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Federal energy regulators said this week that builders of proposed transmission lines to carry wind energy east from Iowa can pass costs along to customers in other states.
The ruling was handed down by the Federal Energy Regulatory Commission and covers the 13-state Midwest Independent Systems Operators, which oversees the electricity transmission grid from the Dakotas to the Ohio-Pennsylvania border.
“If we hadn’t gotten this ruling from FERC, the transmission proposals probably would be dead,” said Dean Crist, vice president of regulatory affairs for MidAmerican Energy of Des Moines.
MidAmerican, along with Exelon Energy and American Electric Power, recently completed initial plans for a line that would carry electricity from Iowa wind farms eastward through Illinois and on to the Indiana-Ohio border.
ITC Holdings of Michigan, which has proposed a transmission line from Iowa and the Upper Midwest to the eastern United States, also praised the ruling.
Gregory Ioanidis, ITC vice president, said, “We are encouraged that the FERC continues to recognize the need for robust planning and reasonable cost allocation.”
But not everybody is keen to help pay the cost – estimated to start at $16 billion – to build transmission for Iowa-generated wind energy.
Eastern utilities and state regulators, eager to develop their own wind resources, have balked at what they call “socialized” allocation of the costs for the new transmission lines needed to move surplus wind energy from Iowa. Iowa’s 3,600 megawatts of wind energy capacity trails only Texas in the United States.
“We’re still studying the ruling, but we have concerns,” said Sue Sheridan, president of the Washington, D.C.-based Coalition for Fair Transmission, which represents utilities that oppose charging its customers for the cost of transmitting wind electricity generated in the Midwest.
Most of the opposition to cost-sharing of Iowa wind has come from the East Coast. But Michigan also has concerns.
“Michigan will be sending hundreds of millions of dollars annually outside the state to fund transmission projects which not only provide little value to the state but will actually harm our ability to develop our own renewable energy market,” said Michigan utility consultant Steve Transeth.
The regulatory commission’s ruling this week was one of the first major issues that has come before new board member John Norris, who chaired the Iowa Utilities Board before President Barack Obama named him to the board.
Norris said in a statement that “this order establishes a new transmission planning and cost allocation mechanism where it is needed most – to support large-scale transmission projects needed to meet regional public policy requirements, as well as large projects that provide broad reliability and economic benefits in the region.”
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