Volts podcast: the challenges of building transmission in the US, and how to overcome them, with Liza Reed

The US is nowhere close to being able to build the amount of
long-distance power lines it will need for a clean energy
transition. In this episode, electricity transmission expert Liza
Reed breaks down the many problems with the current dysfunctional
system, and what it will take to build up the needed
infrastructure.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


Electricity transmission has been having a moment lately, getting
more attention from analysts and policymakers than it has in …
well, at least in my lifetime. 


There's good reason for this: every single model of deep
decarbonization shows that, to get there, the US will need lots,
lots more long-distance high-voltage power lines, to carry
renewable energy from the remote areas where it is concentrated
to the urban load centers where it is needed. 


The problem is, the current system for planning and building
those long-distance power lines is utterly dysfunctional, at
every level, which means they aren't getting built. The US will
not decarbonize on time or on budget unless it can figure this
out.


It's a thorny, complicated subject — not just understanding all
the flaws in the current process, but figuring out how to move
forward with solutions. Loyal Volts subscribers will recall that
I wrote a five-part series on these issues earlier this year, but
if you're looking for a more compact & polished version, I
highly recommend a newly released report, jointly produced by the
Niskanen Center & the Clean Air Task Force, called, "How are
we going to build all that clean energy infrastructure?" 


The report emerged from a workshop held with a variety of
professionals across the industry and serves as a plain-language
summary of the problems facing transmission in the US today and
the candidate solutions. It's remarkably readable, even for
non-nerds — I recommend checking it out.


To walk through those problems and possible solutions, I'm
excited to have as my guest today Liza Reed, the Research Manager
for Low Carbon Technology Policy at Niskanen. Reed completed and
defended a dissertation on these issues just a few years ago and
has been a crucial help to me in parsing through them, so I'm
thrilled she's joining me today, so that Volts listeners can also
benefit. Liza Reed, welcome to Volts.


Liza Reed


Thank you so much. It's wonderful to be here.


David Roberts


So the Niskanen Center has just come out with this report about
transmission and its many challenges. So I thought the best way
to structure the conversation would be to kind of walk through
the report a little bit. But first, sort of by way of context,
tell us, what is the transmission challenge in the United States?
What are the decarbonization models telling us about what we
need?


Liza Reed


The challenge is that we don't have enough transmission and that
we need more transmission.


David Roberts


Pretty simple.


Liza Reed


Yep, it's that simple.


Liza Reed


And we don't have the right mechanisms in place to get the kind
of transmission that we need.


David Roberts


But when we say need more relative to what we have, are we
talking like a 20% increase, doubling, tripling? Give us a
ballpark figure.


Liza Reed


There's sort of a range of estimates that come out of reports,
but generally in the double to triple in the capacity is what
we're seeing coming out of these decarbonization reports. So
that's in the gigawatt miles, is sort of the metric.


David Roberts


And we're not building anywhere close to that pace.


Liza Reed


Exactly. Not at the speed we need and particularly not at the
type that we need because transmission is being built. And this
is one of the challenges when we talk about this decarbonization
challenge, is that there is transmission being built. But
transmission is generally defined as anything over 100 kilovolts.
And the type of transmission that is going to move a lot of power
quickly and over long distances is 500 kilovolts on that high
range. So there's a ton of gigawatt miles being built between 100
kilovolts and sort of 345 kilovolts compared to what we're
getting at these higher voltages that can transfer a lot more
power, go a lot longer distances that provide a different kind of
resilience and access to different power in different geographic
regions.


David Roberts


Right. So the ones that are getting built are generally, I guess
local is not quite the right word, but sort of like a utility
will build a line within its territory to connect or strengthen
two of it's —


Liza Reed


Exactly.


David Roberts


And what we need are these longer ones between territories,
between regions, possibly national. So we're nowhere close on
track. And so let's go through — the way you structure the report
is around the five P's of transmission. So I thought we would
walk through the P's. And what's going wrong with them currently.
The first one is planning. So as I understand it, basically
utilities have their own planning processes and that's basically
what they use to decide on transmission.


But then there are other entities also planning and then there
are other entities jumping into the system without planning at
all. So tell us what's going on with planning right now.


Liza Reed


Yeah, absolutely.


Liza Reed


So there is planning at different scales. You're correct. And the
largest scale on which planning occurs is within what's called a
regional transmission organization. An RTO or an ISO. An
Independent System operator.


David Roberts


Yeah. Let me pause you there because just in case there are a few
people listening who are not yet total energy nerds, we need to
start with a quick distinction. There are two sort of general
kinds of utility areas. One is with the fully vertically
integrated utility is what it's called. They own the generation,
the transmission, the interface with the households. They own
everything. And then there are these other areas which I think
cover about two thirds of customers where the generation has been
broken off into an independent business. The utilities are just
there to deliver the power to the households.


And then you have these regional transmission organizations that
kind of oversee these areas and try to coordinate them. That's a
little bit of basic boring background for anybody who's not clued
into that.


Liza Reed


That's absolutely perfect. And they are member organizations,
which I think is also important. Right. They are organizations of
utilities for the most part.


David Roberts


Right. As opposed to outside authorities that might have contrary
interests or be able to impose contrary interests.


Liza Reed


Right. And they're not building it themselves. Right. I mean,
they are bringing those stakeholders together in pursuit of
particular goals, which are largely established by FERC about
what these regional RTOs or ISOs should be doing. But they are
member organizations, right. So they are conveners and
collaborators and they are managing this transmission planning
process. But at the end of the day, it is still those members and
those utilities who have to build the transmission.


David Roberts


So is it the case that then the RTO brings all its member
utilities together and makes something like a regional
transmission plan, but then all the individual utilities also
have their individual plans?


Liza Reed


I think that's right. It's sort of challenging when we talk about
transmission. And why I say I think that's right is that if you
and I each put our finger on different points in the United
States, the system would be different there.


David Roberts


All right.


Liza Reed


And I'm jumping ahead to the P for process.


David Roberts


It's the overriding P, so it applies to all of these.


Liza Reed


That's correct. That's correct, but right. For the most part
that's true. And that's where what you mentioned earlier, these
local reliability projects, which is often what they're called,
that is often more of an internal to a utility approach. And then
these larger planning approaches, again required by the Federal
Energy Regulatory Commission are about how the utilities plan on
how they work together and what they might need across the
system. But that still has a boundary. Right. So we have utility
boundaries. We have these RTO boundaries. And then inter-RTO
planning or inter-ISO planning happens in theory and I mean
technically happens in reality.


David Roberts


And it happens by the two RTOs getting together in a room
somewhere.


Liza Reed


There was actually a great post just earlier this week about two
RTOs. I believe it was Mid-Continent ISO, I believe it was MISO
and PJM. And it's a single slide that says: Interregional
planning approach. This year we decided we don't need anything.
There's really nothing that we both need.


David Roberts


We're good.


Liza Reed


So we're moving on. But that's the problem. If you have to plan
everything within your footprint and they do, right? They do all
this planning within their footprint with their own set of
metrics and their own priorities. Yeah, I can imagine that you
get together and you're like, "Well, I figured myself out and you
figured yourself out," right. Like you and your neighbor have a
fence between your yards. You're not co-planting a tree.


David Roberts


Right. So you have planning taking place at regional transmission
organizations, which in theory should at least get you to
regional planning. Right. I mean, at least it's bigger than a
single utility territory, but it doesn't seem to actually result
in regional lines.


Liza Reed


Because there's a lot of barriers to regional planning and
there's the technical aspect of regional planning and then
there's the what do we call it implementation aspect where the
entire electricity system is an engineering solution. Right? And
one of the most important facets, I think, of engineering is that
there's lots of ways to get to the end state that you need. And
so you can do it with large interregional lines. Interutility
lines. I mean, this is, again, what the studies have shown that
is currently projected to be the least expensive way to reach the
ends that we need. There are more expensive ways to reach the
ends that we need. And some of those are more attractive to
certain stakeholders because there's an onus of control there.
There's a clarity. Right.


I know that every dollar I invest is resulting in benefits to my
system. And when we have to share a project, do I feel like I'm
getting proportionally the benefits that I'm paying for? And
that's where a lot of these lines fall apart before they can be
completed or even before the plan can be finished, right. You
look at the system, you identify potential areas, but then you
also identify potential solutions. And then you've got to pick
amongst those solutions about what member organizations are
interested in. And it can be very difficult to get these projects
agreed upon if member entities feel like they have to pay for
something that they're not getting a benefit from.


David Roberts


Right. In a curveball and all this. There are what are called
merchant lines, which are not planned or built by utilities, but
are being planned and built by sort of external market
participants, which then aren't part of the utility planning or
the RTO planning. As I understand it, they just kind of get
bolted on if they can pass the test. So how does that work? I
guess two questions here, sort of for my own background. What
sort of percentage of transmission lines are merchant lines?
Like, how big of a presence are independent transmission builders
in this whole process?


And then B, like, how do they fit in the planning?


Liza Reed


Yeah, that's a great question. And when we think about these
independent lines that aren't part of the process, because there
are some transmission organizations, there are some developers
that build transmission, but they are within the process. It's
part of sort of a competitive bidding process. But outside of the
process of that traditional planning process, merchant lines are
an incredibly small, I mean, approaching zero.


David Roberts


Oh, really?


Liza Reed


Well, because it's so difficult to get these lines built, right?
Because of all of these barriers to being outside of the process.
You said bolted on. That's actually quite a barrier. Getting
bolted onto the system is no small piece of the puzzle.


David Roberts


Right? So you got planning. The term you used in the report is
balkanized. You got sort of multiple entities planning. It's sort
of like two problems. One, there's a bunch of different entities
planning. But then two, there's no sort of integrative process
that brings all these plans together and makes sense of them. So
you end up with balkanized planning, but then also balkanized
building. You just get these sort of little regional or even like
local lines, but very few of the longer ones we need.


Liza Reed


Right. And the boundaries are also a challenge because utility
boundaries often do not fall within a state. Right. They are
often crossing state lines. And so the utility's perspective
versus the state regulator's perspective on what the benefits are
—


David Roberts


Right. So you could see something that would be benefiting a
state but not the utility, and vice versa in some cases. So
planning is a mess. That's the first P. The second P is even more
of a mess. It's permitting. And then here also, this is like I
struggle to describe this to people because it's so crazy, but
basically any jurisdiction you cross over, or any entity you
cross over, if you're proposing building a line, you need to get
a permit. And that can be true at the state level, the county
level, there could be private landowners level.


There's just a million levels of permits. So describe the thicket
to us. Sort of like who all do I have to get a permit from if I
want to go across like three states and whatever, 100
theoretically privately owned pieces of land.


Liza Reed


So in some states it's at the state level. You go to the State
Commission and they give you the certificate and has the Siting
Board and those together, the certificate of CPCN is the
Certificate of Public Convenience and Necessity. And then the
Siting is what determines the line. Right. The Siting is where
the line is actually going to go. The certificate is essentially
the right to build and with the certificate comes the ability to
exercise eminent domain if necessary. Right. If that route that
is selected, if the developer is not able to enter into private
agreements with the landowners along that route, then they can
exercise eminent domain through holding this certificate from —


And just pausing here, let's explain imminent domain. It
basically just means you can take it the land and they can't stop
you, right? Is it that simple?


Just compensation. Right. You have to give them some just
compensation, but the land can be taken by the state for this
purpose.


David Roberts


But then there are other entities involved in permitting it in
other states.


Liza Reed


So state level is the best case scenario. And even that is if
every state you cross needs to — so your best case scenario right
now is that you are crossing two states where both states have
state level siting and state level permitting. And both states
are getting enough benefit from this line that it passes their
metrics for allowing the line to be built.


David Roberts


Right. Because each of them are thinking, when they're making
their permitting decision, are just thinking about what does it
do for our state? Statutorily, I think they're sort of often that
confined to thinking about specifically what does this do for our
state?


Liza Reed


Exactly. And there are a few states where regional interests is
actually in the statute, but few. And how do you show that?
Right. Like, what's the metric for demonstrating that?


David Roberts


Yeah. Is there anything like a common — I mean, when these states
are making decisions about does this transmission line benefit
our state enough to warrant a permit? If I'm a line developer, do
I know what to expect, or are there common criteria for what
counts as benefit or metrics or anything like that?


Liza Reed


There are not. Generally speaking, you expect reliability to be a
metric and cost to be a metric, where reliability is actually
explicitly defined by the North American Electric Reliability.
Oh, shoot, I forget the C.


David Roberts


It's probably a council or a commission. It's one of those.
Definitely one of those.


Liza Reed


So reliability is often defined by NERC, and so that is a common
metric. Are we adding reliability to the system? But then there's
a cost question as well. And again, depending on what state
you're in or how the process goes and depending on what the
utility-state relationship is, how that cost gets considered is
very interesting, whether it gets evaluated at the front end or
evaluated at the back end, where some utilities rely on cost
recovery from their state commissions. Right. So you put in the
capital expenditure and then after the fact do a rate case and
say, here's the money that we spent, here's how we benefited our
rate payers and our consumers, but here's why we now need to
raise the rate to pay ourselves back for this risk that we took
in this capital expenditure.


David Roberts


Right.


Liza Reed


But a lot of times those conversations actually get pulled
forward too. Right. Though technically it's not approving the
rate case before it gets built. There's still that discussion of,
well, what are the benefits? Is this going to lower cost? Who is
it going to lower cost for?


David Roberts


Right. And one thing you point out in the report is if you want
to build a really long line, you're going to, at least in some
cases, be crossing a state where you're just crossing the state,
there's not direct benefit to the state other than the sort of
larger regional or national benefit of having this line. And so
do we have examples of states sort of permitting lines that are
like that that just come through them, or is that just like,
"You're screwed if you need a state to let you do that?"


Liza Reed


Well, this is one of the challenges that high voltage direct
current has because it is more expensive to build what's called a
tap off station, right, or a substation that's more expensive in
HVDC systems. And so you're more likely to try to get by with
just a cut through. If you have an AC line, a substation is
proportionally pretty low cost, so you can just tap off some
power.


David Roberts


Right. So an AC line you can dump power into the state and then
create that benefit. But with a high voltage direct current line,
creating an off ramp where you can dump some of your energy off
the line into that state is actually a big chunk of capital cost.


Liza Reed


Indeed, that off ramp can even be important for meeting the state
guidelines to even be in the conversation in the first place. One
of the Clean Line — so Clean Line Energy Partners was trying to
develop a couple of different high voltage direct current lines.
And one of the issues that they ran into was that in one of the
states, they were trying to cut through initially. But if
transmission lines are being built in the state, they have to be
approved by the state commission. But the state commission only
recognizes utilities that serve the state as an eligible entity
to come before them to build transmission. Right.


David Roberts


It's a catch 22.


Liza Reed


Sure. Not exactly a catch 22. Right. But yes, it's tricky for
sure and certainly more tricky for HVDC.


David Roberts


Is that what ended up killing some of those Clean Line projects,
the cut through states?


Liza Reed


I find it difficult to point to one thing that killed the Clean
Line projects because often those projects are great examples of
just how fraught it is. Right.


David Roberts


Right.


Liza Reed


So many pieces that slow you down. There's patient capital and
then there's "I don't even know what we're asking for." When
you're ten years down the road and you haven't broken ground on
anything.


David Roberts


Yeah. No capital is that patient. What is the alternative? What
are the other levels of permits that sometimes you have to deal
with?


Liza Reed


In Georgia, siting goes county by county.


David Roberts


Yikes.


Liza Reed


Yeah.


David Roberts


So that means you're literally like, what does it mean to get a
permit from a county? Are you sending a representative to a
county board? Or how big of a hassle is a process for getting a
county?


Liza Reed


Likely that I mean, you are putting this case before the county
and there's so much more uncertainty about where the line can go.
Right. Because if there's objection in one county that requires a
line to be moved and where it crosses a county line now might
impact that siting opportunity in the adjacent county.


David Roberts


Right. And if you think if the state is sort of insular and only
looking at its own interests, I imagine that's doubly so for a
county. Do you have to prove that you're going to benefit each
county you go through? I'm not even sure how that would work.


Liza Reed


I'll be honest. I don't know either. We would have to talk to a
developer who's gone through the process to know what that looks
like.


David Roberts


And then also, aren't private landowners, don't they get involved
somehow around these processes?


Liza Reed


Sure. So if your land is being potentially taken under eminent
domain, if you can't come to an agreement with the developer on a
private agreement on the access or use of your land or agreement
on an easement or purchase, but the siting is approved. Then
there's the eminent domain process. Prior to that, private
landowners and community members and local interests get involved
at the point of siting decision at community meetings with siting
boards regarding their concerns about the line, for their
property values, their concerns about the use of the line. Some
of them are quite legitimate.


This line is you've misunderstood where the well is on my
property and you can't be this close to the well, right. Or this
is cutting through my farm and if we can move it over here to the
edge of my farm, this is better for everyone involved. Others are
I've read a number of dockets and inevitably people are concerned
about being close to high voltage power lines.


David Roberts


Oh, it's going to mess up their 5G chips in their head, or stuff
like that. Are there similar —


Liza Reed


Yes. There are a host of, I believe, firmly held but inaccurate
beliefs about the health impacts. Now, typically those do not
sway a in fact, I have never seen those sway a docket in front of
a public commission. But all of these sort of different voices
are coming to the fore about where this line should go, if it
should go there at all. Often arguments about where the power is
coming from, where the power is going, shouldn't we all do this
locally? I have a lot of sympathy for that perspective because I
think one thing that transmission —


Transmission is not in the common lexicon when everybody's
talking about energy, right. And as community members, you think
about local solar and rooftop solar and those are the things that
are relevant often to individual landowners and the recognition
that those are part of the solution but cannot serve the entire
need, that's a hard sell in many cases.


David Roberts


Right. And if you're a developer trying to plow across whatever
multiple states, multiple counties, multiple private pieces of
land, that means educating each one of those individual entities
about that, which I imagine can be time consuming, exhausting. So
that's the second P permitting, which is, if we could summarize
the problem, we're talking about interregional high voltage, long
distance lines that would benefit the nation, but there's no
national permitting. All the entities that are permitting are
looking at their own narrower interests and just are creating
basically one hurdle after another.


Liza Reed


Exactly.


David Roberts


And then the third P is paying, which is always, of course, a
problem in any sort of project development of any kind. But tell
us a little bit about how these things get paid for. It's
somewhat different if you're a vertically integrated utility;
obviously, you just build the line and then charge your
ratepayers to pay for it. And that at least seems
straightforward. But then once again, once you are going between
utilities or between states, that's where things get complicated.
How does that work?


Liza Reed


So the challenge here in the business is called cost allocation.
That's the difficulty and it's sort of self-defining. Cost
allocation is how you are allocating costs. And FERC requires
that costs be allocated among beneficiaries. And
non-beneficiaries are not forced to pay to participate in
allocating the cost for a line that does not do them any benefit.
So there are two challenges here, right? On the one hand, you've
got to decide how to share the costs among the people who are
beneficiaries, but you also have to agree on how to define the
beneficiaries.


David Roberts


Yeah, I was going to ask who counts as a beneficiary and who
decides that?


Liza Reed


Right. Great question. And everybody has a different answer,
right? Every RTO has a different answer. And then utilities and
developers have different perspectives. Is a generator a
beneficiary of transmission? Because without transmission,
they're not getting their power onto the grid, right. Is the
next-door utility — maybe that substation isn't in their
footprint, but what level of reliability improvement do they get
before it becomes something that they should participate in
supporting?


David Roberts


Right.


Liza Reed


The geographic footprint of these systems is actually quite large
because for the most part, our electricity system is integrated.
It is all touching each other, and so that power is flowing in
lots of places.


David Roberts


Right. And you get into these sort of like second-order benefits,
third-order benefits in some attenuated sense, everyone in the
country benefits from easing regional congestion and stuff like
that and just reducing the cost of wholesale power. Those
benefits cascade out.


Liza Reed


And they're not static.


David Roberts


Right.


Liza Reed


When you add a new generation somewhere on the system, the
benefit of that transmission line to the system is now altered.
When you add another transmission line somewhere else, the
benefit of an earlier transmission line is altered.


David Roberts


Right. And so once you make this determination about cost
allocation and who pays for what, it's fixed. Can you go back and
revise it when things like that happen and kind of change the
equation?


Liza Reed


So my understanding is that different RTOs have different
approaches to this.


David Roberts


That seems like a common theme here.


Liza Reed


That is correct. We haven't even discussed that. Not the entire
country is covered by RTOs, right. Most of the west is not even
covered by an RTO and they have a completely different system
that please don't ask me about. But in some of them, there is
sort of a medium-term cost allocation and then a revisiting. I'm
not familiar enough to dive into the details of how that process
is worked out and managed, but that's certainly another financial
risk for everyone.


David Roberts


So just kind of summarizing. The basic problem here is FERC has
sort of said you got to allocate costs among all the
beneficiaries, even if we're talking multiple utilities, multiple
states, but it has not specified in any very concrete way what
the hell that means or who counts as a beneficiary or how you go
through that process of cost allocation. So everyone's kind of
winging it on their own. And often when multiple utilities have
to get together and figure these things out, it just kind of
grinds out in disagreements and no one can come to an agreement.


And so once again, you see the incentives pushing utilities to
just build stuff within their own territory. So paying is our
third P, our third mess. It's worth saying those are sort of the
traditional three P's that people have thought about planning,
permitting and paying. You add a couple more. One is
participation. And I have some serious questions about this that
I want to get to later when we start talking about solutions. But
just tell me sort of like, are there any rules and guidelines now
for participation or what passes as participation now? Or what
exactly do you mean by participation?


Liza Reed


Right. So I'm going to pause here, Dave. I'm not sure how to
answer this question. I'll come up with an answer shortly, but
I'm about to not make friends with the answer to this question.


David Roberts


Good. It's a podcast about transmission. We need some
controversy.


Liza Reed


All right. Okay, here we go: Participation. If you talk to folks
in the business in transmission, many of them will tell you that
participation is already part of this, that there's participation
in transmission planning, that there's participation in
permitting. And it is often the permitting where people talk
about participation because they think about those community
meetings and the landowner engagement and things like that. The
planning process also requires stakeholder engagement. They are
not connected. Right. The planning and the permitting are two
very different processes, as we've already discussed, at very
different scales. The stakeholders are not consistent, and as
often is the case, who gets to decide who a stakeholder is?


David Roberts


Once again.


Liza Reed


And there's arguments for, I think a lot of strong arguments for
broadening who is considered a stakeholder, and that
participation should be inclusive and consistent throughout. If
you are bringing in someone five years down the line when it's
just time to take their land or a community or even local
governments, right. The later you bring anyone into the process,
the more they feel they are being strong-armed or likely are
being strong-armed.


David Roberts


Right.


Liza Reed


And I think it's important to note here that this report is not
suggesting that there is going to be some consensus view that
just by talking to more people, suddenly everyone's going to
agree on where a transmission line is going to go. But it does
say, let's really be frank, let's take an outside perspective on,
particularly at the scale that we need for decarbonization on
what these impacts are going to be and if we need to reach scale
and speed and we already know what some of the pushback is going
to be. What are ways that you include people, include local
governments, include local authorities, include all of these
impacted groups more actively and clearly in a process — which is
our last P, I keep running into process — instead of this. Again,
it's not even bifurcated, right? Because it's more than two.


David Roberts


Yeah, whatever. I don't know what the word is. Multipurcated.


Liza Reed


Yeah, there we go.


David Roberts


So that's participation. When we talk about solutions, I want to
come back to this because it vexes me, but let's just get through
the fifth P, which is this process which is sort of meant as like
a meta P gathering up the other ones. And the point of the report
here on this fifth P on process is just that there really isn't
one. That the process is so fragmented and so different from
place to place, even sometimes within places, that it makes for
an environment where people trying to develop power lines don't
and really can't know what to expect or how long it might take or
what they might need or how they should go about it.


Is there more to say about process other than like, there should
be one?


Liza Reed


There should be one. Well, it's clarity so that folks enter the
system, right? So that you get private capital interested in it
because it's not even high risk. It's just wild uncertainty
because capital is not necessarily afraid of high risk, right?
You can find high-risk capital, but risk and uncertainty are very
different issues. But then the other thing about process is that
it can create scale. If nothing is ever repeatable, then you can
never get to scale.


David Roberts


Right. So at the very least, you want a process where people
endeavoring to enter it can have some sense of what's going to
happen, what the steps are, right? Like what are the criteria for
getting through it.


Liza Reed


Because you can also get better.


Right. So those are the five P's. And when you talk about this is
a mess, a mess at multiple levels, a mess at basically every
stage. I mean, I think people listening by now should have gotten
the basic idea that if you're trying to build a transmission
line, you're in a foggy planning process and then a foggy
multi-part capricious permitting process, and then all the while
you're trying to pay for it. And the people you're trying to get
to pay for it don't necessarily agree that they're getting
benefits or don't have the patience to sit around waiting for the
other parts of the process to work out.


David Roberts


So it's really a wonder that any of these things get built at
all. And they really kind of don't. As you said at the beginning,
this is why they're not getting built even though we desperately
need them. So we got to talk about solutions to these things. The
way the report sort of frames solutions is solutions that are
more on the kind of private sector, private actor side of the
spectrum versus public. And I wanted to sort of interrogate that,
get into that a little bit, but just let's go through some of the
private, sort of more private sector-oriented solutions that come
up here because I have questions about some of them.


Like for instance, you say permitting reforms. I guess this would
be a good place to bring up my question about participation, I
guess because this is sort of framing the rest of the discussion.
Because what I've heard so far is there's just so many steps and
so much of a mess and so many delays that it's killing all these
projects. When I hear participation, what that brings to mind for
me is more process, more delays, more difficulties. Because what
I have in my head is I'm really into urbanism and all these sort
of density issues and all this kind of thing.


And when you talk to urbanists about participation, what they
hear is all these siting boards and historical preservation
boards and all this just endless, endless delays. And so two
things about participation from that angle one is just more delay
and more time and more difficulty. But two, it's also the people
who participate in the participation venues are not
representative of the full range of beneficiaries. You know what
I mean? Like if you're trying to build an apartment building near
a single-family neighborhood, it's the homeowners that end up
participating in the process and they all want to block it.


And the people who might benefit from the apartment building
don't exist yet or don't know about it yet and can't show up at
these meetings. So participation is just very fraught. So I guess
I wonder when you talk about a lot of these solutions, like, for
instance, permitting reform, that sounds to me like a gentle way
of saying overriding some of these local barriers, basically just
being able to come in and say no. Like, enough discussion. We're
doing this. Which pulls in the opposite way, opposite direction
of more participation. Do you know what I'm saying? So I guess I
wonder how you reconcile this in your head, more participation
versus the need for speed and cutting through some of these
things.


Liza Reed


Absolutely. What you've described is a pretty common perspective
that folks have about what participation means. And I'll counter
that participation doesn't mean everybody gets a vote. We are not
sending every transmission line to the ballot box. Right? It is
just about when we pull out participation to be separate from
permitting and separate from planning. It is about ensuring that
consistency of communication, giving people information, also
identifying who is encouraged to participate. Right. In the
examples that you are giving people who have the time and
financial resources to participate —


David Roberts


Right


Liza Reed


are the people who are participating. Right. And so being clear
on who should be involved and what it takes to get those folks
involved and that includes right, that's not just landowners
within states, that's also tribes. Right. And there's lots of
different stakeholders here that should be considered. The other
piece, I think what's helpful is I'll give you an example. I'll
give you a permitting example that's been proposed that I think
speaks to this without just sounding like some magical dream.
We'll just allow more people a voice, and all of a sudden it'll
work out.


David Roberts


And it will be faster.


Liza Reed


Right? It'll be fine. Just trust us. So Senator Whitehouse
introduced what's called the SITE Act. It's streamlining
interstate transmission of electricity. Oh, gosh, I don't
remember the date. I think it was two weeks ago. So, Senator
Whitehouse and Representative Quigley both introduced the SITE
Act to their respective bodies. And the Site Act proposes that
the Federal Energy Regulatory Commission, that FERC, have siting
authority on lines that touch two states or more and have a
thousand megawatts or more of capacity. So, on the one hand, this
speaks to what you were saying about overriding. Now, I would
argue it is not overriding.


David Roberts


Specifically that's taking permitting authority away from states
and giving it to FERC.


Liza Reed


I would specify that it is identifying that authority, which is
appropriate for the federal government to have because it is a
federal benefit.


David Roberts


Right.


Liza Reed


It is aggregating benefits across diffuse benefits.


David Roberts


Yeah, totally. Totally.


Liza Reed


So is it overriding or is it reassessing.


David Roberts


Appropriately identifying, let's say.


Liza Reed


Discuss in the comments. So that's the one piece. But the other
part of that bill is that it says folks with — often landowners
impacted or it's 100 foot within the right of way. So it expands
it. It says more people can consider themselves impacted than
just within 100ft of this right of way. It's a wider width of
impact. It also has specifics on how much notice they get. Right.
What the process is for being heard, and that they get
essentially their day in court. Right. And that's the piece that
is really informed by some of the efforts we've seen in response
to pipelines under the National Gas Act. And this is — so this
is, I think, a helpful example of how you can create solutions
that streamline while still including and even broadening
participation.


David Roberts


Ah. So FERC gets the permitting power under the bill. FERC would
get the permitting power. But FERC would also be obliged by
statute to have a sort of formal participation process running up
to that.


Liza Reed


Right. So under the Natural Gas Act, when natural gas lines are
permitted, landowners do have to get notice. You always have to
give landowners notice before you condemn their land, right.
Through eminent domain.


David Roberts


Oh, yeah. Let's just pause and note, just in case people don't
remember this or know this, but when it comes to natural gas
pipelines, unlike with transmission lines, FERC already has that
authority. FERC has the authority to use imminent domain and
override, sort of —


Liza Reed


That's correct.


David Roberts


states and locals. But there is a participation process on that
end, too.


Liza Reed


Well, it would be nice if there was.


David Roberts


There should be.


Liza Reed


It's not statutorily defined. And so, FERC tells the developers
to give notice to the landowners. I'm sure you can imagine that
developers aren't running out the door to tell people that this
is happening and FERC doesn't follow up to ensure that it
happened. So, one of the things that the SITE Act proposes is
FERC can delegate that responsibility to someone, but it cannot
be someone whose financial interest is getting that pipeline
built.


David Roberts


Ah, right. And I suppose the positive gloss on this would be to
say by bringing in people earlier, by creating this sort of
formal system where people know how to participate and can
participate earlier, you might forestall some of these objections
from landowners or counties and thereby speed things up.


Liza Reed


One of the things discussed in the report is that participation
is a two-way conversation, right. It's not just listening to
people complain and saying, "Yes, but the models say that the
line has to go here, I'm sorry, you don't have an electrical
engineering degree and ten years of power systems experience." It
is saying, "What do we need? What will support this community?
What do the local authorities need? What can we work out to make
this work?" And that goes back to process, too, right.


Like creating this as a relationship and as replicable and as
sort of establishing standards, potentially. Right. That's one of
the things that's proposed, is do you establish sort of minimum
standards on not only what participation looks like from a timing
perspective, but what benefits can be expected to communities who
are hosting a transmission line?


David Roberts


Right. And how does this tie into consent-based siting, which is
another sort of private sector-ish solution that's been thrown
out?


Liza Reed


Sure. So, consent-based siting is an example of this. I don't
know if it would work for transmission, I'll be honest, but it's
an interesting thing to think about, where consent-based siting
is usually discussed in the form of nuclear power plants or
nuclear waste, where the community comes to an agreement on
hosting a waste facility, for example. But they have a strong
voice in setting those rules, right. On what they are willing to
accept, on what it means for safety, on what it means for job
training, on what it means for all those different pieces.


David Roberts


Right. And what about regional — this is a mouthful — regional
transmission anchored economic development clusters. Somebody's
going to have to work out a good acronym for that one.


Liza Reed


Yeah. So this is an example of how we think about what rural
economic development actually means. Right. And one of the points
we make in this paper is if we want to pursue some of these
ideas, we've got to get past this five-word phrase or this
acronym that we can fit on a slide. What does that mean? Right.
If you're willing to create, if you want to make this anchor in
this cluster, does that mean that other state or federal entities
are also participating beyond electricity, does it become an
investment and what type of investment and how does that become
sustained so that we're actually creating long-term economic
development.


David Roberts


Right. So that would be sort of transmission as part of a larger
vision of how to spark economic development in these particular
regions. And so then we look on the public side, the public
sector side solutions. It's worth saying that there have been
attempts to give Doe and FERC more power over this stuff, more
role in the planning to encourage regional planning, but they
haven't really gone anywhere. So why did those previous efforts,
if you look back at sort of FERC rulings, there's like a dozen
that are saying in one way or another, please do some regional
planning, but it never seems to work.


So why have these sort of public sector solutions not taken off
yet? Why aren't they getting any traction?


Liza Reed


Well, they're pretty tepid, as you said, right. Interregional
transmission planning should happen. And so we get a slide that
says, well, we thought about it, right. We talked about it and
that's not going to work for us this year. Thank you for trying.
So that's one of the issues. And there's also this authority
question. Who has the authority? And currently the answer is
nobody. Who has the authority to actually compel certain actions
to be taken. RTOs and ISOs are member organizations. They are
voluntary member organizations. Right. And I'm not saying that
they should be required membership organizations, but that is one
of the discussions that folks are having about RTOs and ISOs,
right.


And what makes things compelling?


David Roberts


And just to pause there, I mean the reason for that is RTOs are
hesitant to make decisions that overrule or override any of their
utility members because the utility members always have the
option of just saying, "Well, screw you, we're not going to be
part of the RTO anymore." Right. So it's sort of like a
definition of capture, really.


Liza Reed


That is a consideration. I mean, there's a counterpoint to that
that says maybe it's not that easy to leave an RTO or an ISO,
right. If you are currently in cost allocation contracts, you
might not be able to extricate yourself from them. So now you are
paying for something you're not even getting a benefit from. But
that is certainly a concern, right? Is that impacting things?


David Roberts


Easy to threaten to do it.


Liza Reed


For sure.


David Roberts


So I don't want to keep you forever. So I want to kind of get to
the final thing I want to grapple with. Toward the end of the
report, you say here are sort of two sets of recommendations. One
that focuses more on the private sector and one that focuses more
on the public sector. The one that focuses on the private sector
is sort of tweak this incentive and tweak this process. You're
trying to change the incentive structure to channel private
activity more profitably and honestly, when I read through that
recommendation, my reaction was, this just sounds like a bunch of
incremental, marginal muddle.


It just does not speak to me about the sort of speed and clarity
we need. And then, so the other set of recommendations are more
focused on the public sector. And that's where you discuss the
creation of a National Transmission Authority, or NTA, which
would take hold of this whole thing about interregional lines.
About national lines. I mean, we're talking about interregional
lines, but there's all these proposals also in the background for
a macro grid, for a whole regional like a national grid, not just
interregional, but a grid that sort of sprawls across the entire
nation, which, given our current process, just seems like an
impossible dream.


So you create this National Transmission Authority and you give
it like you're doing the planning, you're running the
participation process. You have authority, eminent domain
authority, to override in some cases when you need to. It just
seems I mean, these are obviously my personal policy biases
coming out here, but it just seems like if you need something so
big and so fast and it's so clear what you need, wouldn't it be
better just to nationalize this and grab hold of it and just have
one accountable entity that you can use to cut through this
Gordian knot?


I mean, I'm asking you to reveal your own preferences here, but
does that speak to you?


Liza Reed


I'm so excited to dive into this question, Dave, because I do
think this is the meat of the report, and I'm kicking myself for
spending so much time talking about other things. That reaction,
I think, again, is pretty common because the National
Transmission Authority is something clear, right? It is quite, as
you said, it is different. It's like, oh, if this isn't working,
let's do something different. And again, what the report is
saying is we are sketching out a possibility, but the next part
of the conversation is, okay, what is that? How are you going to
do that?


How many policies do you need? How are you writing those
policies? Because you cannot build that accidentally. You have to
build that intentionally.


David Roberts


Well, that's part of the beauty of it to me. Right. I mean, the
system we've built now is we just backed into it piecemeal. It
makes no sense. No one did it on purpose.


Liza Reed


The electrical engineer in me says it is a great engineering
marvel that we back into it. That is amazing how some of the best
engineering happens is you just figure out what you need. So a
national transition authority is not easy to define. And I'm not
saying we shouldn't try to pursue defining it. I actually think
it's incredibly important to try to pursue fully defining what a
solution is. Right. This whole report is about another P, which
is paradigms, right? Are we going with a National Transmission
Authority because people say it right? I'm sure you have heard
about National Transmission Authority idea before, right?


This report couldn't have been the first time you heard it.
People talk.


David Roberts


Well, yeah, I've been wanting to nationalize the electricity grid
for a long time.


Liza Reed


Yeah. But we need to pursue what the implications of that are
because electricity is interconnected in a way that the highway
system is not.


David Roberts


Right.


Liza Reed


And a car crash in New York does not affect traffic in Texas.
These are very big questions. Do we want to build a macro grid?
Niskanen is a member of the Macro Grid Initiative. There are
clear benefits to a macro grid. How do we design that macro grid?
If we have the federal government create a National Transmission
Authority today that is tasked with building a macro grid, how
are we updating those plans to respond to the real challenges of
building transmission lines, even under an NTA, how are we
updating those plans to respond to how generation is being built
in different places?


Right. We can't have a plan today and then finish it in 20 years,
the entire system is going to look different. So you're asking a
lot of the federal government and you're asking them to do it
with speed. You're asking them to do it with flexibility. Feel
free to reference Operation Warp Speed now. And I will reply that
we still haven't gotten vaccines in all the arms. Right? I mean,
this is a major undertaking and it's building. Right. It is not
research. It's creating a physical system. It's a lot to ask.
Those authorities need to be explicitly defined.


They're still going to, I think, come under legislative and court
challenges, right? So they've got to be able to take that. We've
got to be able to respond to them and we have to find a way to
fund it. And we all want it to be — so I guess I am a little bit
defined on my bias, but I'm about to explain my bias in the other
direction as well. I'm very good at straddling the fence here.
Where is it going to sit? Is it in the Department of Energy? Is
it in the Federal Energy Regulatory Commission, which I just need
to call it FERC? Is it in FERC, which is technically under DOE?


Does it make sense to have a regulator also be a planner and an
implementer? Or is that really going to mess up their regulatory
authority? If it's in the Department of Energy, what is the way
that it gets funded so that it is not so susceptible to the whims
of budget cycles? And if it is being funded through, for example,
a postage stamp rate. A transmission bill to every user. Whose
business model is that messing up and what are you going to do
about it?


David Roberts


Right? And also, while we're throwing in complications, there are
reasons utilities don't build these interregional lines. And it's
often from a utility's point of view, especially if I'm a
vertically integrated utility and my power is relatively
expensive and if I built interregional lines connecting me to
cheaper power sources, it would reduce the cost of my power,
which is great for my ratepayers, but not necessarily something I
want. So you're not only overriding or intention necessarily with
landowners and counties or whatever, but the utilities themselves
are probably not going to be enthusiastic participants in a
nationalization like this.


Liza Reed


That's right. And when I say whose business plan is it
interrupting? I don't mean it like I have some emotional
attachment to someone else's bank account. It's more that those
business models impact choices that are made in supporting the
transmission in their footprint, right. In ensuring the actual
reliable electricity delivery to your house. Because it isn't
transmission that connects to your house, it is distribution that
connects to your house. All these systems are integrated and so
the impacts of an NTA are significant. It will take time and I
think all of this needs to be grappled with very clearly before
we just say this should happen.


Because if this is done, I'm not suggesting that we can come up
with a perfect policy. That doesn't exist, but we need to come up
with an intentional policy right. And be continuing to have this
conversation and not just sort of slap something together.


David Roberts


I don't know, we're podcasters. I feel like it's our right to
wave our hands vaguely at a giant policy and move on.


Liza Reed


I want to touch very briefly on the private enterprise piece
because I do think the report does make it seem very incremental
and I'm actually in discussions with a couple of folks on how to
write an example that will spell out the private enterprise
piece. So that's clearer because again, if we want to build a
macro grid, it doesn't seem like something that private
enterprise can accomplish. Right. Do you want a private company
deciding if they are sending power to Texas in a crisis or if
they are willing to take a cut in prices because it's an
emergency?


Right. So you have to send the power, but you're not allowed to
charge for it. Right. Well, maybe you do. If there are rules,
there are ways that you can establish collaborations and
partnerships and RTOs and ISOs are an example. Maybe we can
improve upon that example. But private investment can move faster
than government capital in many cases, can move more flexibly
than government capital in many cases, and can see opportunities
in ways that the government can't. There's very likely a hybrid
solution that is going to be the ultimate solution. But it really
should be a thoughtful one that understands these questions and
considers implications and not just we were able to get backstop
strengthened, let's see what happens.


David Roberts


Right, but this idea that private capital is kind of smarter and
flexible and so on is part of what motivated previous reforms. I
mean, we're talking about how merchant power lines are a tiny
fraction of the total. But FERC's idea was, let's create an
analogous market, analogous to wholesale power markets, where you
can actually have competitive — you can have private capital
coming in and competing to do the best, fastest, most efficient
job, and it just completely hasn't. So you need some pretty
substantial reforms because clearly whatever's happening is not
working.


Liza Reed


Yeah, no, I completely agree with that. That is a point well
taken. So it is a big question to ask is, can this be done? And
then what would the gaps be?


David Roberts


Right. And so, I mean, when I think about a national transmission
authority and all the sort of cascade of questions that you raise
about where does it sit, how does it work, who's it accountable
to, how does it pay for itself, how does it interact with DOE and
FERC? How does it interact with states? I rapidly grow
overwhelmed and want to throw my hands up. So if national
policymakers read this report, took it to heart, said the system
we have is clearly not working. We're clearly not building
transmission fast enough. We're clearly specifically not building
interregional and national power lines as fast as every single
model says we need to if we want to hit these goals we have.


What would you like them to do? What is the right process to put
in place, to start working toward? Because the easiest thing in
the world reports come and go all the time. People are constantly
waving their hands at grandiose solutions to this and that. But
what is the incremental next steps? Who should take hold of this?
And what is the process by which we could put some kind of meat
on the bones?


Liza Reed


Right, so the primary takeaway is that we should just build
nuclear. I'm kidding.


David Roberts


Don't trigger — trying to trigger me.


Liza Reed


So the primary takeaway is that these are big conversations and
that they need to be ongoing. When it comes to policymakers, I
think there's a real opportunity to have a hearing about national
planning. That is actually one of the takeaways of this report,
right, is we need national planning because that establishes
clear metrics, that establishes clear definitions. It gets
everyone on the same page. Then do you implement that national
plan through a national transmission authority or implement it
through motivating private capital? But let's have some hearings
on a national plan and how to make that happen and where it
should sit.


David Roberts


Everyone seems excited about that step. No matter what report on
transmission you read, everyone recommends we've got to have a
national plan. But when I look at all the challenges, those
smaller scale challenges, I can easily imagine a national plan
being drawn up and then sitting somewhere. It seems like the most
likely outcome.


Liza Reed


There's a lot of threads that need to move forward here. That's a
great call. It is not just a national plan. But I do think
hearings on a national plan and how to define a national plan and
where a national plan should sit is an incredibly important next
step. The other one is to give me a couple of million dollars to
figure out the answer to this question.


David Roberts


Excellent. Excellent idea for all my wealthy listeners.


Liza Reed


Yes, I'll take them $5 at a time. We'll put them in a little. But
it is that we need to be engaging in these conversations, right.
That I want policymakers to have a sense of what questions they
should be asking. Right? That this is a business model question,
that this is a speed question, that we need to be having these
difficult conversations and then figuring out what the path
forward is. And I don't think those difficult conversations are
happening.


David Roberts


Right? And just sort of as a final question, obviously, to take
any action on a national plan is going to require law. It's going
to require statutes. This is something that's too big and
comprehensive to be achieved through executive level, like
executive action, just tweaking agency rules. You're going to
need Congress to take hold of this and run it. And I don't know
if you've met Congress, but it's not distinguished by its —


Liza Reed


Yeah, no, I invited them to my last birthday party, and they were
pretty dull.


David Roberts


Not super sharp, not super fast, and unable to come to agreement
on almost anything. So what is your sense of the partisan valence
of this? Is this one of those rare, rare issues that you might
actually see some productive bipartisan discussion on, or is this
just going to ground out in some stupid culture war whatever?


Liza Reed


I do think there's a real opportunity for bipartisan efforts
here. We already have some transmission in the bipartisan
infrastructure bill. Those discussions recognize transmission as
infrastructure. Identified permitting — they worked on permitting
through strengthening backstop authority. There's a paying piece
in there, the transmission facilitation program. So there is
clearly — that is a signal that there's a bipartisan opportunity
here.


David Roberts


Can I pause there? What's the steps they've taken in the
bipartisan infrastructure bill? There's money, but money is just
one thing. In terms of those other reforms relative to all the
things we need, how far down the line have they gotten? Are you
impressed with what's in the bipartisan infrastructure bill? Or
is this sort of like barely a first step kind of thing?


Liza Reed


Can I say both? Since we have taken no steps in 15 years, the
first step is the biggest, but it has to keep moving, right. We
can't wait another 15 years. Right. So this has to be the
beginning of that recognition, right? We had this bipartisan
agreement. We recognize that transmission needs more attention.
And this is where I know, in fact, that we at Niskanen and Clean
Air Task Force see this as a call to action to be continuing to
engage in these conversations. Clean Air Task Force and Niskanen
do not come at this problem from the same perspective.


But we both see the need here. We both have folks that we are
trying to talk to and folks that we are trying to learn from and
there is real opportunity for bipartisan, attractive solutions
here, right? We are talking low cost power, we are talking rural
economic development, we are talking reliability and resilience
in cities. I used to live — I just moved to DC but prior to that
I was in Cleveland, Ohio where reliable power was a real
challenge.


David Roberts


I mean this is frustrating in so many areas of climate policy,
right? I mean you can sort of envision big things happening that
are absolutely of benefit to almost everyone. This is what's so
frustrating. No one is, but maybe like a few utilities, is
benefiting from the sort of current constipated system but it's
just like trying to get everyone to look past their immediate
proximate interests to this larger interest is always the policy
challenge.


Liza Reed


Indeed. It is not a small issue and you're right to point that
out. But this report hopefully raises — god, raises awareness.
Yeah, raises awareness.


David Roberts


The dread phrase.


Liza Reed


I know. I hate myself. I take it back.


David Roberts


Well in this case it's true. I mean I will say normally I hate
the phrase raises awareness but in terms of transmission's role
in decarbonization I feel like the past several months, even past
year maybe, really has seen a huge leap in awareness about this.
When I first started writing about it on Volts, not even a year
ago, even then it felt pretty obscure. But even since then it's
just like it's become a front burner topic. So this might be one
of those rare areas where you can say raise awareness without —


Liza Reed


Thank you.


David Roberts


without shame.


Liza Reed


I think I've used this phrase before, and now I'm going to get it
on the record here. I agree with you. Transmission is having a
moment, but it needs to turn into momentum.


David Roberts


Turning a moment into momentum. Oh, that's pretty good. That's a
good slogan.


Liza Reed


Thank you. Yes, thank you.


David Roberts


That's why you deserve these millions of dollars to move this
forward.


Liza Reed


I think one of the barriers that transmission has also had in the
past is that it is very easy to get pulled down into the
technical. And one of the things that this report I think does
really well is keeps it up at the policy, right? That we can move
forward with policy while figuring out the technical. We don't
need to have them so bound together that it essentially becomes
gatekeeping about who's allowed to talk about transmission.


David Roberts


Yes, I meant to say that earlier, actually. I read this report
and it's really for being about such a technical area it's
remarkably readable like I encourage if you're listening, just go
read the report. It's not that long, and it's all pretty plain
language, and it really gives you a global sense of what a mess
this all is and what the need for reform is.


Liza Reed


Thanks, Dave. I really appreciate that.


David Roberts


Well, thanks for coming on and taking all this time, Liza. I
appreciate it.


Liza Reed


Yeah, no, this is great, Dave. Thank you.


David Roberts


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