July 6, 2020 - SACRAMENTO – California Attorney General Xavier Becerra, as part of a multistate coalition, slammed the Federal Energy Regulatory Commission’s (FERC) proposal to change the way it awards incentives for the development of electric transmission projects. If adopted, the proposal, which violates FERC’s statutory mandate to ensure just and reasonable rates, would fail to incentivize the development of appropriate projects by providing incentives to projects that do little to improve reliability or reduce costs to consumers. In their comment letter, the coalition argues that the proposal is little more than a handout to developers and utility companies that would drive up electricity bills for households and retail establishments.
“The Trump Administration can’t backslide quickly enough to please another special interest,” said Attorney General Becerra. “FERC’s incentive program is supposed to spur investment in our electricity grid. Instead, this undisguised handout to old-school energy interests would increase electricity costs for households and small businesses at a time when they are already struggling to pay their bills.”
As required by the Energy Policy Act of 2005, FERC establishes incentive-based rates for interstate electric transmission in order to promote investment in enlarging, improving, maintaining, and operating transmission facilities, as well as encouraging the use of technologies that increase capacity and efficiency and improve the operation of existing facilities. In order to qualify for incentives, companies must demonstrate that their project will increase reliability or reduce the cost of delivered power for consumers by reducing transmission congestion.
In the comment letter, the coalition argues that the proposal would violate FERC’s statutory mandate to ensure just and reasonable rates and would do little to incentivize truly needed and beneficial transmission projects. For example, FERC proposes to award incentives to utilities for joining or remaining in an Independent System Operator or Regional Transmission Organization, organizations that coordinate, control, and monitor state electricity grids, regardless of whether such membership is required for the utility to operate in that region. The coalition also highlights that FERC's proposal would violate its statutory obligation to award incentive rates on a case-by-case basis in decisions tailored to the demonstrated needs of each project. Under the current proposal, there would be no tailoring, only a limit on how much return on equity a utility can get.
Attorney General Becerra joins the attorneys general of Connecticut, Illinois, Maryland, Massachusetts, Michigan, and Rhode Island in filing the comment letter.
A copy of the comment letter can be found here.
Source: CA. DOJ