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Federal court backs key electric grid policy

A federal court on Friday upheld a key rule designed to spur investment in expensive electric grid infrastructure that could connect more people to renewable energy and other power sources.

A three-member panel for the U.S. Court of Appeals for the District of Columbia Circuit unanimously sided with the Federal Energy Regulatory Commission, rejecting claims from petitioners that the federal grid regulator lacked authority to implement its regulation, known as Order 1000.

The rule allows greater regional coordination to plan large transmission projects – the power lines that move large loads of power from, say, a wind farm, to substations closer to dense population centers – and makes it easier to spread the cost of such projects among more customers.

The ruling was a victory for environmental groups and renewable energy advocates, who said keeping Order 1000 was key for spurring transmission investment and allowing power suppliers more opportunities to sell into electricity markets and that it could lead to more clean-energy projects that exist off the grid.

“As the backbone of our energy infrastructure, the transmission system is designed to supply vital electricity in the most efficient way possible. FERC 1000 is the key to unlocking efficiencies that have the potential to incorporate more clean energy solutions in the planning process, which will result in low-cost electricity and clean air,” said John Finnigan, lead counsel with the Environmental Defense Fund.

Traditionally, utilities plan transmission projects by receiving approval from state regulators to pass the cost onto consumers. The logic is that customers would have to pay for the improvement only if they benefit from it. But costs were often prohibitive and desired sources of power were beyond state lines, so upgrades were scarce.

Opponents had taken FERC to task about the cost allocation provisions, saying the order tramples on state authority to plan transmission projects and that it could dump costs on consumers who might not directly benefit from the projects. They also worried the rule would cause confusion and a shortage of transmission investment, potentially threatening electric grid reliability.

The appellate court found those arguments bogus.

“Petitioners raise three challenges to the orders’ requirement that regions establish procedures that account for the impact federal, state, and local laws and regulations (i.e., public policy requirements) will have on transmission systems. None is persuasive,” the court said.