Transmission Superhighway On Track to Carry Cheap, Dirty Coal Power to Northeast

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Thanks to federal funding and pending legislation, momentum is building behind a national transmission superhighway meant to propel America to a repowered clean energy future, but the end result in the Northeast may be just the opposite.

The rules proposed to help the nation tap abundant wind and solar resources in Western states will effectively open vast new markets in New England and Mid-Atlantic states to the cheapest, dirtiest power from aging coal plants in the Midwest and Appalachia.

Further, transmission legislation now before the Senate or about to be introduced excludes support for lines that would reach offshore wind resources along the Atlantic coast. The constant ocean winds, relatively shallow water and proximity to heavily populated cities make offshore wind one of the most promising sources of clean energy in the nation.

Lawmakers behind the legislation are from Western states, and they are thinking first about tapping solar and wind energy in the Southwest and upper Midwest. That leaves utility companies, which have had a clear edge in writing the complex rules, supporting onshore corridors in the East that also happen to provide an easier path to profitability for their aging coal plants.

“There’s enormous financial incentive for the oldest and dirtiest coal plants to access markets through transmission,” said Chris Miller, President of the Piedmont Environmental Council (PEC). “Unless we have a change in transmission rules, all this work on the national grid will mostly result in just more coal-fired power.”

It’s a message that for a long time has met with resistance, even among clean power advocates, but now that money is being allocated and legislation is being marked up, Miller is finding that his warnings are finally gaining some traction.

Miller has reason to be concerned because of a policy called “economic dispatch,” which governs the flow of power on the grid. The policy says the cheapest power gets to market first. If the U.S. builds new transmission lines ostensibly for clean power without changing this policy, Miller warns, then coal-fired electricity from the cheapest sources – usually the dirtiest – will get to new markets first.

“Changing the dispatch rule would be changing the world that utilities operate in, in a fundamental way,” Miller said. “But in pending legislation, there’s no change being contemplated.“

Politically, changing the economic dispatch rule would be a heavy lift, because if lawmakers gave transmission priority to low-carbon power – which currently costs more than coal-fired power – in essence they would be voting in favor of an increase in electricity prices for their constituents. It’s not only likely to be a losing battle, it’s also political suicide.

So Miller and his group are trying to stop a freight train that is now barreling through Congress.

In the Senate, Harry Reid (D-Nev.)has already introduced legislation, and Jeff Bingaman (D-N.M.) has a bill circulating in draft form. Insiders also expect Byron Dorgan (D-N.D.) to introduce another transmission bill this week. Standing behind the effort to pass transmission law are a collection of strange bedfellows, among them the country’s major utilities and their powerful lobbies, Al Gore’s Repower America campaign, and T. Boone Pickens.

There’s now also money behind the transmission superhighway from America’s Recovery and Reinvestment Act of 2009 – the giant stimulus package President Obama signed into law – that makes billions available to jump-start work on 3,000 miles of new lines.

Environmental advocates, alerted by the work of Miller’s organization, are trying to temper the potential negative impacts of pending transmission law.

More than 25 environmental organizations sent a letter to Carol Brownerin the White House, to her colleagues on the Obama climate and energy team, as well as to Senate Majority Leader Reid and Speaker Nancy Pelosi, to express concern and demand good transmission policies within a comprehensive climate and energy package:

Transmission policy reform must result in new lines that serve clean renewable resources, rather than expanding the carbon-intensive power generation that currently accounts for more than 40 percent of U.S. greenhouse gas emissions and contributes to the continued deterioration of air quality in the country’s most vulnerable communities.

Piecemeal energy policy—especially electric transmission policy reform—in advance of a comprehensive national climate regime can have the real but unintended effect of facilitating more, not less, greenhouse gas pollution. For example, recent projects proposed in Pennsylvania and Virginia billed as renewable lines would ultimately result in significant new or expanded remote coal generation.

To ensure that new transmission moves the nation toward a clean renewable energy future, robust safeguards must be put in place to ensure that new lines are designed, sited, built, and operated to serve clean renewable electric generation while taking into account the considerable contributions that distributed generation, untapped energy efficiency and demand response can make for reducing the need for new facilities.

The signatories included the Sierra Club, Environmental Defense Fund, the National Wildlife Federation, NRDC, the National Audubon Society, the Wilderness Society and the Union of Concerned Scientists.

Mark Brownstein of EDF says the message is starting to get through, although a lot more work is needed. He’s following the legislative action and says it’s still unclear what will make it through both houses of Congress.

On the House side, transmission policy is being written into the larger “climnibus” bill being shepherded by Rep. Henry Waxman (D-Calif.) and Rep. Ed Markey (D-Mass.) and promised by Memorial Day. The Senate is not as clear on its timeline for climate law, and right now the transmission discussion is centering around Reid’s stand-alone bill and others that will soon be introduced. Brownstein and others believe the best safeguard for passing good transmission law is to couple it with comprehensive climate law.

“There should be no transmission reforms without a carbon cap – that’s number one,” Brownstein said.  “Number two is that transmission is the last resort and not the first resort. We need to maximize energy efficiency and distributed generation. And number three is good planning and siting.”

According to Brownstein, EDF doesn’t believe changing the policy of economic dispatch is the best solution, since the economic problem underlying coal-fired power is that the prices don’t reflect the true cost. Instead, the organization wants to see transmission policy coupled with a strong carbon cap, so that by the time new transmission lines are built, a price on carbon will elevate the price of coal-fired power and level the playing field for clean energy to make it onto the grid.

“It comes down to two issues: carbon and siting,” said Chase Huntley, policy advisor for the Wilderness Society. “Even so, too often transmission is discussed in a vacuum. For example, an EPA endangerment finding for CO2 without question will have an impact on this discussion.”

Also crucial are investments in smart grid technology to make better use of the power that is consumed, as well as transparency in the planning surrounding the building of transmission lines, since right now, industry insiders with massive coal-fired assets have the edge.

“I think it is safe to say that utilities have a great influence,” Brownstein, said. “The way things work now, it is very difficult for concerned citizens to have an impact before decisions are made. Planning is opaque in terms of process.”

Just how opaque is made clear by Miller’s research. PEC had to invest heavily in becoming expert on the arcane and confusing laws and regulations governing electrical transmission around the nation’s complicated grid.

For years, PEC staffers and hired experts have been digging into regulatory documents, filing countless Freedom of Information requests and examining maps of transmission corridors and plans for expansion. They distilled their findings into a Powerpoint presentation filled with maps and charts. It is still 47 slides long and not for the faint of heart.

The slides document an alarming fact with pinpoint geography. For more than a decade, the utility industry has been championing new transmission corridors to bring coal-fired power to bigger markets. Now the industry is four-square behind the effort to create clean energy corridors with the transmission superhighway. The industry maps for both positions are almost identical.

“All of a sudden, the utilities have turned this into a ‘green’ grid, but nothing has changed on the ground,” Miller said. “If we’re not careful, we’re going to end up with unintended consequences in all the excitement around building a transmission superhighway.”

Eleven coal plants in Western Pennsylvania and West Virginia illustrate Miller’s point with startling clarity. They are among the oldest and most polluting coal-fired power plants, and account for 6% of U.S. carbon emissions from power plants.

Because of the regional decline of manufacturing, these power plants are not even generating energy at full capacity. Further, they have cost advantages that utilities want to capitalize on: the plants are both fully depreciated and escape Clean Air Act regulations because they were built so long ago.

If new transmission lines are built in the region, these plants could run at full capacity and flood Northeastern markets with cheap but dirty power, allowing utilities to reap handsome profits from markets where electricity is priced many times higher than in Appalachia. The power plants sit smack inside a “national interest electric transmission corridors” (NIETC) designated by DOE in 2007, but that industry-friendly status is under administrative and legal challenge.

A report from the Union of Concerned Scientists warned that if these 11 plants, together with four in Ohio, ramped up from current levels to 85% capacity, they would cancel out most or all of the cuts in global warming pollution expected from the Regional Greenhouse Gas Initiative (RGGI), a carbon cap and trade scheme now operating in 10 Northeastern states.

In essence, the states with the largest markets and population centers on the eastern seaboard, working together to enact policies to mitigate carbon pollution, are facing the prospect of seeing hard won and still fragile gains being wiped out by a transmission policy that would import dirty power from outside their borders.

“The way we look at it, transmission is a tool, and the best transmission line is the one that doesn’t have to be built,” Huntley said. “In some parts of the country, we desperately need new long line transmission lines, and in other places, we don’t.”

Huntley said thought is being given to developing greenhouse gas performance standards to govern the on-ramp to the grid, but the friction between competing needs, strongest in the Northeast, is starting to bubble over into overt dispute. The New England and New York ISOs – independent service operators – pulled out of issuing a report on transmission policy development with regional partners from coal-rich states. They were concerned that a report containing policy recommendations ignored coming restrictions on carbon emissions and their associated costs, as well as efforts underway to deliver clean power to the Northeast from various sources, including Canada. In their letter withdrawing from the report, the ISOs wrote: 

With the shared geography and history of energy trading patterns between New York and New England with Eastern Canada, significant consideration is also being given to transmission options that would strengthen our access to new supplies of renewable energy—both hydro and wind—now being developed north of our states in Canada. Given the renewable development, energy efficiency, and likelihood of new ties to Canada, the need to construct long transmission lines to the Midwest would likely be reduced and in turn overall transmission costs may be lower.

The friction between state utility operators is further evidence of the real danger that transmission policy could exacerbate CO2 emissions dramatically, and it underscores the delicate balance federal lawmakers will need to strike in order to arrive at national policy. Even though legislation is believed to be for new transmission lines that are for clean energy only, the reality in the Northeast may be closer to the opposite.

“The prevailing attitude has been ‘Let’s get the transmission built and we’ll worry about this other stuff later,’” Miller said. “There hasn’t been sufficient discussion for people to really understand the rules of the national grid and to weigh all the options.”