The Big Green Transmission Coup

Schumer and FERC end-run Congress on permitting reform and socialize energy costs

WSJ editorial. 

"Senate Majority Leader Chuck Schumer must have uncorked some vintage champagne last week after the Federal Energy Regulatory Commission finalized a 1,363-page transmission rule to accelerate the green-energy buildout. Now Democrats can bypass Congress on permitting reform.

FERC’s actions are “what we need to see the clean energy revolution we catalyzed with the Inflation Reduction Act come to fruition,” Mr. Schumer crowed. What he means is that renewable developers will now capitalize on more taxpayer largesse while states and businesses socialize the costs of their climate policies.

***

Most Americans don’t know what FERC is, and in a normal world they shouldn’t need to. But as energy policy has become politicized, Democrats are using FERC to drive policy they can’t pass in Congress. The goal is to transform the U.S. electrical grid to accommodate solar and wind power while rolling over states that object.

The 1935 Federal Power Act included a federalist compromise that maintained state authority over transmission-line permitting while giving FERC authority to apportion costs of regional grid upgrades. Congress recognized that power transmission affects state-regulated utilities, but also that state disputes over costs may require federal intervention.

This balance has worked for nearly a century, but the left’s climate goals threaten reliable energy. Renewables are intermittent and far from population centers, which increases transmission costs. The transmission share of wholesale power costs has tripled over the last decade on the PJM grid in the eastern U.S.

Many states don’t want to pay for power they don’t need. Heavily subsidized renewable power can also undercut fossil-fuel and nuclear plants, which provide 24-hour baseload power. Some states are subsidizing nuclear plants to stay open to ensure reliable power.

As Mr. Schumer suggests, tens of thousands of miles of new transmission are needed to reach the climate lobby’s net-zero nirvana. But this won’t be quick or cheap. Princeton researchers in 2021 estimated the grid buildout will cost $3.5 trillion by 2050—and inflation has further run up costs for everything from copper wire to transformers.

Democrats want to expedite construction of renewables and transmission, but little else. Sen. Joe Manchin’s small-beer permitting reform bill in 2022 would have let FERC overrule states and apportion transmission costs based on ill-defined benefits, including CO2 emission reductions. After Republicans balked, Mr. Schumer ordered FERC to take over.

FERC’s new rule requires regional grid operators to develop a transmission plan to meet state and corporate climate goals over the next 20 years. This will free liberal state lawmakers from having to consider the effects of their climate policies on grid reliability.

FERC’s rule will effectively subsidize “socially responsible” corporations, as Republican commissioner Mark Christie noted in his dissent. Google will no longer have to worry about how to move wind power in one area to support its data centers in another. That will be the job of grid operators.

It gets worse. Grid operators will also socialize transmission costs across states in their region. FERC currently apportions transmission costs based on reliability and economic benefits. So if New Jersey residents mostly benefit from lower-cost and more reliable power produced by a Pennsylvania natural gas plant, they will pay most of the transmission costs.

Under the FERC rule, all states will be considered beneficiaries from a new transmission line that increases renewable generation because this will supposedly reduce the likelihood of blackouts and electric prices—never mind that solar and wind must be backed up at exorbitant cost. This means Pennsylvanians will subsidize New Jersey’s anti-fossil fuels policies.

This will give Democratic-leaning states an incentive to ratchet up their renewable mandates because grid operators will be responsible for achieving them. The costs of their policies will be shifted to GOP-run states.

***

Mr. Schumer and Democrats are cheering FERC because they believe they will also no longer have to compromise with Republicans on permitting reform to advance their climate goals. But FERC’s rules don’t override the National Environmental Policy Act, which means states and third parties can still sue to block transmission lines.

The U.S. electrical grid is already wobbling under the strain of growing renewable production. By favoring transmission of renewables over fossil fuels, FERC’s rules will reduce electric reliability and increase the cost. Who will benefit? Not Joe the Plumber in Ohio, but Gavin Newsom, Google and President Biden’s donors in the climate lobby."