The Obama administration is changing the way wind energy projects in the American Midwest are financed by “spreading the costs” to consumers and businesses in other states, possibly doubling or perhaps tripling energy bills in the region in the coming years, experts are telling WND.
Obama’s team at the Federal Energy Regulatory Commission, which regulates much of the coal, gas, hydroelectric and oil industries, late last month approved a scheme long sought by environmentalists that links windmills and windmill farms to conventional energy transmission grid lines in the nation’s heartland.
FERC Chairman Jon Wellinghoff announced new federal rules that would in essence socialize the cost of transmission lines across the 13 states of the Midwest at a price tag of approximately $20 billion.
“Cost allocation for transmission facilities is one of the most difficult issues facing the energy industry and regulators, whether state or federal,” said Wellinghoff.
Many state governments – like those in economically struggling Michigan – have not subsidized wind energy or other renewable energy projects. Others, like Illinois, have.
But all states have electricity transmission lines, and the new regulation forces the states to carry the costly wind energy, which is priced at two to three times that of coal or gas powered energy.
State governors and legislators will be powerless to stop this. Regional boards appointed by Obama and renewable energy advocates will control future energy policy decisions for the states once the new power lines are built and integrated into existing networks, which are regulated by the states.
One energy policy lawyer, Kevin D. Johnson, managing partner at Stoel Rives LLP in Minneapolis, told WND the new policy “broadly shifts more power to the regional authority for planning and investment.”
The new Obama energy pricing rule creates a new category of transmission lines, “Multi-Value-Project,” which are priced to consider broad “public policy goals,” essentially the increased use of renewable energy.
Today, only half of the states have renewable energy standards, which require that energy producers generate from 10 percent to one-third of electricity from wind, solar and other renewable resources. Generally, ratepayers haven’t been too excited about paying higher costs for electricity.
A report by the California Public Utilities Commission in 2009 found that to achieve the state’s 33 percent renewable energy target by 2020, seven new transmission lines at a cost of $12 billion would be needed.
Across the country, in Massachusetts, electricity from the Cape Wind project will cost two to three times more per kilowatt hour than electricity from coal or natural gas.
According to a study commissioned by utility companies, the Obama plan will force states like Michigan to pay about 20 percent of the $20 billion in new high-voltage transmission lines being built.
Without the ability to essentially socialize the costs, wind energy projects can’t compete with coal, natural gas or nuclear power, experts tell WND.
Environmentalists like the Obama plan and are likening it to President Eisenhower’s creation of the interstate highway system in the 1950s.
“The policy is appropriate,” Tony Olaivar, an energy Specialist at Lanz Inc., based in Champaign, Ill., tells WND. “Since it is the province of federal government to provide all our interstate infrastructures such as the U.S. Postal Service, interstate highways, and national defense. The original admonition can be found in the Constitutional preamble describing the republic as existing to ‘ensure the general welfare.’ Having said this, it would be most fair to spread the costs to the entire country.”
Olaivar added that “infrastructure outlays are done in advance of industry expansion. Once transmission lines are in place, it will become more practical for midwestern states to develop their own renewable energy projects.”
Right now, the energy lines are not yet built.
But the Obama administration has passed this policy in order to finance that construction, and experts view this as a “critical step for deciding how they will be paid for,” Sarah Johnson Phillips, a lawyer in Stoel Rives’ Energy Development Practice Group, tells WND. “Many wind projects in the region have been delayed by transmission constraints, but the new MVP cost allocation mechanism could break the logjam and get these projects moving.”