On September 30, 2009, the former Chairman of FERC spoke at The Energy Daily Transmission Siting Policy Summit about the need for FERC to have a national rulemaking on cost allocation to allow for creating a clean energy grid. Kelliher said that without federal reforms on cost allocation and siting, reducing carbon emissions in the United States will be greatly impeded.
In making a claim that limited federal backstop siting authority was granted to FERC through the Energy Policy Act of 2005, Kelliher criticized the United States Court of Appeals for the Fourth Circuit’s decision in Piedmont Environmental Council v. FERC. In that case, the Court held that FERC’s backstop siting authority did not apply when a state denied an application. Kelliher called that opinion “one of the worst electricity legal opinions.” On September 16, 2009, several electric utilities and wind energy groups led by Edison Electric Institute (“EEI”) and the American Public Power Association petitioned the Supreme Court to overturn the Fourth Circuit decision.
Kelliher went on to state if there is no federal siting of major transmission lines, then several transmission projects risk being abandoned under state and local siting procedures. Kelliher believes that the Commission should act boldly by allocating transmission costs across regions because expansion in one region will benefit the entire grid. In the past, FERC has been highly deferential to regional planning organizations. However, in his speech, Kelliher appealed to FERC to reject the current Midwest ISO cost allocation plan, stating that it represents a step toward narrowly allocating costs to generators, as opposed to spreading the cost across the region.
Since most renewable energy sources are located in remote regions, Kelliher advocated against narrow cost allocation. Kelliher stated this type of narrow cost allocation is poor public policy, for it represents a shift away from developing the highest quality renewable energy potential and lowest regional costs to lower-quality, higher cost resources.