04-16724. Designation of National Interest Electric Transmission Bottlenecks (NIETB)

AGENCY:

Office of Electric Transmission and Distribution, Department of Energy.

ACTION:

Notice of inquiry and opportunity to comment.

SUMMARY:

The Department of Energy (DOE) seeks comments on issues relating to the identification, designation and possible mitigation of National Interest Electric Transmission Bottlenecks (NIETB). This inquiry is DOE's initial step in seeking to identify and designate NIETBs. By publicly identifying and designating NIETBs, DOE will help mitigate transmission bottlenecks that are a significant barrier to the efficient operation of regional electricity markets, threaten the safe and reliable operation of the electric system, and/or impair national security. DOE seeks comments on the questions posed below and welcomes other pertinent comments or proposals.

DATES:

Written comments are to be filed electronically by e-mailing to: [e-mail] no later than 5 p.m. e.d.t. September 20, 2004. Comments can be filed at the address listed below.

ADDRESSES:

Office of Electric Transmission and Distribution, TD-1, Attention: Transmission Bottleneck Comments, U.S. Department of Energy, Forrestal Building, Room 6H050, 1000 Independence Avenue, SW., Washington, DC 20585.

Note that U.S. Postal Service mail sent to DOE continues to be delayed by several weeks due to security screening. Electronic submission is therefore encouraged.

FOR FURTHER INFORMATION CONTACT:

Mr. David Meyer, Office of Electric Transmission and Distribution, TD-1, U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585, [phone], [e-mail], or Lot Cooke, Office of General Counsel, GC-76, 1000 Independence Avenue, SW., Washington, DC 20585, [phone], [e-mail].

SUPPLEMENTARY INFORMATION:

The Nation's electric system includes over 150,000 miles of interconnected high-voltage transmission lines that link generators to load centers. The electric system has been built by electric utilities over a period of 100 years, primarily to serve local customers. Until recent years, electricity trade among electric utilities was modest. With the advent of wholesale electricity markets, trade has increased exponentially, and utilities now shop for the lowest cost power from suppliers reachable through the transmission network. The increase in regional electricity trade saves electricity consumers billions of dollars, but it places significant additional loads on the transmission facilities over which this trade is conducted. Steady growth in demand for electricity also has contributed to the growth in demand for transmission service.

While transmission service has become more important economically and operationally, investment in new transmission facilities has not kept pace. Over the past 25 years, investment in new transmission facilities has significantly declined. Today, bottlenecks in the transmission system impede economically efficient electricity transactions and potentially threaten the safe and reliable operation of the transmission system. DOE estimates that these bottlenecks cost consumers several billions of dollars per year by forcing wholesale electricity purchasers to buy from higher-cost suppliers. This estimate does not include the reliability costs associated with such bottlenecks.

The National Energy Policy (May 2001), the Department's National Transmission Grid Study (May 2002), and the Transmission Grid Solutions Report (September 2002) issued by the Secretary's Electricity Advisory Board, recommend that the Department initiate a process to determine how to identify and designate transmission bottlenecks of national interest, as a first step toward mitigation of them.

Specifically, the Grid Study states:

Transmission bottlenecks affect national interests by increasing the cost of electricity to consumers and the risk of transmission system reliability problems in various regions throughout the United States. Relieving transmission bottlenecks is a regional issue. DOE will work in partnership with FERC, States, regions, and local communities to designate significant bottlenecks and take actions to ensure that they are addressed.

The report of the Electricity Advisory Board states:

We would urge the Secretary to develop the criteria and process for determining which existing bottlenecks should qualify for special status as “National Interest Transmission Bottlenecks” because the bottlenecks affect the reliability and security of the nation's electric grid. The DOE must work with State, regional and local government officials to encourage proposals from industry participants and to monitor progress toward elimination of designated bottlenecks.

The Electricity Advisory Board goes on to recommend that to be designated a National Interest Transmission Bottleneck the bottleneck must meet one of three criteria:

1. The bottleneck jeopardizes national security;

2. The bottleneck creates a risk of widespread grid reliability problems or the likelihood that major customer load centers will be without adequate electricity supplies; or

3. The bottleneck creates the risk of significant consumer cost increases in electricity markets that could have serious consequences on the national or a broad regional economy or risks significant consumer cost increases over an area or region.

We note that Title XII of H.R.6, as reported by a joint U.S. Senate-House of Representatives Conference Committee, as well as Title XII of S. 2095, the comprehensive energy legislation now before the U.S. Congress, contain provisions that would require the Secretary of Energy, within one year after enactment into law, and every three years thereafter, to designate “National Interest Transmission Corridors.”

The legislation would also give certain Federal “backstop” siting authority to the Federal Energy Regulatory Commission for facilities to be located within DOE-designated National Interest Transmission Corridors.

This Notice of Inquiry does not ask for comment on any of the National Interest Transmission Corridor and related provisions of pending energy legislation. Should those provisions be enacted into law, the Department will issue such notices and take other actions as may be authorized or directed by those provisions.

The Department has completed some preliminary scoping studies to support DOE identification of NIETBs. These include a survey of existing models and tools that could support bottleneck assessment by DOE and a survey of bottlenecks reported by regional transmission operators or independent system operators. These studies are available at: http://www.electricity.doe.gov/​bottlenecks.

Additionally, DOE organized a workshop on July 14, 2004, in Salt Lake City, Utah, immediately following the National Association of Regulatory Utility Commissioners (NARUC) Summer Meeting. The purpose of this workshop was to learn from stakeholders what they believe to be the major issues associated with the designation of NIETBs, and how they believe the process should be designed to maximize its benefits to the users of the grid and to electricity consumers. For proceedings from the workshop, please go to http://www.electricity.doe.gov/​bottlenecks.

To assist DOE in developing a procedure for identifying, designating, and addressing NIETBs, we request comments on the three criteria for designation described above, and the following questions:

1. Are the Electricity Advisory Board's recommended criteria for designation of National Interest Electric Transmission Bottlenecks appropriate and sufficient? If not, what should they be? For example, should DOE also consider disaster recovery, economic development, and the enhancement of the ability to deal with market and system contingencies in designating NIETBs?

2. What should be the role of transmission grid operators, utilities, other market participants, regional entities, States, Federal agencies, Native American tribes and others in the process of identifying, designating, and addressing NIETBs? For example, should a NIETB be designated only if some entity applies to DOE for designation? Should DOE accept applications only from entities from regions that have an extant regional transmission (or resource) plan? Should DOE be able to designate a NIETB even if no entity asks DOE to do so?

3. How might DOE identify bottlenecks in regions where much pertinent data are not available, in contrast to regions where transmission expansion plans have been developed and made public?

4. What actions should DOE undertake to facilitate and monitor progress towards mitigation of designated NIETBs?

In addition to the above, commenters are encouraged to discuss, comment on, and make suggestions on other transmission bottleneck issues that may be relevant to the development of procedures to designate and address NIETBs. To the greatest extent consistent with law, comments submitted pursuant to this Notice of Inquiry will be deemed public and will not be treated as confidential.

Issued in Washington, DC, on July 16, 2004.

James W. Glotfelty,

Director, Office of Electric Transmission and Distribution.