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Public power advocates detail wish list for FERC, Congress

Increased transparency around transmission projects and fixes to wholesale electricity market rules are some of the policy goals the American Public Power Association is promoting during its 2018 legislative rally.

Scheduled to take place Feb. 26-28 in Washington, D.C., the annual rally typically brings in around 600 public utility executives, state and local officials and other industry representatives to meet with members of Congress and agencies on key policy issues.

As part of the current year's event, association, or APPA, members approved a resolution urging the Federal Energy Regulatory Commission to enforce the transmission planning provisions of its Orders 890 and 1000 "in a manner consistent with the purposes and goals of those orders."

The resolution stemmed from the APPA's concerns over a "marked increase" in supplemental transmission projects, particularly in the PJM Interconnection. Supplemental projects are not part of the PJM's regional transmission expansion plan and, therefore, do not receive the same "rigorous review" as other projects, according to the APPA.

"This lack of true oversight means it is nearly impossible for energy consumers — who ultimately bear the costs of these projects — to verify that they are getting their money's worth," the resolution said. The document noted that since 2012, supplemental transmission projects in PJM have totaled about $12.7 billion, exceeding the $11.6 billion in projects subject to the region's established planning process.

APPA President and CEO Sue Kelly told reporters at a Feb. 27 press briefing that FERC should address these rising costs and ensure that supplemental transmission upgrades are "just and reasonable" and needed to ensure service for customers.

Kelly said APPA members also approved a resolution calling for "modest revisions" to the Public Utility Regulatory Policies Act, or PURPA. The 40-year-old law, which requires utilities to buy power from small renewable or co-generation facilities in their service territories, is "badly in need of updating" to prevent abuse by developers and free power companies from buying electric output they do not need at above-market prices, she said.

The APPA already has voiced support for a bill in the U.S. House of Representatives that would ease utilities' mandatory purchase obligations under that law and allow utilities to challenge FERC designations of qualifying PURPA facilities if they believe developers have abused the law's so called one-mile rule.

That rule stipulates that multiple facilities located at least one mile apart are considered separate for purposes of PURPA qualification. The House bill would direct FERC to make the one-mile rule a rebuttable presumption, meaning utilities and other stakeholders could seek redress if they feel developers are gaming the rule.

In addition to the transmission and PURPA resolutions, APPA members adopted measures to support electric vehicle deployment, bolster utility responses to natural disasters, and discourage the federal government from incentivizing states and localities to privatize public infrastructure.

Legislative priorities

Public power backers also will seek legislative fixes from Congress.

The APPA is opposed to the Trump administration's proposal in its fiscal-year 2019 budget request to privatize the transmission assets of three federal power marketing administrations and the Tennessee Valley Authority. Although Congress has rejected such proposals in the past, Kelly said the APPA is "quite concerned" by the request and will urge lawmakers to fight attempts to sell the assets, which she said would raise power costs for ratepayers.

Public power producers further hope Congress will address their long-standing concerns with wholesale markets managed by regional transmission organizations. Kelly said certain RTO market rules make power prices more volatile, reward merchant generators over public ones, and impede APPA members' ability to self-supply or buy their own generation.

Other legislative priorities for the APPA in 2018 include strengthening industry-government partnerships to protect the grid from physical and cyber threats, preventing the federalization of rate designs for distributed generation and keeping those decisions locally based, and supporting "common sense" reforms to environmental regulations.

Industry supporters also will work to support bond-funded electric system investments. The GOP's new tax law preserved the tax-exempt status of municipal bonds that finance over $5 billion per year in public power investments. But the law repealed the tax exemption for advance refunding bonds that help public utilities lower borrowing costs for essential infrastructure projects.

Some lawmakers are seeking to reinstate that exemption: U.S. Reps. Randy Hultgren, R-Ill., and Dutch Ruppersberger, D-Md., introduced a bill Feb. 13 to restore the tax exemption for advance refunding bonds.