Socializing the Cost of ‘Green’ Power Lines

by Greg Pollowitz

The editors of the WSJ write today:

How would you like to pay higher utility bills to finance expensive electricity from solar and wind power, which you would never use? That’s the issue now before the Federal Energy Regulatory Commission (FERC), and it deserves more public and political scrutiny before it becomes a reality.

FERC has a draft rule that could effectively socialize the costs of paying for multi-billion dollar transmission lines to connect remote wind and solar projects to the nation’s electric power grid. If FERC rules in favor of Big Wind and Big Solar, the new policy would add billions of dollars onto the utility bills of residents of at least a dozen states — including California, Michigan, Oregon and New York — that will receive little or no benefit from the new power lines.

Transmission lines connect coal, natural gas and nuclear plants to the electric grid so that power can be delivered to homes and businesses. The costs of building this infrastructure, hooking up to the national electric grid and transporting electricity to the end users has traditionally been paid by the industries and passed on to rate payers. This long-standing user-pays policy would be replaced with a policy of everyone pays under FERC’s plan.

As FERC chairman Jon Wellinghoff has put it: “This is a country where transmission lines have traditionally been built by the incumbents who serve that area; the question is whether we should continue that policy in the future.” He told Congress that we should steer away from pricing that would “calculate the precise monetary benefits expected to accrue from a new transmission facility.” But that’s exactly what investors try to do in assessing the economic viability of any new project.

The big winners from socializing transmission costs would be wind and solar projects that tend to be in remote areas, like the desert or offshore. In many cases, thousands of miles of new transmission lines would have to be built to get the power to the end user. Google recently announced it will be a major investor in a $5 billion wind farm off the coasts of New Jersey, Delaware and Virginia that will require hundreds of miles of underwater transmission lines. No one is saying who will pay for those transmission costs, but it’s a safe guess the investors are betting that FERC will decide to socialize them.

The rest here.

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