“Transmission Siting and The Federal Landscape” Remarks of James J. Hoecker Husch Blackwell Sanders Former Chairman of the FERC Public Participation In Transmission Siting January 26, 2010 Orlando, FL

2  Aging and deteriorating infrastructure  More dispersed resources of generation  Wholesale competition among generators  Complex bulk power markets  Arrival of the digital economy  Electricity consumption doubled  Shifts of public policy (e.g., RPS, efficiency, demand response)  NERC: Transmission additions will triple to 3100 miles/year On the books now: 90 planned projects each greater than $100million Challenges to The Transmission System

3  Siting – Location, Location...and Need  States consider “need” for facilities when siting them  Cost allocation – Who Pays? Who Benefits?  States are influenced by the rate impacts on citizens when considering need; FERC often defers to states and stakeholders need; FERC often defers to states and stakeholders  Planning – Which Projects Are Needed?  Stakeholders & regional planners determine whether projects satisfy reliability, economic, environmental, or public policy needs Transmission Regulation – It Boils Down to Need

4 Challenges to New Transmission Construction  “Not in my backyard” or “not in my term of office” or “hands off my cheap energy”  Conflicts between local, state and regional interests  Inconsistent state and local regulation  Uncoordinated Environmental reviews  Federal land authorization, esp. in the West  Lack of timing coordination among siting entities  Varying GHG restrictions and RPS’s  Difficulty right-sizing for short and long-term needs  Uncoordinated siting between lines and generators  Timing of “need” determinations

5 “The uncoordinated participation of this wide spectrum of interested parties, and the nature of EHV transmission crossing jurisdictional boundaries, complicates and impedes the planning, approval, and permitting processes. This can further delay the already lengthy siting process, add to the cost of transmission projects, and increase the financial risk to a transmission developer.” Stakeholder Participation: Important but Often Messy DOE Electric Advisory Committee Keeping the Lights On in a New World” (2009) (p.49)

6  Section 216, Federal Power Act (Sec.1221, EPAct 2005) EPAct 2005)  National Interest Electric Transmission Corridor  Limited FERC backstop authority within NIETCs  FERC’s Aggressive Interpretation of Its Authority  Regional State Compacts  Enter the Fourth Circuit - Piedmont Environmental Council v. FERC  Timely state action is dispositive  Supreme Court has refused review Status of Federal Siting

7 “The result of the Fourth Circuit decision is nullification of the comprehensive scheme erected by Congress with respect to U.S. transmission policy. The goal of Congress was to strengthen the interstate grid to support competitive markets, assure reliability, and promote development of renewable energy capacity. Congress recognized that development of larger interstate transmission projects is necessary to accomplish those policy goals, and also appreciated that state and local siting is poorly suited for development of such projects…. [T]he Fourth Circuit has interpreted Congress’ intent as maintaining each state’s veto authority over new interstate transmission facilities no matter how vital to the national interest.” Amicus Brief By Four Former FERC Chairmen Piedmont Environmental Council v. FERC

8  Pending transmission legislation –  S.1462 American Clean Energy Leadership Act  HR 2454 American Clean Energy & Security Act  Administration initiatives – Interagency MOU on federal lands; more?  New Siting Approaches?  Pre-emptive federal backstop  Natural gas pipeline model; federal siting for high priority lines  Interstate siting compacts  Adoption of federal, state and local “best practices” for  Valuing their viewshed  Protecting Property values  Land conservation  Multi-agency permitting  Combine siting with regional or interconnection-wide planning processes Now What?

9 James J. Hoecker, JD, Ph.D Husch Blackwell Sanders LLP Hoecker Energy Law & Policy PLLC James J. Hoecker, JD, Ph.D Husch Blackwell Sanders LLP Hoecker Energy Law & Policy PLLC