Eminent Domain: Taking One for the Team

Transmission upgrades are getting a lot of attention.  Congress mandated "incentives" and gave FERC preemptive authority for siting.  The U.S. DOE is allocating millions for inter-regional studies.  FERC is allowing high generation prices to attract more transmission.  Regional transmission organizations, new generation entrants, utilities, and non-utilities are all pressing for multi-state plans to get power moving.

Then there are the property owners.  I often get calls from the media asking, "What's this 'eminent domain' thing?"  It's the government power to take private property, paying the owner the constitutionally required "just compensation," when the public interest requires.  Most states grant this power to their utilities.  So some homeowners are beginning to learn—and experience—how important their property is to the nation's need for transmission.

There's nothing new about the power of eminent domain.  What's new are the requestors and their reasons.  In the simple old days, the requestor was the utility, the reason was "obligation to serve."  The utility had to show three things: (a) it would use the acquired property to provide obligatory services to its utility customers, and not for its private business interests; (b) the acquisition was necessary to render adequate service to the public; and (c) the action would not unduly interfere with orderly, scenic development.  See, e.g., Narragansett Electric Company, 65 PUR4th 198 (1985) cert. denied, 544 A.2d 121 (1988).

Today's transmission efforts involve new requestors and new reasons.  The requestors include not only the local utilities; but also distant utilities, generation entrepreneurs, even non-utility transmission entrepreneurs, all of whom want to invest in power plants distant from load or invest in transmission to carry that power to load.  These are the new entrants, seeking to diversify our power sources, trying to bring competitive accountability to an industry some see as soggy from century-long franchises. 

The problem is, they're not utilities, they're entrepreneurs.  And their offerings stem not from any obligation to serve, but from a strategy of "build and they will come."  So they can't easily sing the first two tones of the eminent domain triad.  But if we keep granting eminent domain power to the utilities and not to the competitors, how fair is that? 

States are struggling toward solutions.  Let me know your ideas.

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