Academic journal article Environmental Law

Anticompetitive Transmission Development and the Risks for Decarbonization

Academic journal article Environmental Law

Anticompetitive Transmission Development and the Risks for Decarbonization

Article excerpt

  I. INTRODUCTION                                                   886  II. THE TRANSITION TO A DYNAMIC AND DECARBONIZED ENERGY SYSTEM     892      A. Zero-Carbon Energy                                          893      B. Multi-Scalar, Dynamic Energy Systems                        896 III. THE LONG AND WINDING ROAD TOWARDS COMPETITIVE ENERGY           897      A. Natural Monopoly Regulation                                 898      B. Competitive Generation: Progress and Backlash               900      C. Open Transmission: A Slow Work in Progress                  903         1. Open-Access Transmission Tariffs and Independent         905            Transmission Operators         2. Interconnection Orders                                   907            a. Orders Designed to Improve Transmission Access for    908               Large Generators: Order Nos. 2003 and 845                i. Order No. 2003                                    908               ii. Order No. 845                                     910         3. Transmission Planning and the Right of First Refusal     911            Under Order No. 1000         4. The Right-of-First Refusal in the Courts                 912  IV. THE DORMANT COMMERCE CLAUSE AND COMPETITIVE TRANSMISSION       915      DEVELOPMENT      A. The Dormant Commerce Clause and the "Public Utility"        915         Exception         1. The Dormant Commerce Clause Tests                        916         2. The "Public Utilities Exception"                         918      B. LSP Transmission Holdings, LLC v. Lange                     921   V. IMPLICATIONS OF LSP FOR COMPETITIVE TRANSMISSION DEVELOPMENT,  926      ACCESS, AND THE ENERGY TRANSITION  VI. CONCLUSION                                                     929 

I. INTRODUCTION

The U.S. electricity sector is undergoing a profound transformation. In 2019, for the first time, power generation from renewable resources surpassed the amount of electricity produced from coal (1)--a remarkable feat, considering coal had comprised nearly fifty percent of U.S. electricity generation only a decade earlier (2)--and 2019 economic analyses showed that most renewables had become cost-competitive with, if not significantly cheaper than, coal, nuclear, and natural gas. (3) Technological innovations in batteries, storage, metering, and grid operations have opened the electricity system to new participants and spurred a re-envisioning of the electricity grid of the future. (4) More and more, experts have begun to envision an electricity system that is highly dynamic, multi-scalar, and powered primarily by renewable resources. (5) Realizing this vision will enable the United States to decarbonize the broader energy system, as studies show that a dynamic zero-carbon electricity system can power the transportation and heating sectors. (6) The energy system of the future will thus integrate rooftop solar, distributed storage, smart meters, electric vehicles, heat pumps, interactive appliances, and a host of other new assets of various sizes. (7) The future energy system will also embrace new market designs, so that demand response, energy efficiency, storage, and other grid services are compensated equivalently to power production, and so that various producers, consumers, and "prosumers" can become market players. (8) Even as these changes take place, however, the United States will continue to depend upon large facilities--including wind farms, utility-scale solar, and hydroelectric plants--delivering electricity along high-voltage transmission lines. (9)

For nearly a century, economic theory and regulatory policy treated electricity as a natural monopoly incapable of sustaining competition. (10) Over time, however, generation and retail electricity services became increasingly competitive, and legal structures changed to promote diverse ownership and competitive energy markets. (11) And yet, conventional wisdom treated the "wires" components of the electricity system as inherently monopolistic. …

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