« The Weeds

Getting power to the people

2021-07-30

Matt is joined by Liza Reed of the Niskanen Center to talk about energy policy, electricity transmission, and how America's complex system of power grids really function.

Resources:

"Transmission Stalled: Siting Challenges for Interregional Transmission" by Liza Reed (April 14)

Summary of the Energy Policy Act of 2005 (EPA)

Guest:

Liza Reed (@LizaBevin), Research Manager, Low Carbon Technology Policy, Niskanen Center

Host:

Matt Yglesias (@mattyglesias), Slowboring.com

Credits:

Erikk Geannikis (@erikk38), Producer

Ness Smith-Savedoff, Engineer

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
People argue about anything and everything right, but when we argue about human rights is more at stake than whose right neutron in a new podcast from University, Chicago CO, host lawyers, Tom Ginsberg, including Floris, have a lot to send the user expertise advising governments across the world and all sorts of human rights issues to why rights matter and what's the matter with rights, the show called entitled legislator that someone subscribe wherever get your part guests. love. What them to another episode of the needs on the box. Media protests network are met. We place yes, my guest today, leisure, Reed is research manager for low carbon technology at the news Cannon Centre, she's the author of a couple, great recent papers that are all
electrical transmission help taught me through this issue. For some peace, I've been writing, I think, is really short of fascinating a little bit under discussed aspect of the energy policy puzzle. So welcome to the show us. Let us start like really basic banal. Like you go in the street, is paralyzed spread they bring electricity to your house, that's electrical transmission. What is, Inter Regional, transmission, you call it, but now I call it one of the most important and interesting parts of the transmission infrastructure. So, there's a lot of different ways that it can be defined, think is one of the challenges of talking about transmission, viz, the precision of definition, but, broadly speaking, Inter Regional transmission is transmission that connects regions, and I don't say that glibly right. I mean this is important, because how we define regions really impacts, what that transmission can do so. The broadest definition of region is an interconnection
So the United States is divided up into three interconnections: the eastern interconnection, the western interconnection and then or caught, which is contained within. access, and what we mean by interconnection is that those are interconnected, theres many separate different utilities and lots of other subsets of electricity. Regulation and management within those interconnections, but they are It is essentially synchronous region right that they are all on the same frequency? Should you ve got your house and You have some utility that you get your electricity from, but that utility connects to sort of other neighbouring utility is, and it up
these three big interconnections I want more. I was in New York City, one time and something broke like in Quebec and our power went out and that's because there's some long chain of connections exactly- and in fact I say- the United States is the eastern and western or caught, but these certain western interconnection connect up into Canada as well, so that, like the largest inter regional gale is things that connect to that. And currently those systems are largely connected through DC connections and pretty small capacity. Size of the systems and primarily back to back those, not even a physical transmitter, Mine is a DC station to another Deasey station that transfers the power between these two grids. Because they aren't on the same a sea frequency while they are in that it's all the same, hurts but they're, not in that they're not synchronous site there, peaks and valleys, don't up so that the biggest regions and then
their smaller regions, within that so the next sort of largest that people tend to talk about our called Arcos or ice as were Archie O, is a region transmission organization, an ice is an independent system operator. You'll want to Gatt energy lawyer on here to discuss the differences, but for our purposes they are the same thing so PJ's em and mid continent I so New England, I so New York, I so cow, I so right. These are examples of this all of these Archie as an ice, as are smaller than and interconnection and quite smaller right. I only defined three interconnections and all of these ideas, and I as those obviously multiple of them, are within these interconnections. So they are. member organisations of utilities, essentially in the Eu
These could be considered Inter regional, depending on the definitions that someone is working with and all of them transmission connecting all of these is important. Transmission across the interconnections is important and valuable when I say I mean the value of lowering costs for increasing resilience and reliability for increasing more low. Carbon energy sources into the grid and then also true across the Artie, oh and I assume boundaries and across states right where these boundaries are also separate from states. Joe listen, my leg, the most basic reason, why these kind of institutions exists. Why I assume at some point in the history of electricity, it was I much simpler than that ride. Like somebody had a facility that will generate electric, City, and they struck the wires in it, served some places, and so you could get electricity from the source, and I think, if I remember my urban history correctly, this is like
people would locate factories near dams because they could get their energy that way, but that's a pretty crude away to power a society. the because, like if anything, breaks the nobody can get electricity. You have all these points of failure, whereas if you can interconnect- so- that more than one electricity source can supply a given customer and vice versa, that just sort of works more more smoothly, economically and sort of functional, exactly one concept does that you're gonna help your neighbour, but your neighbor can also help you another concept: is this you have redundancy where they're not repetitious right there, not just wasteful the same exact thing right. They have a lot of overlap, which functionally makes the whole system more robust and also you can like export as a business ride. Like my Quebec out, age is like nobody lives in Canada, but there's a lot of hygiene.
Lecter Dams in Canada. To the point the Canadians call electricity, hydro and one of the things they do is they sell electricity to America, which requires you to transported over time because we don't want to move to Northern Quebec together. Electricity, that's exactly right! So there's get expanding reasons that you make these connections as well at both of these are true for how we think about, Inter regional transmission, that there's redundancy unreal ability benefits, and there are significant market expanding benefits. The United States has diverse, energy resources and geographically diverse right both diverse in source, but also diverse and geography, and so the more that you can share those an share with our neighbours to the north, that less expensive electricity gets right. The more expanded your markets are essential in terms of expense that both you get yourself from surpluses and also you can respond dynamically to different conditions
so I'm in Texas, now, where we, I guess, are often our own electrical grid, island and some of the problems that they had their the months before release this lack of inter regional capacity. If I understand it correctly, that, like Texas, can't get extra electricity from elsewhere, if they need it, So that is a factor in the February crisis that when there was this demand on the grid, essentially heat demand right where they're called snap had a lot more electricity demand as a result coming from consumers. If you get more electricity into the system, you can serve that Tibet and if you cannot get more electricity or generation. I should say into the system, then you can't serve that demanded, cut it off, so that you can maintain the integrity of the grid itself. Now there were other factors happening in Texas as well as much as I am proud.
Mckenna transmission does not solving all of our problems rate, and there were issues which I think many folks have seen by now, with natural gas pipelines, reason right for gas systems being downright that those were issues as well, but transmission very likely could have. some of that gap and the lesson the severity of those outages, and that's why you did me. That's a sort of basic resilience idea rate is like problems happened right and the question is: do we have any kind away to round them? I want to take a break and talk about why this is particularly important for clean energy, its chief curry was reading. Would you want to hear that you? What about mullah you sit side or Susan Army? What, if you could even discuss the books with these luminaries and hear their thoughts and reactions to these books? Listen has been very little innovation in the book up space, but literati is a new kind of club, you
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literati, I'm showing blocks conversations as a show father about exploring big ideas and hard questions together with bright mines in deep thinkers who also happens to be human beings. The chances of me not crying. I feel like a very low because there is a lot to wrapper minds around these days. A lot of questions to be asked like if we don't use this to open the door to asking save questions than with MR massive opportunity, because if you're going to really talk, you ve gotta be willing to and up somewhere different from where you started as a matter of taste. It's one of my Jane Austen thank this virus like you're using the wrong starting July. Twelve vocs Conversations will be coming to you twice a week, I'll be your host every Monday, I'll be in discussions with like the Reeds Korea, Michael Poland, Bill Mark and asking questions about things like this data. Democracy, media and big tack are changing our brains and the relationship between
spirituality psychedelic on Thursdays, you'll hear more great conversations hosted like Gmail Smith and other colleagues of mine from Vocs India is actually quite life. Changing if you, if you really stick to that, so subscribed to box conversations wherever you get your podcast inter regional transmission is partake. The important for clean energy. There are so many studies that show that it's, the least expensive way to meet our carbon zation goals, but also necessary, but not sufficient. It's one, as transmission is in the category of necessary, but not sufficient, that oh, local solutions are incredibly expensive, because your name getting that redundancy right. If you have to do everything yourself, I mean there's a few dimension to this right. You can't put the sunshine in the back of trucks and move it all right.
right so with fossil fuels. We don't like the coal fired power plants are right next to coal mines necessarily and we shepherd untrained swayed there are these pipelines to move natural gas to gasping power. Plants are, moreover, they exist oil. Obviously, you can fill up your car at different times a station so we move the product the commodity and then we also do transmit the electricity, but a lot of the distance is being done by moving a physical commodity, and you can't do that with renewable energy resource
You have to move the electricity said Inter regional transmission lets. You move that electricity to where you need to move that we could probably get into a semantic debate about whether that is still moving a commodity. It was short. The point: is you not gonna move the wind ray you're, not going to move the went and you're not gonna move the sun like weird the wind as it happens, is like not where people live. Right, often, the highest capacity when disruptive across the great plains tends to be in a sort of more of a role, more flat regions right just off the mountains. The also when the wind happens also really interesting. Right is more in the sort of dusk. Ours is windows higher so nice compliment to solar in that sense, but you're right, we dont for the most part, live near the wind wasted it. That's the other fact right, one is elation centres are not with when we Horses are solar, a little bit of a different match for issue
but also does this intermittences waves of the sun doesn't shine at night. The wind blows hardest at certain times a day and so you were drachma complementarity and so like. How does that plan? So first we can forget offshore wind, because I would hate fur offshore wind advocates to come. They first saying we don't have went near where we live. There is a lot of offshore wind availability, past thirty along load centres by neither cost. But yes, so they are compliments to each other. But there is an intermittent z, issue right and that when the sun is strongest, when the wind is strongest, you can predict, but will you can't guarantee right, and so, while wind and solar a compliment to each other, we also need store. Judge and transmission and other sources like hydro power like nuclear right like natural gas, with carbon capture rate that can ensure the stability
the supply, but essentially were envisioning a very dynamic kind of system. Right where, like tapping the storage, is relatively expensive, and the sun shining. Sometimes the winds going. Sometimes you spinning up the natural gas plants. You know me when you need to, and so it's like a lot of electrons on, go away, which is always how it works, but to a greater extent than we're talking about with conventional back, What right and when you diversifying resources, I mean there's just the reality right of diversifying anything right is the same with for supplying and investment portfolio, is that there is just more moving right, there's more pieces that you are keeping track of absolutely, but one of the benefits of transmission is that once it gets on that line, you are now moving at right. If you can consolidate some of this power onto a high capacity. Transmission line, for example, is consolidated. Some of the
problems in some of those geographies right. Where again, if you're, looking at all local right, all of these problems get multiplied possibly exponentially right. If you think about the problem, solving aspect of it as opposed to transfer when were you, can consolidate and move between regions easily. If you look around like in a year in person like me, if you drive around, it seems like there's a lot of power lines. everywhere. Things seem connected to each other, but what are we talking about physically, like what kinds of things are actually need to increase the capacity to that kind of long range transmission? This is a great question: When we talk about things being connected physically, that's the interconnection right. It is all physically connected, but getting power to move from one patient to another location is actually pretty difficult and there's a couple. A reasons is difficult, but one of those reasons is lost
Rights of, Inter regional transmission is often discussed in envisioned as high power, or it's a typically high voltage, but also high current, as are you looking at four hundred kilowatts DC in a five hundred seven hundred kilowatts ac with hi killer voltage, let you transmit more power with lower losses. Rights aware were all acted now we're all connected, I'm pretty low kill of. Also. If you try to go pretty far, you just run out right. You can't get there from here you just you know. It looks like men. Right. There's like wires around that you put the switch and the lights turn on, but you're saying. Actually you Lose electricity as it runs along as wires, and so, if you like the normal wire, and you just make them go of really really long distance that some kind of work, and, in fact this is why we have an easy system, because, when the war of the current, was ongoing between Edison and Westinghouse and Tesla, they technology didn't exist. To transfer
Jesse voltage to a higher voltage, so Edison's technology could only operate on the voltage that he was generating power, and so we couldn't transmit it far distances whereas altered. In current can take advantage of electric and magnetic fields and through a transformer literally just wrapping wires, you can transform that ac voltage higher, there's the magic the magic is, then the icy transformer at big there, absolutely incredible, and that's how you get it further distances right. You up that voltage, so you can send it farther ok, and so, even though we have these big interconnections, essentially to increase the amount of power that were sending over long distances, we need to build some new kinds of stuff rats, increasing amount and actually just create the ability right without currently have a lot of this high voltage. That sort of giving this point to point ability to transfer power,
So it's not just about capacity. It's about adding that capability as well. Have people seeing this stuff like it looks different from the kind of regular power lines that you would see along a country road. It's like the really big ones, You sometimes see like cutting a swat through landscape somewhere I mean I think we will say that I think that's how people are opposed to it. I mean they are very large. It least they get lot larger and a suitcase if you're, looking at direct current, which is actually where one of the papers that you are referencing that I published is about. You know with direct current you're tower Don't have to be as big with a sea to get the same capacity or towers often have to be for safety reasons. A lot higher and your right of way has to be cleared a lot wider Jane. You visit substantial infrastructure, comparable to interested highways and other times of
things like that, and so what's the issue with building I mean: is it just while people say it looks ugly? I mean with anything it's hard to build in America. Are we really just looking at a cost? not in my back yard, you know- I am all for electricity transmission, but like please, don't screw up my view. This is a great question and I think our understanding of what the barriers and opportunities are for transmission development is continuing to evolve as these conversations get pushed forward. These questions of it NIMBY get brought in to undo and what are all of the pieces that come into play, and I would pass it that it is not just nimby where there's a lot of challenges here, a number of them are regularly. A number of them are, as you said, there's this historic all basis for why we have this system we have now, but
historical basis, is not well structured for, Inter regional transmission right, if you start local and slowly start finding ways to aggregate each one of those levels of aggregation requires discussion of what the economic impacts are. What the business impacts do you need to restructure utilities? You need to restructure relationships, who should be paying surviving? Let's talk about the regulatory landscape is very fragment is actually more fragmented. Then I realized I spent my whole life in the urban northeast. Where we have, I guess, state utility regulators, and then privately owned utilities apparently enlarge to America. Doesnt work like that and there's publicly owned power company is, but it's basically estate function regulating electrical goods. So there's like an inherent problem any time you do anything that crosses state lines, Wednesday, regulators oversee so yeah.
There's a lot of state oversight in certain parts of transmission building and the only reason I emphasise certain parts is that what makes it even more complex, because if states had all control over every right, then. You also have a different conversation that you're having right the when it's a bit vulcanised. If everybody has a different onus of control right, then there's just that. Many more people who are agreeing disagreeing on how to move forward great and what the barriers are right does not may if you hear them, droughts, and so I can talk a little bit about this, it's so their state regulators and in many states one of their roles that stay regulators play is granting permits. And for any transmission line to be built in that state. Whether it is going he paid for by their ratepayers or not whether is going to be built by their utilities, are built by a private company,
anything that is considered transmission must be approved by the state. Regulators is often a public utility commission. Sometimes it's a power citing board. Every state, of course, has something a little different cause, God forbid anything be the same. So that's a huge regulatory aspect of building transmission is getting permission to build a line in the state in each state has rules about what can be built why what the regulators can consider for approving these lives? And this is where, Inter Regional can run into trouble some You can imagine that an inter state line is going to have different benefits for different places along that line and different both categorically But if you are going to put an economic value on them, often different echoes clear as well and so a number of state regulators interpret their assent. Ready that they can only approve lines if the primary
and if it is to the state- and I may not be the case rate, particularly depending on how you're defining benefit and how you're quantifying these things, if one day to the next and the other state as an importer whose primary beneficiary is the state that selling the power. Is it the state that buying the power? And these are pretty complex discussions and one ends up happening often? Is that these lines just don't move forward? Where Joe I mean, if I am a state with a lot of generating potential and a line that lets me export that power elsewhere, that has economic value to the state, obviously, but not necessarily value to the states ratepayers. So if the way you're evaluating it is, does this make electricity cheaper for my constituents? It doesn't really make it cheaper to let you export wind power from South Dakota, but it might be good for South Dakota to be able to develop this industry commercially right to state that importing it. It could be good for the
They or their. It could be good for sustainability goals, but it could be bad for local power producers riding. It depends whose interests you considering an if you need to coordinate across multiple regulators. It's unlikely that you're gonna get a single definition of whose benefits count is going to apply to people on both sides of a transaction that's exactly right, so this is one of the reasons that aggregation exists or the benefits of degradation and as far as Archie as an eye associates when transmission planning happens within an hour to YO or I so region, there's an agreed upon definition of white were counting and this planting rights. But then, if you cross between Arteriosa, says we're back to the same challenge of what are the benefits raid and do we agree on how we are proceeding with his transmissions But then, even if you have this agreement at the Archie, Oh- and I also level at this one level of
in a level that still might not match with state regulators definition, and so this transmission planning process. Might result in a line that court unquote should be built by the state might not agree right with that analysis that that line should be built. Before my current sojourn in Texas, I was in me and all the greatest tat spring transmit yeah you're having this huge political fight, which had been true to give a fair accounting of everyone's point of view on this issue, namely, is bringing canadian electricity to Massachusetts, is sort of like the main point of it. It's gonna be paid for by Massachusetts, but it is physically in me, and so one set of perspectives on it is. This is amazing. We get this big construction project, lots of jobs, all these good stuff and the taxpayers in Massachusetts are paying for it. So, like that's all,
Another point of view is air. They put in this big ugly thing through the forest and when even the ones using the electricity at another. a view as their bills? this and we're not even the ones who are selling the electricity right, which I think is simple, and to raise rate is that often these discussions get talked about like there in these in there just landowner and community interest. But they are not, and there are incorrect utility and generator interests as well? So you have the oil companies is weird alliance with the forest lover is essentially to say they don't want, as it looks like it's gonna get built in the end, but there has been a lot of ill will. taken a lot of time and it brings home. Did there isn't like an unequivocal canonical process whereby you would do something like that swayed by gives a huge set of best spoke
political fights- this is one relatively small state in which actually, both the democratic governor and her republican predecessor agreed on food bring this project and it was still like a death match to go. Do it and fairly innocuous too, I mean we're talking about this ignoble lives in north Western, and unlike its clean energy like it's all super feel good and none the less like it didn't make me think you would build a lot of comparable sergeant, said yeah, it's an end thing challenge and macro and micro tend to mean something specific and transmission, but I mean it more in the broad sense that the macro concepts of transmission, I think,
very easy to understand and get behind, but then the micro of an individual project. If you can't move any of them through, then you can get into the macro benefits, and this process that you mentioned is, I think, a huge problem right that there isn't a clear even to clear what is even three clear ways: rate in every subset of these regions, that we have to find a different process that you ve got to figure out. As val upper and navigate as the developer, but also figure out a navigators, a community member as well? Let's take a break here for a second, I wont connect one of these points of view, a few weeks ago, you were telling me offline about an effort to kind of fixed, as that was made way back in, and he was two thousand five energy bill. So what was that? And why didn't work so that Energy policy ACT of two thousand and five establishments a new function, a new federal authority for
transmission lines citing and is a jewel authority between the Department of Energy and the Federal Energy Regulatory Commission, where the Department of Energy is task to do a study every three years of specifically economic congestion right so where there's a mark opportunity here. Wright brothers to high prices and identify areas where there is a lack trick: economic congestion as national interest, electric transmission Carter's or an I e t cease after the Department of Energy declares these, and I e t sees the federal Energy Regulatory Commission now has backstop citing authority in those corridors. What is backs that mean? So there is still in this state process that we ve been discussed, This is the first process right so developer with other transmission. Nine would go to the state citing commissions of public utility missions, assigning boards and propose their line and, if
airline falls in the national interest Electric Transmission Carter and isn't approved by the states. Then federal Energy Regulatory Commission has this backstop authority to essential. over rural right. You consider it themselves and say no. Actually, this line is important because it is in the national interest. Rates of the attempt here is to recognise that states are off. Constrained, to only considering the state interest, and so the federal government consider in the national interest and if a line is a national interest than the federal government had said she you say I don't know I mean it's like. We need this power, in southern New England, urban centres at sire, environmental, go Rules are diplomacy with Canada like were given at the thumbs up and you're little main concerns are not going to be allowed to trumped up and that's how we do things I mean sometimes in America right. It's a federal system, men
aids have a lot of autonomy, but we also decide certain things are national interest, and so that would be the vision. It sounds great, but I assume we wouldn't be doing this episode of the two thousand five law had solved the problem, so I intentionally misspoke. because what I said was if the states deny it, but that is actually not what the law specifically says or how the law has been interpreted, and hence the rep during discussion does not commit. The congressional intent was that it should be this denial ready. The states has no, the federal government can override it, but what the Energy ACT language says is delays. More than a year, the court interpretation of that is that it's a delay so if a state says no, that is determination, and so the federal gum cannot override and no it can only override and no decision. So in theory, this goods These decisions, but it was
just as no than this line can't get belt, which is exactly what has happened, and this is where textual lists and judiciary have may be operated at odds with. I don't know good sense. I think it's pretty clear. I mean you, don't you can have a view about how judges ought to do things and how the law ought to work, but like the goal here was to create a system where the federal government would do redemptions and we will build more inter regional transmission and the insistence on construing the words that narrowly. That strictly has been that we have not in fact, tat fellow preemption, and we haven't had this kind of express track for national interests projects. As now. I guess what the sure I would say, is wages pass another war than in the real world Congress you know like wants. It approved, passes a law at a given subject, but we are now hoping for some new, let
isolation. So that's a great and now and I've tapered over some of the history of- and I e t season folks are welcome to follow up with me and many others on more details of that. issues with the early implementation of them. But the conclusion is right: we aren't getting at this, isn't functional to get these stay or inter regional or really any these national interests lines built there legislation in discussion that could address some of these issues and one of those pieces. The legislation was recently just at the Energy National resources sent a committee, and that is about changing this backstop authority. Great. So there's one approach that says: let's just cortical fix it as you, right if there's a language issue with the lawlessness update that languages, so it says in fact it is denied or delay or has it. That is one of the proposals and in fact that is what came out, send it in our. Was this language, adding this denial or delay and adding other considerations right that it isn't just economic
question is in the national interest, but there are lots of things that are in the national interest when it comes to electricity transmission, and there are lots of things that the department energy should be allowed to consider and in ways that they should approach it and your party, that that is the difference between a twenty twenty one view of our energy needs and day. I'm like Dick Cheney, Energy bill view of our energy needs. We were talking before about you know, meeting deep decriminalization gulls requires, inter regional transmission of ways to do it in a cost effective way, and so we want those ecological considerations to also be on the table is the point: is it's the most economically practical way to achieve the decolonization goals, but you need those corporates to be on the table as part of the analysis, otherwise
it's not cheaper than not building the transmission lines, so you gotta get that in their it's, not gonna work by its economic is environmental, its resilience, its reliability. There's an energy security argument to be made here too, there is a whole technology argument. I mean some. They will have to talk about eighty verses, Deasey I've only barely teased it. This is tat, liver, Edison early twentieth, century inventor, grudge match back. Then it was the fact that it was, but we ve got a new grudge match right. We ve got new technology. That gives a lot more kind of operating they produce a very new technology. Twenty five years old, which is very new electricity work. That's too much for me: ok, so rights, but I did want to make sure that I mentioned that this updating backstop is also not the only solution. So in that same hearing-
Senator hidden Labour, introduced an amendment which he then withdrew prior to vote, but that amendment looks at this completely differently, and this is what you have been talking about in a previous newsletter rate. Is this bright line approach That says one stead of doing a study and then declare, these corridors and then waiting a year are there some things that our job, the national Interests period right, our high capacity interstate lines employee in the national interest rate, and so should that be a federal authority, so that another piece in discussion and then there's a whole other aspect of the Energy policy ACT of two thousand and five. That also allows the federal government to enter into private public partnership with the developed which would in theory, then give the federal government citing authority, because it is now considered a federal line by the financing background of show beyond this kind of regulatory element. How do you actually get the land get the right away to build some, but really big, straight powerless?
How does that work? For the most part you weren't, negotiating with landowners, I mean- and I would refer to Develop- those who have actually done this process by that's primarily. What's the preferred path is right so that when the site, and permitting comes up. That gives you the opportunity to avoid It goes through eminent domain. If you can come to a private agreement with a private landowner or with the state where his lands are going through a lot of this sort of goes on. I guess failing rural areas where people own eye big stretches of land, otherwise it wouldn't be like soup practical. So what are the prospects of this right is this, the kind of thing that has some major interest group position? You know like big data The commission is trying to stymie change here, or is it like? This is a kind of technical question and it's hard to get things on the congressional agenda. I mean there's a lot of interest
issues, sort of at play here with all of the aspects of transmission. There's a couple of challenges to say but one of the opponents is often state regulators because their perspective, is that this is their authority, Raven and so to take some of that authority is they can get their movement. Have nobody likes that look up. I didn't want to give it up, they think they're doing a great job and they should lose it, which is always an issue in life. Before that you go, I think we should talk a little bit about finding and say something like that, because I assume fairly expensive to build a giant electrical line across agents.
And I assume there some country somewhere where there's like a single national utility and then it would go without saying that any kind of project is part of that, but we're talking about sending power from one set of utilities to another set of utility is so the sash willing and raised the question of what's the business model for that right. Who pays? I think you can probably get one of those countries that has a single state. It might be called the state grid for cover the entire state of an entire country where they build a whole lot of transmission. In fact, whether its chair, FIFA giant, ok, don't make sense. China, big country, one big, obviously, a lot of countries of small changes so it can be done, but that seems unlikely as a solution for the United States, and I wouldn't then say that that is anyone's gall behind a go at all will explicitly say that that is no.
So how do you make the paying work in a federated system? These are great questions that it's hard and I don't say that lightly at this is currently Nothing in front of the Federal Energy Regulatory Commission to talk about right fur is looking at cost allocation. They put out orders before about how utilities ship together and determine com allocation and who should pay, but it's not a sort of clear, explicit formula right. that everyone is agreeing on and moving forward with an that's exactly where these things come into challenges. If you are building it among utilities, another option is called merchant transmission, where you have private investors, building lines and then They can essentially finances lines through selling that power in the market.
right either in an energy market or through power, purchased agreements or some other different elaborate financial mechanisms should not would like be my business just like I could own boats and my businesses, Pay me to ship starve. I could own power line and my whole business is a utility wants to tap into the power that, on the other end, so they pay me and I find that on that basis, that's his accurate, but these are still hard to do. There are other barriers for a merchant line and how they can get connected into this system again. To cost allocation is a fascinating Chris. I don't know that we have time to talk about postage stamp. Verses license plate rates, but I We learned of these two different models of how we think about paying. Let's teach people some jargon, so a postage stamp rate is a universal right. That sort of like a flat same rate right everybody paying the postage stamp break a license. Plate rate is a regional right. I think those were the metaphor comes
right, as is the regional boundary of a license plate versus the. Then why'd boundary of approaches where the license plate rate is where you pay based on our part. portion of your use in that region, and that's why you have to bound it because figuring out Everybody's fraction of a national energy grid uses is impractical and intractable, but if you create these license plate regions rate and then charge people right, then you're. cost allocation is some proportion based on how much of your use is the total use? If any advocates anyone is out there. I've just like begging. You call this. A national verses regional system is going to his help had cleared up you guessed. It is true that the Post office,
The national constituency where's the dm these serves as state based ones, but I dont think that is the thing that comes to mind would be wondering what what's the difference between a postage stamp and licence. So please, please everybody. There is a lot of the details to figure out I mean I do think that sort of theme here right- is that, to the extent that you can establish a process that is clear that helps alot ready mean either There are reasonable room for disagreement as to exactly what the rules should be it just much easier. If you like pick one right like who do you go to for the permitting? What is the standard they apply? How does the rate setting were great? Then you can look at it as a business version. You can see what pencils out and what doesn't, whereas now we have a system that is fraught with uncertainty, which
I just political people, don't always appreciate how bad it is for a business model to have it be just like not clear what the rules are that really drives costs up of financing anything at all verses. stem where you can predict reasonably well what will and won't get a green light. Yet that's it The rights in one of the barriers to inter regional transmission is that in many ways the process is clear for entering. transmission, which is that you can't build it. So you don't builder and sort of serious there you get so ok. Thank you. So much for your time here Reed scanner centred couple great stuff up on the website, name and understand it more coming out, thanks as always to sponsors actual do sir. To knock is and always will be
on Tuesday.
Transcript generated on 2021-08-11.