Regulators move in positive direction on transmission costs

It may be one of the most complicated issues in the wind power business, and one of the most important—allocating costs for new transmission. So the industry got good news last week when the Federal Energy Regulatory Commission (FERC) approved a forward-looking cost allocation plan submitted by the Southwest Power Pool (SPP), an area covering a significant portion of the wind belt.

New transmission is needed if the United States is to take full advantage of its world-class wind energy resources; the transmission lines are needed to carry the power generated by wind turbines in unpopulated areas to the markets where it is used by customers.

Traditional regulatory processes are not designed to handle the cost-sharing of new transmission lines that are delivering electricity across state lines. So wind farm developers and transmission players have often been at odds over how to fashion new systems.

The SPP plan approved by FERC is known as a “Highway/Byway” proposal and focuses on the region as a whole. Traditional transmission planning approach focuses on local reliability issues.

"I am so proud of the SPP leadership moving a regional plan for allocating costs to get transmission built in our part of the country,” said AWEA CEO Denise Bode, an Oklahoma native who was the first President of SPP’s Regional State Committee. “We appreciate the work of SPP’s stakeholders to reform its cost allocation mechanisms and we applaud FERC’s approval of their innovative approach.”

She added, “In recognition of the broad benefits that flow from transmission development, the new SPP cost allocation mechanism broadly spreads the costs of new transmission infrastructure, allowing the region to plan and build a robust transmission grid that will bring reliability and economic benefits as well as supporting state, regional and national policy goals. We think this approach could serve as a model for other regions facing similar issues."

By Chris Madison,