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Think tanks worry what Binz-led FERC would do on grid cost allocation, demand response

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Think tanks worry what Binz-led FERC would do on grid cost allocation, demand response

The Competitive Enterprise Institute and the Colorado-based Independence Institute are concerned that Binz will not keep consumers' interests in mind if he leads FERC and that he would promote subsidization of demand-side management products and socialization of electric transmission costs, William Yeatman said in a recent interview. Yeatman is an energy policy analyst for the Independence Institute's energy policy center and assistant director of CEI's center for energy and environment.

Yeatman's criticisms of Binz's leadership priorities date back to when Binz was the chairman of the Colorado Public Utilities Commission. Binz was appointed PUC chairman in 2007 by then-Gov. Bill Ritter. In that capacity, Binz was a key player in enacting the democratic governor's climate change plan.

Binz has been "an unabashed supporter of green energy," which is not in itself a problem except "to the extent [that] he's not been sensitive to ratepayer concerns," Yeatman said.

"It was under [Binz's] watch that the PUC changed its mission from providing least-cost electricity, to promoting expensive, 'green' energy," Yeatman said in a February 2011 blog post about Binz's decision not to seek another four-year term as PUC chairman. "As such, [Binz] is in part responsible for the precipitous rate increases that Colorado electricity consumers are now experiencing, and will continue to endure, for the foreseeable future."

Yeatman, in the recent interview, acknowledged that FERC has already issued a demand response compensation rule. As chairman, "Binz would be in a position to advance that indirect subsidy for the demand-side management industry," he said.

Yeatman also noted that FERC has allowed a number of regional grid planning groups to socialize the costs of high-voltage power lines. "Even within the regime created by Order 1000, there's huge leeway for FERC to determine the extent to which these costs are allocated," he said.

Given that the implementation of Order 1000 is being handled on a case-by-case basis, "there's a lot of space in there — a lot of grey area — where FERC can advance the socialization of those costs," Yeatman said.