**Testimony of James A. Dickenson,**

**Managing Director and Chief Executive Officer of JEA,**

**On Behalf of the Large Public Power Council**

**Before the United States Senate Committee on**

**Energy and Natural Resources**

**March 12, 2009**

My name is James A. Dickenson and I am Managing Director & CEO of JEA, a
municipally owned electric, water and sewer utility system located in
Jacksonville, Florida. JEA's electric system serves more than 400,000
customers in Jacksonville and parts of three adjacent counties. I am
testifying today on behalf of JEA and the Large Public Power Council
("LPPC").[^1] LPPC is an association of 23 of the nation's largest
municipal and state-owned utilities. Together, its members own
approximately 34,000 miles of transmission, representing nearly 90% of
the transmission investment owned by non-Federal public power entities
in the United States. LPPC members are located in states and territories
representing every region of the country. Our members are not-for-profit
entities that are directly accountable to our customers -- the citizens
in our communities. Our commitment is to provide highly reliable, low
cost and environmentally responsible electric service to our
citizen-customers.

LPPC members are among the industry's leaders in development of
renewable generation and energy efficiency, having invested, on average,
in renewable generation at a level above the industry average. For
example, Seattle City Light made its first wind purchase in 2000, far
before most utilities. Austin Energy now receives about 12% of its
energy from new wind resources, and will more than double this in the
next few years. Los Angeles Department of Water and Power (LADWP) plans
to receive 35% of its power from new renewables by 2020, perhaps the
most aggressive renewable goal in the nation. The Sacramento Municipal
Utility District will have 20% of its energy resources in renewables in
2010, with a goal of having 33% in renewables by 2020. Snohomish County
Public Utility District leads the country in FERC-approved tidal
applications. Our members in Florida and the Southeast, however, have
significant challenges when it comes to renewables, with biomass and
landfill gas resources as our best options.

On Monday, March 9 LPPC received proposed legislative language entitled
Siting of Interstate Electric Transmission Facilities, which proposes to
amend.Section 216 of the Federal Act (16 U.S.C. 824p). LPPC has not yet
had the opportunity to fully review and discuss this proposal. However,
we will comment on it in a supplemental submission for the record and I
will be prepared to discuss the proposal during the hearing on March 12.

My testimony today addresses the need for federal legislation to spur
the development of transmission facilities to bring new renewable
resources to market. I address four policy issues relating to new
transmission: siting, planning, cost allocation and proposals for
dedicating new transmission exclusively or predominantly to use by
renewable resources. LPPC members support transmission development
needed to deliver renewable and other generation resources, and believe
that enhanced federal siting authority would be particularly useful.
With respect to system planning, while we recognize that there may be
room for improvement in existing planning institutions and processes,
much is now being done at FERC's recent behest. We believe it would not
be productive to layer a new planning bureaucracy on top of the current
regime.

As to cost allocation, LPPC believes that the users of the proposed new
transmission facilities should pay for them. Some current policy
proposals provide for interconnection-wide cost allocation for new
transmission facilities -- that is, spreading the costs of new
transmission facilities constructed in the Eastern or Western
Interconnection to all consumers in the Interconnection.[^2] This cost
allocation policy is not necessary to encourage needed new facilities,
and may well discourage the development of more economical alternatives
for reducing greenhouse gas ("GHG") emissions, such as energy efficiency
and local renewables. I am particularly concerned, from the standpoint
of JEA and its customers, that the large subsidies for construction of
transmission contemplated by some current proposals would provide little
benefit to Florida, and would prove to be a costly burden. If Congress
establishes environmental goals for our industry through implementation
of an RES or carbon control measures, or both, Congress should let
utilities, state regulators, and regional transmission organizations
determine how to meet those goals most effectively by making economic
choices among an array of available options.

[**Options for Reducing Carbon Emissions**]{.underline}

Building transmission to access remotely located renewable resources is
only one of many means by which utilities may respond to requirements to
reduce greenhouse gases (GHGs). The Electric Power Research Institute
("EPRI") through its "Full Portfolio" analysis and McKinsey and Company
in its 2007 "U.S. Greenhouse Abatement Mapping Initiative" show a wide
variety of options that we may employ, including: energy efficiency
initiatives (many calling for capital investment); conversion of
existing generation to more efficient operations; the development of
additional nuclear capability; advanced coal generation and carbon
capture and storage; distributed renewable resources (including
distributed solar); plug-in hybrid vehicles and the development of
large-scale remotely located renewable generation.[^3] Many of these
options are also useful in meeting a Renewable Electricity Standard
("RES").

The EPRI and McKinsey studies demonstrate that we should take advantage
of the full range of alternatives available to us to reduce carbon
emissions. When considering these options from Florida's standpoint, or
the entire Southeast for that matter, we must also remember that the
available options depend very much on geography. It is clear that in the
Southeast, unlike the West, Pacific Northwest and Mid-West, we are not
blessed with substantial wind resources. The Department of Energy's
nation-wide study of wind resources shows plainly that there are no
significant on-shore wind resources in the Southeast, and limited
off-shore capability.[^4] It is telling that even American Electric
Power's ambitious proposal for a nation-wide transmission build-out does
not propose facilities in the Southeast.[^5]

What we do have in the Southeast is biomass capability, some limited
solar capability, the potential for nuclear development and the
opportunity to consume energy more efficiently. These options do not
call for an extensive transmission build-out, and it does not seem
reasonable or fair to me to call upon electric customers in the
Southeast to pay for transmission they cannot use. Certainly, I would
not expect others to fund the options we will choose for addressing RES
or GHG reduction requirements, including, potentially, new transmission
to reach off-shore wind resources. I believe that it makes a lot more
sense to permit utilities to make intelligent choices from among the
realistic alternatives they have available to them to meet RES and GHG
control requirements, without burdening them with costs of transmission
facilities useful only in distant regions.

**[Transmission Siting]{.underline}**

LPPC believes that where transmission to remotely located renewable
resources is sensible, there are measures Congress should take to
facilitate that development. LPPC agrees that state siting authority is
not sufficient to address interstate transmission to benefit renewable
resources. State authorities are generally restricted to considering the
best interests of their jurisdictions in isolation when deciding whether
to issue a Certificate of Public Convenience and Necessity or make state
eminent domain powers available for a project, leaving any state in a
proposed interstate transmission pathway in a position to exercise an
effective veto. Nor is current federal authority adequate to overcome
this barrier. While the Energy Policy Act of 2005 ("EPAct 2005") did
amend the Federal Power Act by creating a new Section 216, authorizing
the Federal Energy Regulatory Commission ("FERC") to exercise "backstop"
siting authority, the authority is of limited utility for renewable
resources. New Section 216 authorizes FERC to issue certificates in
instances in which states delay siting facilities that would address
transmission constraints in so-called "national interest corridors"
previously designated by the Department of Energy. However, it is my
understanding that these designations are generally not intended to
address transmission for renewable resources. I also understand that the
scope of federal authority was recently narrowed by the Fourth Circuit
Court of Appeals' decision in *Piedmont Environmental Council v. Federal
Energy Regulatory Commission* (Case No. 07-1651, 4th Cir., February 18,
2009), where the court held that a state order directly denying a
certificate application did not serve as a predicate for the exercise of
federal backstop authority.

I also believe that any additional federal siting and eminent domain
authority that Congress creates should be respectful, to the maximum
extent feasible, of state and local concerns regarding siting options
and land use. State agencies historically responsible for siting
transmission facilities are well-equipped to consider environmental and
land use issues, the impact on local economies and rates. These agencies
have an important role to play in determining routes subject to federal
siting authority.

LPPC's Western members have experienced significant obstacles to the
development of interstate renewable transmission projects from such
federal agencies as the Department of the Interior's Bureau of Land
Management, the Forest Service and the Department of Defense, to the
extent they are responsible for the administration of federal lands that
may be crossed by transmission for renewable resources. Federal land is
often traversed by large-scale transmission projects, and LPPC's Western
members report that lengthy review processes, and difficulty in valuing
benefits of renewable goals can be problems for these agencies. Here,
empowering a single federal agency, preferably FERC, to facilitate the
federal siting process would be very helpful.

Finally, I note that LPPC believes it would be a mistake for new
legislation extending federal siting authority to include restrictions
on the use of this new capacity. Some of the current policy proposals
would restrict the use of new transmission to renewable resources. These
proposals raise difficult issues regarding compliance with open access
requirements, verification and equity. In addition, dispatching power
into the grid under such a system would be tremendously complex. Such
requirements simply may not work when one considers the physics of the
electric grid and the intermittent nature of renewable resources.

**[Planning]{.underline}**

Coordinated interregional planning will be important in the development
of new transmission to interconnect renewable resources. There may be
room for improvement in the existing planning institutions and processes
-- but with the changes mandated by FERC in Order No. 890, I think they
are up to the task. In Order 890, issued last year, FERC directed the
implementation of new, region-wide planning processes that call for an
unprecedented level of regional coordination, transparency, and federal
oversight.[^6] Compliance filings by all utilities reflecting these
principles were accepted by FERC only a few months ago, and the
implementation process is now under way. Utilities in the Southeastern
United States, including JEA, are actively participating in a new,
region-wide planning process designed to address pan-regional planning
challenges and proposals.

Layering a new planning bureaucracy on top of what we are currently
developing is likely to be time-consuming and costly, and may delay
rather than expedite transmission development. As the industry moves
toward a more open, transparent and coordinated process under the Order
No. 890 framework, we have been careful to preserve the "bottom up"
nature of the planning function, since doing otherwise would risk system
reliability. There is no doubt that the focus of this process will
change as an RES or other measures governing GHG emissions are
implemented. But I believe Congress should be wary of turning the
industry's planning process upside-down at the very time we most need a
careful, considered response to the new stresses that will be placed on
the grid.

**[Cost Allocation]{.underline}**

The cost of the proposed transmission build-out is unknown at this time.
However, a recent transmission study undertaken by the Midwest ISO, SPP,
PJM, TVA and MAPP in the Joint Coordinated System Plan 2008 ("JCSP")
estimates that the investment in transmission in the Eastern
Interconnection alone to meet the 20% wind energy scenario studied by
the Department of Energy in its Eastern Wind Integration and
Transmission Study would be \$80 billion. I think it is reasonable to
assume that a nationwide program may cost as much as twice that amount.

If Congress adopts an RES, and with the potential for other carbon
control measures, utilities will have every incentive to respond in the
most cost-effective manner possible, in view of the resources available
to them. Utilities will do what they need to do to meet these goals, and
if building transmission to access remote renewable resources is the
most economical alternative, that is what they will do. However,
allocating the cost of that transmission on an interconnection-wide
basis will tilt the playing field dramatically away from any
alternatives that do not depend heavily, or at all, on transmission. If
the cost of transmission to remote resources is essentially free from a
system planner's standpoint, other alternatives to meeting carbon
control requirements will be significantly less economical by
comparison. Low cost, subsidized transmission for distant renewables
should not be allowed to crowd out energy efficiency and local
renewables.

At such time as a Federal RES and some form of carbon control regime is
in place, utilities will have a powerful incentive to employ all
available options for GHG emission reductions. Of course, many utilities
will make plans to build new transmission facilities to access remotely
located renewable resources, while project developers will have reason
to invest in such facilities in order to access newly motivated markets.

A good deal of work on transmission for renewables is already being
undertaken, particularly where state RES requirements are already in
place. According to the North American Electric Reliability
Corporation's (NERC) 2009 Long-Term Reliability Assessment,
approximately 11,000 more transmission miles are planned between now and
2012, a substantial addition to the existing network of 164,000 miles,
and more than the system has experienced for many years. Much of this is
specifically aimed at integrating new wind resources into the electric
grid. For example, there are two major transmission projects in the West
planned for completion in 2014 to integrate renewable resources. Each of
these 1,000-plus mile lines will facilitate the delivery of 3,000 MW of
primarily wind generation from the northern plains to load centers in
the Southwest.

Some argue that without an interconnection-wide funding mechanism,
needed transmission would not be built. This seems incorrect to me, and
it ignores the unavoidable incentive that an RES or carbon control
framework will establish. Faced with a direct mandate, or a substantial
financial incentive, utilities will respond in full compliance with the
law. Where economical, they will build or fund new transmission systems.
Whether the investment compelled by these new requirements will support
all of the high voltage facilities contemplated by some project
developers is an open question. But it doesn't make sense to judge the
economics of these lines in a vacuum. If it makes economic sense to
build new transmission facilities, when one looks at the available
resources and demand and compares the cost of construction to all of the
available alternatives, they should be built. Project developers should
be making these judgments based on projected generating capacity,
anticipated demand and the cost and efficiencies of the facilities.
There is no need for legislation addressing cost allocation that would
effectively prejudge those decisions.

**[What Interconnection-wide Cost Allocation Would Mean For
Florida]{.underline}**

The options for renewable generation to meet the RES in the Southeast
include further reliance on biomass resources, the development of
additional solar facilities, a substantial investment in efficiency and
demand response initiatives, and the potential development of off-shore
wind resources. These options do not depend on a large scale
transmission build-out, and no one has made a good case for facilities
that would cross half a continent in order to supply Florida with
additional wind resources. As I noted above, the transmission build-out
proposals I have seen leave Florida and the Southeast out of the
mix.[^7]

The effect of this, from the standpoint of JEA's customers, would be to
call for what amounts to a substantial tax, with no practical benefit
from an environmental standpoint. JEA will do what it must to meet RES
requirements, generate renewables or purchase renewable energy credits,
but adding an interconnection-wide fee for transmission facilities we
cannot use makes no sense.

**[What Congress Should Do]{.underline}**

LPPC's view is that Congress should focus on clearing away obstacles to
transmission development where they exist. These steps include
implementing further federal transmission siting authority that is
respectful of state and local concerns. Further, a full review of
existing statutes and federal agencies involved in authorizing
transmission across federal lands should be undertaken, in order to
respond to what I am told is the substantial need for coordination among
all federal permitting processes.

What Congress should [not]{.underline} do, in LPPC's view, is create an
additional bureaucracy to oversee system planning, or require the
interconnection-wide cost allocation of new transmission investment. The
need to respond to an RES will drive transmission investment where that
makes sense. The "socialization" of transmission costs would be a costly
subsidy that would suppress other, potentially more economical,
alternatives to meeting renewable energy and GHG control goals.

[^1]: ^1^ LPPC's members are Austin Energy, Chelan County Public Utility
    District No. 1, Clark Public Utilities, Colorado Springs Utilities,
    CPS Energy (San Antonio), IID Energy (Imperial Irrigation District),
    JEA (Jacksonville, FL), Long Island Power Authority, Los Angeles
    Department of Water and Power, Lower Colorado River Authority, MEAG
    Power, Nebraska Public Power District, New York Power Authority,
    Omaha Public Power District, Orlando Utilities Commission, Platte
    River Power Authority, Puerto Rico Electric Power Authority,
    Sacramento Municipal Utility District, Salt River Project, Santee
    Cooper, Seattle City Light, Snohomish County Public Utility District
    No. 1, and Tacoma Public Utilities.

[^2]: The Eastern and Western Interconnections are the separate
    interconnected transmission systems in the Eastern and Western
    United States. A separate Interconnection operates in Texas.

[^3]: See mydocs.epri.com/docs/public/DiscussionPaper2007.pdf; and
    http://www.mckinsey.com/clientservice/ccsi/greenhousegas.asp.

[^4]: *See http://www.windpoweringamerica.gov/wind_maps.asp.* .

[^5]: *See*:
    <http://www.aep.com/about/i765project/docs/WindTransmissionVisionWhitePaper.pdf>.
    The map at p. 8 of that proposal shows no facilities planned for the
    Southeastern United States.

[^6]: *Preventing Undue Discrimination and Preference in Transmission
    Service*, Order No. 890, 72 *Fed. Reg.* 12,266 (March 15, 2007),
    *FERC Statutes and Regulations*
    [¶31,241](javascript:rDoDocLink('NON: FERC-FEG-05 P31241 ');),
    *order on reh\'g,* Order No. 890-A, [121 FERC
    ¶61,297](javascript:rDoDocLink('NON: FERC-ALL 121FERCP61297 ');)
    (2007

[^7]: *See* AEP's proposal for building the new green grid at
    <http://www.aep.com/about/i765project/docs/WindTransmissionVisionWhitePaper.pdf>.
    The map at p. 8 of that proposal shows no facilities planned for the
    Southeastern United States.