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Published in Energy
New state law seeks to streamline electric transmission projects, though critics worry about competition and costs COURTESY PHOTO

New state law seeks to streamline electric transmission projects, though critics worry about competition and costs

BY Tuesday, January 18, 2022 02:32pm

Legislation signed into law late last year by Gov. Gretchen Whitmer aims to speed up the process for building certain electric transmission lines in Michigan, which a major operator says is crucial in helping to facilitate the clean energy transition.

The Transmission Infrastructure Planning Act — sponsored by state Sen. Wayne Schmidt, R-Traverse City, and signed into law on Dec. 16 — gives incumbent electric transmission companies the right of first refusal to build, operate and maintain regionally cost-shared transmission projects. These incumbent companies include electric utilities and their affiliated transmission firms or independent transmission companies that own lines in Michigan.

Simon Whitelocke, president of ITC Michigan, told MiBiz last month that the law was necessary to remove uncertainty over which entities end up building high-voltage transmission lines in Michigan.

“Right now, without this bill, a federal process that came out 10 years ago created a theoretical competitive solicitation process for certain transmission projects. Even though it hasn’t done much, it’s really slowed down the planning process because transmission companies have to work together to do planning across a broader region,” Whitelocke said. “If we’re competing with each other for projects, then we all won’t be as forthcoming with information about projects. We weren’t getting the right projects developed in the planning process.”

Whitelock was referring to a 2011 order by the Federal Energy Regulatory Commission that sought to increase competition for building certain regional transmission projects, which are increasingly important for moving power from decentralized and often rural areas to population centers. 

The Midcontinent Independent System Operator (MISO), the regional grid operator that oversees the electric grid in Michigan and 14 other states, complied with the federal order by creating a competitive developer selection process for certain projects where costs can be shared across the operator’s footprint. The competitive solicitation process involved transmission projects that would deliver reliability and economic development benefits or that would reduce market congestion.

The new law opts Michigan out of the competitive process by giving utilities that already own or operate transmission lines the right of first refusal on new projects. Michigan joins six other states in MISO’s territory that have already done so.

Under the new state law, incumbent utilities would have 90 days to notify state regulators whether they plan to build and operate a regionally cost-shared transmission project. The utility would also have to provide regulators with quarterly reports on project costs.

However, critics of the new law say it abandons federal efforts to promote competition when building energy infrastructure and could lead to higher costs for ratepayers.

John Dulmes, executive director of the Michigan Chemistry Council, said electricity costs have been steadily rising in Michigan for all utility customers, including energy-intensive members of his organization. While transmission infrastructure is needed, he worries about the costs that are passed down to ratepayers.

“We have concerns with any legislation that would eliminate competition for, in this case, electric transmission development,” he said. “This is something that was brought forward by transmission companies that already have a monopoly. … I’m just not convinced that doing away with competition in this area will benefit ratepayers.”

Whitelocke countered that, over the past decade, no projects have been proposed in Michigan that would have fallen under the competitive process.

The new law “really allows the planning process to be enhanced because there is more information sharing,” Whitelock said. “The real competition comes when you put the project out for a bid.”

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