In Minneapolis, a federal energy regulator says an “outdated” electrical grid needs modernization

There is a ‘generational need’ to invest in the country’s outdated electricity grid to power: greener economy, says Allison Clements, a member of the powerful Federal Energy Regulatory Commission. Significant new federal policy could unlock these improvements.

“It’s pretty gradual, but important,” Clements said Monday in Minneapolis. “In many ways, this is modeled after what (Midwest regional grid operator) MISO is already doing.”

The policy requires electric grid operators to plan transmission line needs and costs for 20 years. This could help add new transmission lines and increase wind and solar power generation in the U.S., as these projects often struggle to connect to the grid. This principle can also help solve other problems, such as extreme weather conditions.

Democrats see the measure as an important way to help transition away from fossil fuels, although many Republicans fear it will impose costs on states that don’t want more renewable energy for projects built in states that do.

Clements spoke to hundreds of people at a downtown Minneapolis hotel during a conference for state regulators in the Midwest.

Clements, who is leaving the commission at the end of this month, later spoke with the Star Tribune about the new broadcast rules and the upcoming sale of Allete to Global Infrastructure Partners, which would privatize the Duluth-based company. GIP is taken over by the investment giant BlackRock. Both transactions must be approved by the Federal Energy Regulatory Commission (FERC).

Some liberal consumer and environmental groups have raised transparency issues regarding the private company owning the utility and conflict of interest concerns over BlackRock’s extensive investments in the utility sector and Allete’s clients, such as iron mining companies.

The conversation with Clements has been edited for length and clarity.

Q: Can you touch on the importance of FERC’s new broadcast rule, especially for readers who are wondering what it might mean for them or why it’s such a big deal?

AND: Ordinary citizens don’t think about transmission lines or the process involved in flipping a switch or connecting an iPad. However, it turns out that building large infrastructure is difficult and takes a lot of time. That’s why you need to start planning for the future now. It’s just like planning a family vacation. If you plan a year ahead, you can get cheap flights, you can get restaurant reservations, you can get all the attractions. If you wait until the previous month, your options are much more limited and everything will cost more.

When you’re planning a network, if you’re thinking 20 years ahead, what will the economy look like? What type of production and industry will exist in my region? How much electrification will there actually be? And we don’t know the answer. All we know is that we’re wrong, right? But you try to use the best available information that we have today, and then you think holistically, we call it scenarios, a set of options.

So think about it, if gas prices stay high and inflation stays low, that’s one scenario. If extreme weather conditions turn out to be worse than expected, that’s a different scenario. So you start applying these models and taking advantage of the uncertainty of the future. This helps you make profitable investments in network infrastructure that will serve your families and your children’s families.

Q: Do you feel like Minnesota or the Midwest is lagging behind in some long-term plans? I know MISO is working on this themselves. How would you describe us?

AND: Actually quite the opposite. I would suggest that Minnesota and the Midwest are ahead of the curve and have provided a model for the rest of the country because they planned, built the necessary transmission, and facilitated significant economic development. And if the recent winter storms – Uri, Elliott – prove anything, these airlines have kept the lights on for customers in Minnesota and throughout the Midwest. And so they continue to bear fruit. Our governments have taken a lot of what’s going on in the Midwest and tried to apply it to the rest of the country.

Q: We are working on it $10 billion Midwest regional broadcast plan through MISOis now another draft plan for up to $23 billion this may be just the first part of a larger proposal. People might see this and think it’s a big number, it could cause sticker shock.

AND: Network investments are expensive: between $20 and $40 billion is already spent annually. Our network is old. It’s outdated. Most of them were created in the 1950s and 1960s. So if we think about the modern economy and how important energy and electricity is to the modern economy, it’s the right scale, the right order of magnitude of spending, and it doesn’t have to be spent every year indefinitely. However, there is now a generational need to invest in the infrastructure that powers our economy.

Q: Allete is being acquired by Global Infrastructure Partners, which is being acquired by BlackRock. There have been some concerns at FERC regarding potential concentration of energy problems. Can you share your views on this and if you have any doubts?

AND: I don’t want to talk about specific conduct. Even though I’m about to get out of this term, I’m still a commissioner… but I really think transparency and accountability are really important in corporate relationships and M&A in the energy industry. The competition has served customers best for decades. The role of the regulator is to really look carefully and consider every transaction that comes before us for approval.

Q: Is it generally good or is there any difference between a utility being privately owned and publicly owned? Is this usually good for payers?

AND: I think customers can be protected in both public and private models. I think that public energy, municipal authorities and cooperatives have a huge opportunity to innovate, to lead in the energy transformation, because they are created by the people they serve, their customers, and they have a different type of relationship with their customers. … I believe that regardless of the type of corporate entity, there is an opportunity to protect customers and keep the network affordable and reliable.