Electricity Transmission Provisions in the Bipartisan Infrastructure Bill

On Monday, November 15, 2021, President Biden signed into legislation the $1.2 trillion Infrastructure Funding and Jobs Act (the “Act”), generally known as the Bipartisan Infrastructure Bill.  The bundle offers funding alternatives for quite a lot of conventional infrastructure tasks, together with roughly $65 billion for power and electrical grid improvement.  The Act’s power provisions are numerous, and embrace alternatives for these investing in grid resilience and reliability, analysis and improvement for newer and rising applied sciences equivalent to battery storage and hydrogen, cybersecurity infrastructure, electrical automobile infrastructure, nuclear energy, and emissions discount applied sciences, amongst others.  This replace focuses on one subset of the power provisions contained in the Act: direct funding in the nation’s electrical transmission and distribution services. 

Excluding parts of the Act associated to analysis and improvement, the 5 provisions providing alternatives for transmission builders and homeowners starting in fiscal yr 2022 are of explicit curiosity. 

Transmission Facilitation Program 

The Act establishes a Transmission Facilitation Program – funded by a $2.5 billion revolving mortgage fund – that permits the Division of Vitality (“DOE”) to supply loans to, and enter into capability contracts with, transmission builders in order to supply monetary stability to proposed transmission tasks.  As envisioned, DOE’s implementation of the Transmission Facilitation Program will embrace DOE’s contracting with transmission builders for long-term capability service with contract phrases of as much as 40 years, and for capability to not exceed 50 % of a transmission challenge’s whole proposed transmission capability.  Along with getting into into such long-term transmission service contracts, DOE now has statutory authority to be a lender to qualifying transmission tasks and supply technical help in “designing, developing, construction, operating, maintaining, or owning an eligible project.” 

The Transmission Facilitation Program is particularly geared toward bigger transmission tasks – for brand new tasks, solely these able to transmitting at the very least 1,000 MW qualify.  Nonetheless, improve tasks may qualify to take part so long as the improve is able to transmitting at the very least 500 MW.

The Act funds the program however expects DOE to recuperate its prices from eligible tasks both as a lender to the eligible challenge or, in the case of a transmission capability contract, DOE could recuperate its funding by means of income recovered by the challenge’s final clients.  The Act directs DOE to terminate its capability contracts “as soon as practicable” – i.e., as soon as DOE determines that the challenge is independently financially viable – by reselling the capability to 3rd get together entrepreneurs or relinquishing the capability again to the developer.  The Act additionally stipulates that DOE’s implementation of the Transmission Facilitation Program will present that any DOE funds {that a} developer expends on research for tasks which might be by no means constructed needn’t be repaid.   

DOE Aggressive Grant Program 

The Act offers $5 billion in funding to DOE to ascertain a aggressive program to fund grid resilience tasks.  Half of the funds will probably be awarded by DOE on to eligible entities (which incorporates transmission homeowners and operators) and the different half will probably be distributed to states and Indian Tribes to fund their very own resilience grant packages.  Moreover, the Act’s small utilities “set aside” offers that at the very least 30 % of grant funds should be made out there to entities that promote not more than 4 million megawatt hours of electrical energy per yr.  The DOE Aggressive Grant program should be initiated by DOE by Might 14, 2022. 

An applicant, in addition to abiding by any guidelines to be established by DOE, will probably be required to supply a report detailing its “past, current, and future efforts…to reduce the likelihood and consequences of disruptive events.”  A minimum of a part of the justification for this provision is that entities will probably be restricted to receiving a grant that’s not more than the whole quantity it has spent in the prior three years on “efforts to reduce the likelihood and consequences of disruptive events.”

Grant recipients are required to spend proceeds on the any of the following actions:

(A) weatherization applied sciences and tools;

(B) fire-resistant applied sciences and hearth prevention programs;

(C) monitoring and management applied sciences;

(D) the undergrounding {of electrical} tools;

(E) utility pole administration;

(F) the relocation of energy traces or the reconductoring of energy traces with low-sag, superior conductors;

(G) vegetation and fuel-load administration;

(H) the use or development of distributed power sources for enhancing system adaptive capability throughout disruptive occasions, together with— (i) microgrids; and (ii) battery storage subcomponents;

(I) adaptive safety applied sciences;

(J) superior modeling applied sciences;

(Ok) hardening of energy traces, services, substations, of different programs; and

(L) the alternative of outdated overhead conductors and underground cables.

Federal Transmission Siting Authority Reform

The Act amends Part 216 of the Federal Energy Act in an try and reinvigorate DOE’s and the Federal Vitality Regulatory Fee’s (“FERC”) backstop transmission siting authority.  Initially established by the Vitality Coverage Act of 2005, Part 216 permits FERC to concern permits with eminent area authority to transmission tasks situated in nationwide curiosity electrical transmission corridors (“National Interest Corridors”).  Nationwide Curiosity Corridors are designated by DOE by means of the issuance of a examine and report that it’s required to finish each three years.  DOE’s most up-to-date report, nonetheless, issued in 2020, didn’t designate any Nationwide Curiosity Corridors.  Dep’t of Vitality, Nationwide Electrical Transmission Congestion Examine vi (2020). 

FERC’s capability to concern permits underneath Part 216 was restricted following a 2009 Fourth Circuit choice that interpreted the language of Part 216 as prohibiting FERC from issuing permits in the occasion a state company expressly denied a transmission challenge’s siting software.  Piedmont Env’t Council v. FERC, 558 F.3d 304, 309 (4th Cir. 2009).  In different phrases, following Piedmont, FERC may use Part 216 when a state company did not act inside a sure timeframe however couldn’t concern a allow underneath Part 216 after a state company truly denied a siting software. 

The Act is meant to “undo” the antagonistic influence of Piedmont on DOE’s backstop authority and contains specific language authorizing FERC to concern a allow the place a state authority “has denied an application seeking approval” for the siting of electrical transmission services situated inside a DOE-designated Nationwide Curiosity Hall. 

In designating Nationwide Curiosity Corridors, DOE should look to quite a lot of elements, together with whether or not a scarcity of sufficient electrical energy is imposing financial constraints on a specific area of the nation, and non-economic elements equivalent to whether or not a designation would serve the nationwide pursuits and whether or not it could promote power independence.  The Act expands the scope of DOE’s overview by offering further elements DOE could think about in offering a Nationwide Curiosity Hall designation.  Particularly, DOE could now overview whether or not a designation will “enhance the ability” of electrical technology services “to connect to the electric grid,” whether or not the designation will lower electrical energy prices for customers, and in addition whether or not the designation will improve the United States’ power safety.

Whether or not this enlargement to the backstop federal transmission siting authority, and extra elements DOE could think about in designating Nationwide Curiosity Corridors, will consequence in change will rely on how DOE and FERC implement the new provision.  DOE just isn’t required to concern a brand new transmission siting examine till 2023.  As a result of there are at present no DOE-designated Nationwide Curiosity Corridors, FERC is unable to concern permits underneath Part 216 at present.  Nonetheless, the Act’s adjustments to Part 216 may considerably redefine the federal authorities’s position in the siting of electrical energy transmission tasks – a job that has traditionally been virtually completely inside the purview of the states.   

Good Grid Funding 

The Act offers further funding – $3 billion – and expands the scope of qualifying tasks underneath DOE’s Good Grid Funding Matching Grant Program, 42 U.S.C. § 17386.  Beneath this program, DOE could concern grants masking as much as 50 % of the prices related to qualifying “Smart Grid investments.”  Transmission homeowners and builders could now apply for and obtain grants to cowl expenditures associated to the buy and set up of “advanced transmission technologies such as dynamic line rating, flow control devices, advanced conductors, network topology optimization, or other hardware, software, and associated protocols applied to existing transmission facilities that increase the operational transfer capacity of a transmission network.”   

Federal Monetary Help to Non-Federal Entities for Grid Reliability and Resilience Tasks 

The Act offers $5 billion for DOE to supply grants to non-federal entities (state and native governments, state public utility commissions, and Indian Tribes) to collaborate with electrical sector homeowners and operators on “innovative approaches…to harden and enhance resilience and reliability.”  This program is particularly focused to permit states to develop resilience packages in coordination with municipal entities and rural electrical cooperative entities “on a cost-shared basis.”  This system moreover appropriates $1 billion in monetary help to rural and distant areas for the similar function.  This system should be established by DOE by Might 14, 2022.

Source link