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Wellinghoff Weighs In

FERC chairman has his eye on markets, cyber security, and rooftop PV.

With enough solar installation on the customer side of the meter, the need for new long-haul transmission would recede.

In fact, Wellinghoff went so far as to suggest that the emergence of cheap rooftop solar PV might end up as the deciding factor for the biggest money question of all -- that being how much new electric transmission the country will need to integrate all the renewable energy needed to meet current and perhaps future laws mandating renewable energy portfolio standards.

On one side, as he noted, major and costly new grid projects are being planned to help deliver to market all the potential central-station wind power available from the Great Plains, from the Dakotas southward to Texas. On the other hand, however, he acknowledged that DG, and especially rooftop solar, is now a major player, with PV panel costs falling fast, and that with enough solar installation on the customer side of the meter, the need for new long-haul transmission would recede.

“We need to build only the transmission that we need,” the chairman said.

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No Design in Mind
With the deadline looming in October for electric industry players to comply with FERC Order 1000, Wellinghoff quite reasonably has his eye focused on regional transmission planning. In particular, the chairman noted how a federally sanctioned right of first refusal (ROFR, which Order 1000 purports largely to eliminate), could have far-ranging effects, impacting technological innovation, for example.

“One area where we’re going to get some pushback is rights of first refusal, as some areas, he noted, “have different ideas on that.”

FERC rules should reward industry innovation, and that Order 1000 was designed in part to do just that.

As an example, Wellinghoff cited FERC’s recent order (Docket EL12-69, July 19, 2012, 140 FERC ¶61,054) in which Primary Power had invested $5 million developing a way to use static VAR compensators to alleviate grid congestion, but then “got nothing for it,” as PJM eventually had selected two incumbent utilities as better situated to build the project. And in the run-up to Order 1000, many in the industry continued to insist that for new grid projects, incumbent utilities should retain a ROFR -- the option to exercise for themselves the right to build the project. Wellinghoff acknowledged that a ban on federal ROFRs wouldn’t necessarily have saved Primary Power in the particular case, but made the point anyway that FERC rules should reward industry innovation, and that Order 1000 was designed in part to do just that.

Regional capacity markets also have proved controversial, as the chairman acknowledged, but warned the industry not to expect the commission to enter the fray via any new rulemaking effort. “The commission is interested in the issue,” said Wellinghoff, “but does not have an ideal rule in mind.”

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Interestingly, Wellinghoff conceded that a number of leading economists had advised him against capacity markets, favoring instead an energy-only market design, where prices are allowed to rise high enough to recover all expenses through the energy commodity price. But he added: “I believe this … Texas is realizing