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Energy
Policy Act Signed by President Improves Market Access for Wind
Power
Production tax credit
extension is key provision; transmission and reliability
provisions could remove barriers to development
The Energy Policy Act of 2005 signed
by President Bush contains a number of important provisions
for the wind energy industry, the American Wind Energy
Association (AWEA) said today. In addition to the extension of
the production tax credit (PTC) through 2007 (http://www.awea.org/news/energy_bill_extends_wind_power_072905.html),
the Act requires that utility system reliability rules to be
developed for the nation be “non-discriminatory” and
provides incentives to encourage construction of new and
upgraded transmission lines.
“By requiring that new national
reliability rules be non-discriminatory and by providing
incentives to ease transmission bottlenecks, the Energy Policy
Act chips away at two important barriers to continued wind
energy development in this country,” said AWEA Executive
Director Randall Swisher. “While they do not replace the
need for the production tax credit to spur production of
clean, safe, domestic, renewable energy like wind, these
long-term reliability and transmission provisions could help
level the playing field and brighten the long-term planning
horizon for wind power.”
Summaries of the two major reliability and
transmission provisions, and what they mean, are as follows:
“Electricity Modernization Act of
2005”
Sec. 1211: Electric Reliability
Standards (Pages 1080-1096)
The provision creates an Electric
Reliability Organization (ERO) to create and enforce
reliability standards subject to the review of the governments
of the U.S., Canada, and Mexico. The Federal Energy Regulatory
Commission (FERC) will oversee the ERO in the U.S.. The ERO
must be independent yet ensure fair stakeholder representation
and balanced decision-making. The ERO may file proposed
reliability standards with FERC, which will approve them if
they are “just, reasonable, not unduly discriminatory or
preferential, and in the public interest.”
What it does:
This provision is the most significant piece
of EPAct ’05 for the electric industry. Until now
reliability has been voluntary and in the hands of hundreds of
different parties, all with strong commercial incentives that
do not necessarily coincide with reliable operation. After the
Northeast blackout of August 2003, pressure for mandatory
standards gave many policy makers a good reason to support the
energy bill. AWEA believes the wind industry and the rest of
the electric industry will benefit by having mandatory
reliability standards.
The language in the Act for the first time
requires all reliability rules to be non-discriminatory.
Discriminatory rules are a clear and present danger: even
though modern wind turbines can ride through system faults,
contribute reactive power and active voltage control, and
otherwise contribute their fair share to overall reliability,
AWEA is concerned that the North American Electric Reliability
Council’s (NERC) comments to FERC in FERC’s currently
ongoing generator interconnection proceeding create a higher
hurdle for wind than other resources. The wind energy industry
is currently engaged in discussions with NERC and FERC to
resolve this issue, and expects this new law will help AWEA in
these proceedings.
Transmission Infrastructure
Modernization
Sec. 1221: Siting of interstate
electric transmission facilities (page 1096)
This provision directs the U.S. Department
of Energy (DOE), in consultation with the affected states, to
conduct a study of transmission congestion and issue a report
designating “national interest electric transmission
corridors.” This classification is based on the need for
reasonably priced electricity, the need to access more supply
and diversify energy sources, and effects on energy
independence, national defense and homeland security.
Within certain limits, FERC may authorize
the taking of private property and issue construction permits
if a state does not have authority to approve the facilities.
For siting on federal land, DOE shall act as the lead agency
for coordinating federal authorizations. States may form
interstate compacts establishing regional transmission siting
agencies. FERC has no siting authority over states that are
members of a compact unless the states disagree.
What it does:
This provision adds significant pressure to
relieve interstate transmission bottlenecks, and could allow
for the designation of corridors between wind-rich areas and
the high voltage transmission system, based on the criteria of
energy independence and diverse supplies.
This provision does not help, however, with
cost allocation, which is typically the more difficult
challenge in building the transmission necessary to bring wind
power to market from windy areas in the heartland.
AWEA,
formed in 1974, is the national trade association of the U.S.
wind energy industry.
The association’s membership includes turbine manufacturers,
wind project developers,
utilities, academicians, and interested individuals. More
information on wind energy
is available at the AWEA web site: www.awea.org.
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