** Southeastern Utilities Block Transmission Necessary for Decarbonization ([link removed])
------------------------------------------------------------
By Daniel Tait on Feb 07, 2024 03:33 pm
Decarbonizing the economy will require a significant expansion of interstate and interregional transmission, but investor-owned utilities in the South, such as Southern Company and Entergy, have spent years undermining efforts to expand high-voltage transmission in an effort to entrench their monopolies, preserve the value of their existing fossil fuel assets, and limit the introduction of lower-cost renewable energy from outside their service territories.

Expanded high-voltage transmission is crucial to increasing the flexibility and reliability of the grid by expanding the geographic footprint and the potential resources available for grid operators. The Department of Energy’s 2023 Transmission Needs Study noted ([link removed]) , “nearly all regions in the United States would gain improved reliability and resilience from additional transmission investments.” The study said that the territory covered by Southern Company and Entergy are among the regions that have constructed the “fewest circuit-miles [of transmission], relative to regional load,” over the past decade.

Southern Company has routinely filed comments ([link removed]) with federal agencies opposing national standards or rulemakings designed to increase transmission, and has questioned ([link removed]) federal regulators’ legal authority ([link removed]) to regulate its transmission activities.

Entergy has stalled transmission growth for years, going so far as to hire an undercover consultant ([link removed]) under the guise of a “customer” in an attempt to manipulate its wholesale market’s transmission planning process; the utility closely coordinated ([link removed]) with the Mississippi Public Service Commission to align their public positions. Entergy was subject to a U.S. Department of Justice (DOJ) investigation ([link removed]) in 2012 that forced it to join a regional market, the Midcontinent Independent System Operator (MISO).

Officials with the North American Electric Reliability Corporation (NERC) ([link removed]) , which is responsible for setting reliability standards for the bulk power grid, have lamented the role of incumbents in blocking transmission construction. Mark Lauby, NERC’s Senior Vice President and Chief Engineer, while speaking on a conference panel that was published by the Public Power Underground podcast in late 2023, said ([link removed]) some generators, like utilities, gain from congestion and want problems in the system to remain. Lauby told attendees, “How do I get a line through multiple markets when markets themselves don’t want to compete with other markets. So we have some substantial challenges within markets within generators that are trying to stop the building of transmission. It’s not just permitting but it’s also those folks that feel that they actually get gain
out of congestion, out of having that stinking solar stuff way a ways away so they can make more money locally.”


** Southern Company’s opposition to transmission expansion
------------------------------------------------------------

In an attempt to break the transmission logjam, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) titled “Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection” in April 2022. FERC sought comment on reforms related to three specific areas: (1) reforms for longer-term regional transmission planning and cost-allocation processes that consider anticipated future generation, (2) rethinking cost responsibility for regional transmission facilities and interconnection-related network upgrades, and (3) enhanced oversight of how new transmission facilities are identified and paid for.

Southern Company, through its law firm Balch and Bingham, submitted comments to FERC documenting a litany of concerns and implying that almost any requirements from federal regulators would risk litigation ([link removed]) . Southern told FERC that transmission cannot provide benefits on its own ([link removed]) , argued that federal regulators should not require it to study ([link removed]) any transmission benefits, and said that doing so would infringe on state’s rights ([link removed]) . Clean energy advocates noted
([link removed]) that, “although well-intentioned, this experiment in regional deference has produced paltry results in the Southeast” and that “no non-RTO/ISO region’s planning process has ever resulted in a transmission facility selected for cost allocation. ([link removed]) ”

Southern has routinely refused to study the benefits of transmission. When Alabama Power asked the Alabama Public Service Commission for permission to buy a gas plant, the company reviewed ([link removed]) only the costs of transmission, but not any potential benefits.

Southern has faced tough questioning ([link removed]) from the Georgia Public Service Commission Staff about its failure to proactively plan transmission to assist with the closure of coal plants in the state. Requests by clean energy advocates to study the issue via the Southeast Regional Transmission Planning (SERTP) process, which is self-run entirely by the Southeastern utilities, were rebuffed by SERTP. Georgia Power later admitted ([link removed]) to state regulators that SERTP’s process limited its ability to plan ahead, and the utility claimed it did not have the software or models to study economic congestion on the transmission system.

But Southern told FERC a different story, saying that because no transmission project has ever been selected by SERTP, “no such more efficient or cost-effective regional solutions” exist, and that SERTP’s failure to select transmission “validates the robustness and thoroughness” of its planning process. The Southern Renewable Energy Association (SREA), which represents renewable energy developers in the South, noted the apparent contradiction in Southern’s position in SREA’s own reply comments ([link removed]) to FERC.

In comments to the U.S. Department of Energy’s (DOE) National Transmission Needs Study, Southern claimed that transmission congestion could not be calculated ([link removed]) in the Southeast, unlike in parts of the country that have a regional transmission organization (RTO). Southern told ([link removed]) DOE it opposed any federal designation of a National Interest Electric Transmission Corridor and opposed DOE even studying projects. To do so, Southern warned ([link removed]) , could be illegal. Southern also claimed
([link removed]) that “economic” and “public policy” congestion was not relevant to non-RTO utilities like Southern. However, some utilities in the non-RTO Southeast, such as Duke Energy, are subject to legally binding public policy passed by their state lawmakers.

Southern Company’s anti-transmission advocacy is backed by massive expenditures on lobbying and campaign contributions. The company has long been one of the largest spenders on lobbying among utilities. Southern reported spending $191 million in activities related to political influence from 2015 through 2020 in annual filings to FERC, far more than any utility other than NextEra during that time, according to data ([link removed]) aggregated by the Energy and Policy Institute (EPI). In the last ten years, Southern Company has spent ([link removed]) more than $112.4 million on lobbying at the federal level, according to Open Secrets. Southern has never employed fewer than 49 lobbyists in a year over the last decade. In comparison, Southern could build enough transmission to support moving 1,600 megawatts of power from the Tennessee Valley Authority (TVA) to North Georgia for less than $57 million
([link removed]) or 1,600 megawatts from South Georgia to North Georgia for less than $96 million ([link removed]) , according to data released by SERTP.

Figure 1. Southern Company’s Lobbying Spending by Year, Source: Open Secrets


** Entergy’s opposition to transmission expansion
------------------------------------------------------------


** Southern Spirit
------------------------------------------------------------

Southern Spirit is the name of a proposed high voltage direct current (HVDC) transmission line which, if completed, would connect the Texas grid to the rest of the grid in the Southeast US, and would be capable of transmitting up to 3,000 megawatts of power. As planned, the line would originate in Texas, traverse Louisiana, and terminate in Mississippi. The project was first submitted to federal regulators ([link removed]) in 2011.

Entergy, in filings with the Mississippi Public Service Commission, is attempting to derail the Southern Spirit project, claiming that the transmission line could compete ([link removed]) with some of its existing gas-fired power plants.

Meanwhile, Amazon Web Services’ new data centers in Mississippi will require more than 1,000 MW of new power from Entergy. Entergy has worked with Amazon for “years ([link removed]) ” to attract the tech firm to Mississippi. The Mississippi Legislature granted Entergy broad exemptions from state and local regulatory oversight, including an exemption from competitive procurement, to charge ratepayers for new infrastructure to serve the Amazon facilities.

After a brush with the Department of Justice for anti-competitive practices in 2012, Entergy’s grid is managed by MISO, which has the final say about which transmission projects get built on its system. MISO, for its part, was unconcerned ([link removed]) about the costs or ability of Southern Spirit’s developers to pay for system upgrades as planned.

Half of the energy from Southern Spirit is proposed to be delivered to Entergy, with the other half delivered to Southern Company. An analysis conducted ([link removed]) by Energy Systems Integration Group projected that Southern Spirit would save Southern Company and ERCOT more than $150 million, which may signal why Entergy is unsupportive of the project. If the project were not built, those savings would not occur, with the money instead being paid by customers to Entergy.


** Blocking competitive transmission projects, evading the purview of MISO
------------------------------------------------------------

In 2018, MISO awarded ([link removed]) NextEra a 500-kilovolt (kV) transmission project from Hartburg to Sabine on the Texas side of the Texas-Louisiana border. In 2019, the Texas legislature passed a right of first refusal law (ROFR), over the objections ([link removed]) of the U.S. Department of Justice, that allowed Entergy to claim ownership of the previously awarded NextEra line. (The federal Fifth Circuit Court of Appeals declared the ROFR law unconstitutional in 2022, and the Supreme Court declined ([link removed]) to take up Texas’ further appeal.)

But rather than build the transmission line, Entergy instead issued a request for proposals (RFP) to build a power plant in the same general area, which had the effect of reducing ([link removed]) the economic benefits of the line. Entergy won its own RFP, deciding to build a 1.2 gigawatt combined cycle gas-fired power plant at Orange County ([link removed]) .

Entergy has also evaded the purview of MISO by opting to build large “local” or “bottom up” transmission projects and asking for “expedited review”. Local transmission projects are submitted ([link removed]) to MISO by the utility, whereas regional projects are developed independently by MISO. Local transmission projects can diminish, or even eliminate, the economic benefits of regional transmission projects, such as the previously planned 230-kV Waterford-to-Churchill transmission line near New Orleans. In that case, MISO Senior Manager of Expansion Planning Edin Habibovic told RTO Insider ([link removed]) in August 2020 that Entergy built new projects in the area that eased congestion and eroded the Waterford-to-Churchill project’s benefits.

In the last two years, Entergy has requested ([link removed]) expedited review for local transmission projects from MISO representing projects costing more than $540 million in order to enable 1.1 gigawatts of new load. MISO data shows ([link removed]) that the vast majority of transmission projects approved are local projects and that Entergy’s (MISO South) transmission development is drastically different from its counterparts throughout the rest of MISO. Local projects do not provide the same grid-scale benefits of resilience and renewable energy integration as higher-voltage, geographically broader projects.

Figure 2. MISO Transmission Approvals by Category, Source: MISO

Figure 3. MISO Transmission Investment by Facility Type and Region, Source: MISO

As it currently stands, Entergy’s service territory remains largely an island to the rest of MISO, known as MISO North. The limited tie between Entergy’s territory, known as MISO South, and MISO North restricts lower cost, mostly wind, power from traveling from North to South. Such a restriction raises prices in MISO and benefits power plants operated by Entergy, and leads to billions in extra costs for consumers annually, according ([link removed]) to a January 2024 working paper titled, “Power Flows: Transmission Lines and Corporate Profits” by Catherine Hausman. Hausman’s paper analyzed two major markets in the U.S., the Southwest Power Pool and MISO. She found that if Entergy’s system were better integrated with its neighbors and other grids, the utility’s 2022 operating profits would have been reduced by $930 million ([link removed]) .


** Coordination with regulators and undercover consultants
------------------------------------------------------------

Previous reporting by EPI revealed Entergy’s close coordination ([link removed]) with consultants to the Mississippi PSC to align their respective positions at MISO. Mississippi’s consultants make millions of dollars per year and some of them are paid hundreds of dollars per hour, all at the expense of ratepayers. The coordination worked to Entergy’s benefit, as the Mississippi and Louisiana PSCs filed comments opposing ([link removed]) key elements of MISO transmission planning process.

The City of New Orleans, which acts as a separate regulator of Entergy’s New Orleans utility, initially sided with Entergy as well, but later reversed ([link removed]) course to support MISO’s transmission planning process. MISO’s transmission planning process has led to some successful transmission planning in the northern part of its territory when, in 2022, the RTO’s board approved ([link removed]) a $10.3 billion dollar plan that would enable approximately 53 gigawatts of renewable power to integrate to the grid.

EPI previously reported ([link removed]) about Entergy’s use of an undercover consultant, former Entergy executive Dave Harlan, who posed as a “customer” at MISO meetings. MISO later changed ([link removed]) its rules to require consultants to disclose whom they represent when attending or speaking at meetings. The Mississippi PSC directed its staff and representatives to, “not engage in any dialogue, formal or informal, related to public policy or any other matter within the Commission’s jurisdiction, with any stakeholder or other participant who declines to publicly disclose who he or she represents.”

Entergy was supposed to divest ([link removed]) its transmission system to ITC Holdings more than a decade ago in order to satisfy the demands of federal prosecutors who accused the utility of anti-competitive practices. The DOJ said that “Entergy’s commitments to obtain membership in an [regional transmission organization] RTO and divest its transmission system […] will address the Antitrust Division’s concerns by eliminating Entergy’s ability to maintain barriers to wholesale power markets, ensuring that all Entergy service area generation is dispatched independently and at lowest cost, increasing market transparency and oversight, and properly aligning incentives for the construction of transmission.” Former FERC Commissioner John Norris recently noted ([link removed]) that it is “unacceptable” for transmission to be “held
hostage” by “anti-competitive” behavior in MISO South. Norris was one of the FERC regulators to approve Entergy’s entry into MISO more than a decade ago.


** Southeastern Energy Exchange Market’s Poor Performance
------------------------------------------------------------

The Southeast Energy Exchange Market (SEEM) was proposed and created by the region’s major utilities, most of which are members ([link removed]) , including Southern Company, Duke Energy, Dominion and TVA, among others. Utilities claimed SEEM would provide the benefits of a wholesale power market without the costs and bureaucracy. The utilities also said that SEEM would help bring more renewable energy online, but the platform does not report on the energy mix of its trades, and independent power producers, such as large solar facilities, are ineligible to participate. SEEM does not conduct any transmission planning functions. Even Entergy, which as a MISO member is not a member of SEEM, said ([link removed]) that “whatever benefits SEEM might entail, it is not an RTO or ISO and, as proposed, would not provide any transmission, resource or reliability function that MISO
currently provides.”

Filings posted on the SEEM website largely show a platform failing to live up to its members’ promises. A November 2023 Utility Dive op-ed from Nick Guidi of the Southern Environmental Law Center and Chris Carmody of the Carolinas Clean Energy Business Association which analyzed SEEM data showed ([link removed]) that SEEM had “realized only $3.3 million in total benefits” and “just a small fraction of its bids and offers create matches,” meaning few benefits accrue to members. Given the original start-up costs and ongoing operational costs, it is unclear that SEEM has yet to save its members any money. SEEM originally promised total benefits of $37 to $46 million dollars in its first year.

In July 2023, SEEM was struck down by a federal court which said ([link removed]) that SEEM may violate FERC requirements that transmission owners provide open access to their systems. At issue was SEEM’s exclusion ([link removed]) of 65 existing non-utility participants and discriminatory practices. New participants and certain types of resources, such as demand response and distributed energy like rooftop solar, are prohibited from participating. In its ruling, the D.C. Circuit Court said ([link removed]) that “The creation of a new service that — by its design — excludes existing market participants evokes the discriminatory practices against third-party competitors by monopoly utilities that prompted the
commission’s adoption of Order No. 888.”

SEEM data also shows a marked decline in activity ([link removed]) during extreme weather events, like Winter Storm Elliott, which forced SEEM members TVA, Duke, Dominion, and Santee Cooper to curtail power to its customers. Georgia Power, under questioning in July 2022 ([link removed]) and again in January 2024 ([link removed]) , admitted that the utility would not model SEEM as part of its regular integrated resource planning and it would not improve reliability or expand transmission.


** BIG WIRES Act
------------------------------------------------------------

In September of last year, U.S. Senator John Hickenlooper (D-CO) and U.S. Representative Scott Peters (D-CA) introduced the Building Integrated Grids With Inter-Regional Energy Supply (BIG WIRES) Act ([link removed]) . The Act would require the country’s regional grids to have the ability to transfer approximately 30% of their peak load capability to neighboring grids in order to “fortify the critical energy infrastructure of the United States while lowering the cost of living for families.” The Electric Reliability Council of Texas – commonly known as ERCOT – would be exempt.

The bill has not moved since its introduction, and both Southern Company ([link removed]) and Entergy have registered to lobby ([link removed]) on the bill ([link removed]) , according to federal lobbying disclosures. The bill awaits a hearing in the Senate Energy and Natural Resources Committee.

Header image source: Pixabay ([link removed])


** Do you have more examples of utilities blocking transmission? Share them with the author!
------------------------------------------------------------

Please enable JavaScript in your browser to complete this form.
Name * ____________________
Email * ____________________
Phone ____________________
Message *
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
(wpforms-submit) SubmitLoading

The post Southeastern Utilities Block Transmission Necessary for Decarbonization ([link removed]) appeared first on Energy and Policy Institute ([link removed]) .
Read in browser » ([link removed])
[link removed] [link removed]




** Recent Articles:
------------------------------------------------------------
** As Rate Case Approached, Avangrid’s CEO Tried to Improperly Influence CT’s Utility Regulator, Documents Allege ([link removed])
** Legislators backed by Dominion contributions to appoint Virginia utility commissioners ([link removed])
** Virginia bill would bar utilities from charging customers for politics, joining other states ([link removed])
** Governor Lombardo prioritizes gas, eroding Nevada’s climate plan ([link removed])
** Dominion Energy says data centers are “key industries” to the company but its South Carolina subsidiary may soon refuse them service ([link removed]

============================================================
** Facebook ([link removed])
** Twitter ([link removed])
** Website ([link removed])
Copyright © 2024 Energy and Policy Institute, All rights reserved.
You are receiving this email because you opted in at our website via our Contact Us page.

Our mailing address is:
Energy and Policy Institute
P.O. Box 170399
San Francisco, CA 94117
USA
Want to change how you receive these emails?
You can ** update your preferences ([link removed])
or ** unsubscribe from this list ([link removed])
.
Email Marketing Powered by Mailchimp
[link removed]