors highlight that “the planning process is a key uncertainty.”[10]

2. Impacts Arising from Federal and Tribal Land Ownership and Environmental Laws

Because the federal government owns a significant portion of land in the west, any sizeable transmission project is likely to run across at least some federally-owned lands. Traversing such lands generally requires evaluation of environmental impacts by multiple federal agencies. See report on Sunrise Powerlink below. The Roadmap provides summaries for the major federal environmental laws and agencies affecting developers, including the National Environmental Policy Act, the Endangered Species Act, the National Historic Preservation Act, the Clean Water Act Sections 401, 402, and 404, the Clean Air Act, the Federal Land Policy and Management Act of 1976, the Migratory Bird Treaty Act of 1918, the Department of Defense, and the Federal Aviation Agency.[11]

The Roadmap also acknowledges that in addition to federal lands, tribal lands encompass a large part of the west. Transmitting power across tribal lands requires tribal authorization as well as possible federal authorization. Additionally, several western tribes have or are building on-reservation renewable energy projects, some of which are capable of generating enough power to sell off-reservation. Transmitting off-reservation electricity, while potentially quite beneficial to tribes, has its own set of challenges, including complicated and conflicting environmental review requirements, disparity between state interconnection standards, varying grid capacities, and physical and geographic limitations.[12]

3. State Land Use

The Roadmap recognizes that state requirements vary widely, but provides general considerations that are common to most western states. For example, many states also require compliance with specific state environmental policy acts, which may be able to be coordinated with federal NEPA requirements. As noted by the Roadmap, many western states control “school” or “trust lands” that are held in trust by the states for identified beneficiaries such as schools, universities or other public institutions. Siting transmission projects across these lands would require state authorization. Other potential state-required permits include water supply permits, state fish and game permits, and permits under state historic preservation acts.[13]

4. Local Agency Permits

Finally, the Roadmap provides a list of permits likely required by local agencies, including rezoning of the project site or a special use permit, site plan approvals, and drainage and construction plan approvals. Local agencies will also probably require permits for construction, access to local roadways, water supply and wastewater systems. Additionally, local requirements also include approval of fire control plans, hazardous materials storage and control plans, and traffic impact studies.

The Sunrise Powerlink Approval Highlights the Challenges Identified by the WGA Roadmap

The San Diego Gas & Electric’s Sunrise Powerlink, which recently obtained preliminary approval in the form of a Record of Decision issued by Forest Service and the BLM, presents a concrete example of some of the theoretical challenges identified in the WGA Roadmap. The project, which at full buildout is expected to have a 500 kilovolt capacity, is designed to bring solar, wind and geothermal energy from California’s arid Imperial Valley to the consumers in the greater San Diego region.

The $2 billion project was initially approved by California regulatory officials in 2009, after being touted by its backers as a lifeline for renewable power and a weapon in the battle against global warming.[14] San Diego Gas & Electric has promoted the transmission line as a necessary element to allow California to meet its state-mandated target of obtaining 33 percent of its power from renewable sources by 2020.

Because the proposed path for the powerline went through the Cleveland National Forest, approval was required from both the Forest Service and BLM. Both agencies issued their approval earlier this month.[15] In response to that decision, California Governor Arnold Schwarzenegger released a statement that highlights the conflict presented by these types of projects, namely, the need to connect renewable resources in rural areas with customers, who tend to live in urban areas far from production facilities:

California has two dozen renewable energy projects looking to break ground this year alone that will create thousands of jobs and billions of dollars of investment in our state. But many of these projects will be built in remote locations in the desert, and we need more transmission lines, like the Sunrise Powerlink, to transport this renewable energy to population centers.[16]

The project has long been the focus of controversy, with some citizens and environmental groups opposing the project and government officials calling for its approval. Earlier this spring, Senator Diane Feinstein (CA – D) was reported to have "pressured the head of the Forest Service during an appropriations hearing to quickly approve the power company’s request." Feinstein reportedly told Forest Service Chief Tom Tidwell, “the longer you guys hold it up, the less renewables we have in an area that is a heavy consumer of electricity.… I don't think there’s any flora or fauna or real environmental problems that I know of.” Feinstein was also reported to have claimed that there was no opposition to the project, then corrected herself when a staff member handed her a note, calling the opposition “NIMBY groups fully considered and dismissed” by state and federal regulators.[17]

Notwithstanding such statements, opponents of the project have been preparing to challenge the anticipated decisions for some time, and have stated that they are prepared to file litigation to block the project. In response to the Forest Service’s ROD, Laura Cyphert, co-founder of the East County Community Action Coalition stated that “over a year ago, the legwork was started for a lawsuit against the Forest Service in the event that they permitted this project. We are well positioned to prevail in the courtroom.”[18]

Conclusion

As utilities, the States and the federal government all work on developing transmission capacity to bring renewable energy to those who will actually use it, challenges facing transmission line siting continue to hamper those efforts. The WGA Roadmap seeks to provide what its name entails – guidance on how to navigate the myriad of regulations and the various agencies and state and municipal permits required. As the Sunrise Powerlink project shows, even successfully navigating that maze does not assure that a project will not face litigation once it has been approved.

For more information, contact Steve Jones or any member of Permitting and Environmental Review practice group.