Academic journal article Northwestern Journal of Law and Social Policy

Traditional Public Utility Law and the Demise of a Merchant Transmission Developer

Academic journal article Northwestern Journal of Law and Social Policy

Traditional Public Utility Law and the Demise of a Merchant Transmission Developer

Article excerpt

Introduction

Due to advances in technology and the coinciding reduction in the cost of renewable energy sources, the United States electric power system is currently undergoing dramatic changes.1 The electricity grid is becoming less centralized as more distributed resources, such as wind and solar energy, become available to generate power.2 Concurrently, a larger number of private developers are looking to enter the electricity market in order to bring more energy sources onto the grid.3 These changes to the electricity grid are challenging incumbent utilities and the current regulatory construct created under traditional public utility law.4 As renewable energy resources continue to develop in a non-centralized manner, the jurisdictional lines between the Federal Energy Regulatory Commission and state public utility commissions continue to blur and overlap.5 Renewable energy resources are unconventional in how they produce electricity, which exacerbates the application of public utility law to their development. Unlike most fossil fuels, which are burned in a small number of large power plants, renewable energy sources are dispersed in a wide variety of areas and in much larger numbers.6

In particular, wind energy continues to grow nationwide thanks to the federal production tax credit and state renewable portfolio standards.7 In 2017, wind energy became the largest source of renewable energy capacity in the United States.8 The availability of additional wind resources requires the construction of new transmission lines to deliver the wind energy to urban areas with high demand for electricity. Unfortunately, wind energy is being curtailed due to "an inability to transmit power from where it is generated to where it is needed, [which] could degrade the potential for wind power to reduce fuel costs and emissions."9 Historically, transmission line development was controlled by public utilities, but now independent or merchant transmission developers are increasingly entering the market to build new transmission facilities.10 Unfortunately, these new entrants into the electricity market are being treated similarly to the traditional vertically integrated utilities that were established decades ago.11 As this paper will demonstrate, the analogous treatment of two very different types of energy providers creates barriers to clean energy development.12 While clean energy development has made great strides in recent years, contemporary federalism issues and the application of traditional public utility law to private developers of interstate transmission lines continue to limit the expansion of clean energy in the United States.

In order to highlight the barriers confronting transmission line development in the United States today, this Comment examines a case study of a transmission line project in the Midwest and analyzes how federalism issues and the application of public utility law stifled its development. In the case study, Clean Line Energy Partners (Clean Line), a merchant transmission developer, attempted to build a new transmission line through two states in order to transport wind energy produced in the Great Plains to the Chicago area. Clean Line was operating within the confines of traditional public utility law but was stymied by regulatory action at the state level due to a "state-centric" approach that lacked a broader perspective on the benefits of clean energy development. As a merchant transmission developer, Clean Line does not fit within the definition of a traditional public utility and, as a result, was barred from developing an electric transmission line in Illinois and other states.13

Part I of this Comment reviews the history and development of public utility law in the United States including the regulation of interstate transmission lines. It also explores how contemporary federalism conflicts have developed from the jurisdictional split between state and federal oversight of interstate transmission development. …

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