Op-Ed: A new era in energy permitting will help power Nevada’s future

Las Vegas Sun

Heavy duty electric power poles blue sky

When it comes to regulatory landscape, it is very rare for anyone to report news that would be welcomed by both sides of the political aisle. But we experienced one of these rare moments last month, when the White House unveiled the creation of a “one-stop shop” for permitting related to power grid expansion.

Nevada is poised to benefit from streamlined processes as it connects burgeoning renewable energy sectors to national and local grids. The announcement is part of broader regulatory changes, including the EPA’s final power plant rule, which may spark heated debates, yet the focus on renewing and expanding the transmission network meets a critical need for Nevada’s economy and its rapidly growing clean energy production.

Each four years, the American Society of Civil Engineers (ASCE) evaluates the state of America’s infrastructure in 17 categories and grades it on a scale of A to F. Unfortunately, the report card prepared by ASCE continuously shows that the U.S. infrastructure is crumbling, with an overall grade of C-.

When it comes to America’s electricity infrastructure, the picture is no better. According to the latest report, despite the significant investment made by the electric industry to meet its customers’ demand, “transmission and distribution (T&D) systems still struggle with reliability. Eastern Missouri consumers are facing a 900 MW shortfall in power this fall and spring after a recent auction saw energy prices surge from $15 to over $700. The higher price still wasn’t enough to meet expected demand. This problem is likely to accelerate as the impacts of climate change persist and the public’s expectation of more reliable, ‘always-on’ electricity increases.”

The report also puts a price tag on the observed transmission and distribution problems. At the household level, these issues are costing $28 to $169 annually. For the newer critical industries that depend on reliable electricity, the costs are substantial: the cost for U.S. data centers grew from $505,000 in 2010 to $704,000 in 2016, which “equates to $8,851 per minute that the electricity grid is malfunctioning.”

Given these facts, it is not surprising that the grid system needs a major update which will require a significant investment. However, finding the capital for this upgrade has not been the only hurdle faced. The regulatory landscape is another big hurdle, holding back this much-needed investment. The approval timeline for projects varies wildly depending on states and localities involved on top of federal regulations. For example, the Transwest Express Transmission Project, from Wyoming to Las Vegas, took 18 years from initiation to just approval and has become the poster child for demonstrating the high regulatory bar that these projects have to overcome. According to the Department of Energy website, on average federal permitting for a new electric transmission line takes approximately four years.

The significance of the White House announcement is to make regulatory process more efficient in two ways: making the Energy Department the lead agency to coordinate the work of at least nine agencies that have a role in the permitting of power lines, and imposing a two-year deadline for completing the authorization process. Having a single agency overseeing the whole process potentially lowers the likelihood that projects get stuck in one agency, and the introduction of a deadline will further improve the efficiency and help reduce the costly uncertainties imposed on project stakeholders. This uncertainty ultimately increases the costs to consumers.

While everyone focuses on upgrading and expanding the aging transmission lines, as well as creating a system flexible enough to incorporate green energy, there is another important benefit of this regulatory improvement. A shorter, certain and efficient regulatory process could fuel investments in interregional and cross-interconnection transmission lines, like Transwest Express. This could help improve the resilience of the system through access to diverse generation resources across different climatic zones.

According to a recent study by GE Energy Consulting, the ability to export and import electricity is the most cost-efficient form of flexibility in the grid system. Their electric generation across the U.S. Eastern Interconnection simulations for various weather conditions in the 2035-2040 timeframe showed that greater transmission lowered capacity and ancillary service requirements, saving $2 billion in 2035. In another simulation, factoring in heat waves, they showed that greater transmission preventedabout 740,000 customers across New York City and Washington, D.C., from losing power, saving $875 million. A single intergrid transmission line in the Midwest, the Grain Belt Express project, would save Midwestern consumers $11 billion by 2041.

Nevada stands at a crossroads where effective regulatory reform could significantly enhance the state’s energy resilience, economic growth and environmental stewardship. Today’s announcement could serve as a model for reducing regulatory barriers across other economic sectors, reflecting a responsive government that meets the evolving needs of its people and the economy without unnecessary delays. In a rapidly evolving economy, no one needs, or has the patience, to wait 18 years to hear whether a project can be built.

Pinar Çebi Wilber is chief economist and executive vice president of the American Council for Capital Formation.

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Pınar Cebi Wilber’s research interests are diversified and include energy policy, tax policy, international trade and finance, and general government policy. Recently, Pınar has researched issues related to climate change legislation including the impact of such legislation on the U.S. economy. She has also done extensive research on the effect of government policies on retirement saving as well as the use of annuities in retirement.