A gust of progress

Apr 30th 2009 | CHICAGO
From The Economist print edition

FRANKLIN ROOSEVELT helped bring electricity beyond America’s cities to its most distant farms. Barack Obama hopes the countryside will return the favour. Much of this challenge rests in the gusty upper Midwest. In recent years Interstates 29 and 80, highways of America’s heartland, have teemed with lorries bringing wind blades to new plants. Efforts to build transmission have moved more slowly. There are 300,000 megawatts of proposed wind projects waiting to connect to the electricity grid, says the American Wind Energy Association. Of these, 70,000 megawatts are in the upper Midwest.

Now action is at last replacing talk. Firms are proposing ambitious transmission lines across the plains. The region’s governors and regulators are mulling ways to help them. The federal government is playing its part. In February the stimulus package allotted $11 billion to modernise the grid. Since then members of Congress have proposed an array of bills to develop transmission. Jeff Bingaman, chairman of the Senate energy committee, intends to start marking up transmission plans next week—though debate over other parts of the energy bill may delay progress.

America’s grid is complex: 3,000 utilities, 500 transmission owners and 164,000 miles (264,000km) of high-voltage transmission lines are stretched across three "interconnections" in the east, west and Texas. If wind is to generate 20% of electricity by 2030, as in one scenario from the Department of Energy, about $60 billion must be spent on new transmission. Just as important, regulations must change.

Historically, electricity has been generated close to consumers. Regulations are ill-suited for transmission across state borders. Rules for allocating a project’s costs burden local ratepayers rather than distant beneficiaries. One state’s regulators can scuttle a regional plan. The process for seeking approval from federal agencies is so disjointed and slow that pushing a line over a national park or river might as well be crossing the Styx.

American Electric Power (AEP) built a transmission line from West Virginia to Virginia in two years. The approval process had taken 14. "There are lots of people with authority to make pieces of the decision," explains Susan Tomasky, president of AEP Transmission, "and no single entity that can say ‘yes’ or ‘no’." Despite recent changes, the Federal Energy Regulatory Commission (FERC) has limited power to make projects go faster.

Fortunately, officials have started to address these problems. In September 2008 the governors of the Dakotas, Iowa, Minnesota and Wisconsin formed an alliance to co-operate on regional planning. Midwest ISO, which supervises 94,000 miles of high-voltage lines, is considering ways to spread the costs of new transmission beyond local ratepayers and taking part in preparing a broad plan for the eastern interconnection.

Federal legislation will help too. Harry Reid, the Senate’s Democratic leader, Mr Bingaman and Byron Dorgan of North Dakota have offered three of the most prominent proposals. Each would require comprehensive plans for the interconnections, and would, to varying degrees, expand FERC’s authority to locate big new projects and allocate their costs.

Initiatives like this would help to encourage firms already eager to invest. Two of the most ambitious plans belong to AEP and to ITC Holdings, which each want to build lines from the upper Midwest to cities farther east. In April FERC offered ITC’s "Green Power Express" initial incentives to push the project along.

However, even quick progress in the world of transmission is slow. If all goes according to schedule—an unlikely thought— the Green Power Express would still not be in service until 2020. Fights in Washington are inevitable. FERC’s role in siting projects is controversial. More important, this debate may be bogged down by broader ones, such as the fight over a mandate to make a greater share of electricity from renewable sources. Meanwhile the winds whistle across the plains.