On Thursday, Sen. Harry Reid (D-Nevada) introduced “The Clean Renewable Energy and Economic Development Act.” The bill would give the Federal Energy Regulatory Commission (“FERC” or “Commission”) the authority to step in if states are blocking the development of transmission lines designated to bring more renewable energy onto the nation’s electric grid.

Highlights from the bill include:

Renewable Energy Zones

Sen. Reid’s bill would require the president to designate renewable energy zones with significant renewable energy generation potential. A region would be so designated if it could generate more than 1 gigawatt of electricity 45 from renewable resources. The president would have to designate those zones in the Western Interconnection within 90 days of the passage of the bill and within 270 days for the Eastern Interconnection. The president also could adopt renewable zones already designated by states, such as in Texas.

Transmission Planning

Within 120 days of passage of the bill, FERC would be required to designate an organization to be certified as the regional planning entity for each of the Eastern and Western Interconnections. The bill would require states, utilities, generators, regional grid operators, environmental groups and other stakeholders to cooperatively develop a transmission plan for the Eastern and Western Interconnections. The plan must lay out what projects should be built within the renewable energy zones. To cover the costs of the transmission planning efforts, the bill would impose a surcharge on all transmission users within those Interconnections.

If regional authorities do not develop a transmission plan within one year of the president’s designation of renewable energy zones, FERC would have authority to develop the renewable transmission plan for those areas.

Federal Siting

Transmission project developers would be able to apply to FERC for federal backstop siting for transmission projects that are part of the renewable transmission grid plan or for transmission projects that FERC determines are needed to integrate renewable generation resources. FERC would then have the authority to issue construction permits for transmission lines that dedicate 75 percent of capacity to delivering renewable energy from those zones. Transmission projects that use FERC backstop authority would have to give priority to load-serving utilities that contract to buy power from renewable facilities or give priority transmission rights to renewable generation developers.

The legislation generally requires transmission providers that use FERC’s backstop siting authority to provide access to load or generation in states through which their lines pass. However, if that is not possible, states that get no benefits from lines passing through are eligible for additional grants from the U.S. Department of Energy.

Cost Allocation

The bill encourages states and power market participants in each region to propose a cost allocation plan to FERC. If no proposal is made to the Commission, FERC would have authority to spread costs over all users of the bulk power system in a region of an Interconnection or throughout an entire Interconnection. Any renewable developer connecting to the line at a later date would be required to pay its share of transmission costs, thus reducing costs for other system users.

Sen. Reid’s legislation is expected to be incorporated into a broader energy bill being drafted by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-New Mexico). Sen. Reid’s statement introducing the bill is available at: http://reid.senate.gov/newsroom/pr_030509_transmissionbill.cfm.