Federal regulators’ decision clears way for grid upgrades

A decision today by the Federal Energy Regulatory Commission will help ease the development of new wind power projects and transmission lines in the Midwest.

The FERC’s new rules create a class of “multi value projects” – those that support public policy requirements (i.e. renewable energy standards) or help improve reliability. For those projects, the full cost of transmission upgrades will be paid for by energy consumers across the region.

In the past, when utilities built new generation facilities, they also paid for the cost of new transmission capacity. However, wind farms are typically built by independent, third party developers, and requiring those developers to pay for new capacity would make many projects financially infeasible.

Under the new rules, ratepayers will pick up the tab, but a portion of utility bills already goes to pay for transmission infrastructure.

Under another proposal approved by the FERC, consumers developers will pick up 90 percent of the cost of new lines to connect energy projects to the existing grid.

The decision was the culmination of a 19-month process involving stakeholders from throughout the region.

“Cost allocation for transmission facilities is one of the most difficult issues facing the energy industry and regulators, whether state or federal,” said FERC Chairman Jon Wellinghoff in a news release.

Earlier this month, the Midwest ISO announced the approval of 231 projects throughout the region, totaling $1.2 billion in investment. Wellinghoff says the FERC’s decision will provide the clarity on cost allocation needed to move those projects forward.

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