On Tuesday, Senator Jeff Bingaman (D-NM) released draft legislation on transmission siting, planning and cost allocation. Senator Harry Reid (D-NV) introduced similar legislation last week (see March 6, 2009 edition of the WER). While Sen. Reid’s bill strengthens FERC’s existing backstop siting authority, Sen. Bingaman’s proposal would allow project developers to go directly to FERC and bypass the state approval process altogether in certain circumstances.

Highlights from the bill include:

FERC Siting Authority

The draft bill would eliminate FERC’s current backstop siting authority for projects in National Interest Electric Transmission Corridors under section 216 of the Federal Power Act. Instead, FERC would have exclusive authority to site “high priority national transmission projects.” Such projects include 345 kV and above AC lines, 400 kV and above DC lines, or renewable feeder lines that are 100 kV and above designed to bring renewable energy to high voltage lines. FERC must presume public need for a proposed project that is part of an interconnection-wide transmission grid project plan.

Transmission Planning

The draft bill would require designation of one or more regional planning entities to prepare a centralized, interconnection-wide transmission project plan as part of the “national interstate transmission system.” FERC could then approve or modify the plan. Like Senator Reid’s bill, Bingaman’s proposal would allow FERC to step in for the planning entity or a state if a plan is not submitted or if a state does not participate. The Electric Reliability Council of Texas Interconnection has the option of participating. Hawaii and Alaska are exempt.

Unlike Sen. Reid’s bill, Sen. Bingaman’s proposed bill would not limit FERC’s siting authority to renewable energy projects. However, planning for high-priority national transmission projects must take into consideration support for the development of new renewable generation, opportunities for reduction of emissions, cost savings resulting from congestion reduction, enhanced fuel diversity, reliability, and other national priorities.

A regional planning entity would be allowed to recover its prudently incurred planning costs through a federal transmission surcharge based on a formula rate approved by the Commission. The surcharge would be collected from all load serving entities based on annual energy usage and capped at $80 million each year.

Cost Allocation

Sen. Bingaman’s draft legislation would allow regional planning entities to propose a cost allocation plan for projects that are developed under a plan. FERC would then approve the proposed cost allocation unless it finds the proposal to result in rates that are not just and reasonable and unduly discriminatory or preferential, would unduly inhibit the development of renewable generation projects, or would not allow the transmission provider the opportunity to recover prudently incurred costs including a reasonable return on investment. If no cost allocation plan is proposed, FERC would have broad authority to spread costs to all load serving entities in the Eastern or Western Interconnection, or to load serving entities within a part of the Interconnection for high-priority transmission grid projects.

The full text of Sen. Bingaman’s bill is available at: http://energy.senate.gov/public/index.cfm?FuseAction=IssueItems.View&IssueItem_ID=6a7e4b50-e86d-452b-b0eb-630b2c7c10d1.