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Hoecker: Electric Infrastructure Needed

The challenge was obvious. Our transportation network, and therefore the country, was balkanized. It would not sustain heavy traffic in interstate commerce other than maybe by rail. It posed questions about our ability to position civilian and military assets strategically. A major highway expansion that began in Kansas ended in a cornfield in Oklahoma.

The solution? The interstate highway system. America’s economy thrived. The Eisenhower administration’s National Interstate and Defense Highways Act of 1956 inaugurated what became the critical economic, social and national security network of the 20th century.

Today, 40 percent of all energy consumed in the United States is electricity, and it’s growing. The demand for power is escalating and electricity markets are becoming competitive.

The challenge this poses is becoming widely recognized. Although the “grid” is more highly integrated and sustains greater bulk power traffic than it did a half-century ago, it is congested, aging and inadequate to the needs of the digital age. Carol Browner, director of the White House Office of Energy and Climate Change Policy, has called the transmission system “dilapidated.” Those challenges alone would warrant construction of an “electron superhighway.”

Now comes the kicker. Policymakers are now promoting the “clean energy economy” as the new engine of growth, employment and energy independence. A key piece of that initiative is reliance on wind, solar, geothermal and biomass energy resources as a vast source of alternative electricity generation.

For many lawmakers and the Obama administration, the light bulb has suddenly lit up. The nation’s renewable resources are largely located where there are few customers. How do we get these resources to load? The link between economically competitive and most-abundant wind and solar resources is high-voltage transmission.

“Smart grid” technology, which offers enormous potential for improving the efficiency, demand responsiveness and reliability of the electric system — and for helping customers manage their own energy consumption and carbon footprints — will help advance the cause. But the smart grid must first be a strong grid. In other words, we need to expand, upgrade and strengthen the network of wires and substations that knit our electric society together.

Understanding the challenge isn’t enough. The Eisenhower administration understood that assembling a series of state highway systems was not going to result in the strong commercial links that the nation needed in the post-World War II environment. It understood that infrastructure networks, like superhighways, benefit the nation and everyone affected by the economy, regardless of whether they drove on them. Eisenhower was thinking long term, and the vision was a national vision. Except perhaps for the German autobahn, there was no precedent for the 1956 legislation, or for its results.

Today’s infrastructure crisis, important as it is for that same highway system, has even greater implications for the electric system, which sustains the American standard of living. It is no less severe because it is silent. Policymakers have been slow to launch an Eisenhower-like program to re-build the high-voltage network principally because its history is rooted in local and state regulation and there is little appreciation for the kind of vast, shared network of transmission facilities or how much we depend on it. Building a truly 21st-century grid that leads to the clean energy economy nevertheless requires a far larger investment of money and innovation — including major changes in the way our electricity industry is regulated.

We must create a high-voltage “interstate electricity superhighway” on the model of the 20th century’s concrete superhighways. A complete reassessment of how the high-voltage network is planned, sited and paid for is suddenly a necessity. The recent awards of $3.5 billion in stimulus money for smart grid technologies is a very modest start, as is President Barack Obama’s call for building more than 3,000 miles of electric transmission lines in the near term. In fact, the best estimates reflect a need for total investment of about $300 billion just in the transmission portion of the power business by 2030.

Looking back, it’s clear that a patchwork of state and local programs and regulatory policies would not have led to the interstate highway system we rely on today. One might say the same of the Internet or the financial or rail systems.

Our federal system normally allocates responsibility for economic and infrastructure development to the level where the resources and span of jurisdiction are most available. The wholesale or bulk power market is fundamentally regional and national in operation and significance. Regulation must better reflect that reality. That is not to say that states cannot provide valuable oversight and initiative. But today’s interstate transmission network is subject to such complex and frequently duplicative, local, state and federal regulation that its evolution is being stunted and the “clean energy economy” is under threat of being stillborn.

The technology, finances and entrepreneurial skill to create a truly 21st-century grid for the country already exists. The missing ingredient is regulatory reform and the certainty that a clearer regulatory path to grid expansion will provide. Washington and the state governments — working in cooperation with industry, environmentalists and other stakeholders — must create a new legal and regulatory environment to replace one that in recent decades has not been particularly supportive of building new transmission.

Only Congress is in a position to seize the initiative and clear the roadblocks that are now clearly visible. The industry needs simplified regional planning to serve the needs of all grid users efficiently and equitably. We must have a more effective way of siting transmission lines responsibly. And it is critical that federal regulators allocate the costs of the transmission system to everyone that benefits.

Today, various regional and cross-utility collaborations already are encouraging new transmission planning tools, including creation of transmission infrastructure authorities and renewable energy zones. Regulatory rules are being reformulated to help bring power to consumers from remote generation sites. And recognizing that transmission pricing and cost recovery are critical elements of transmission investment decisions, certain regions have taken positive steps to ensure recovery of investment in transmission built to connect to renewable resources. Nine federal agencies recently took a small step toward regulatory reform by agreeing to work together in streamlining the process for approving and building transmission lines across federal lands.

These efforts are simply not enough. The president’s commitment to modernize the grid is welcome. His vision echoes the determination to create the interstate highway system. But immediate and rational regulatory reform is essential to actually realizing the dream of a cleaner and more efficient energy future. That would represent a true, long-term stimulus for our nation and its economy and give us the electric transmission “highway” that is essential to meeting our economic and climate change goals.

Let’s “be like Ike!”

Jim Hoecker, a former chairman of the Federal Energy Regulatory Commission, serves as counsel and adviser to WIRES (the Working group for Investment in Reliable and Economic electric Systems). WIRES (wiresgroup.com) is a nonprofit association of transmission providers, customers, and equipment and service companies that promotes investment in electric transmission.

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