In Search of... Transmission Capitalists

Deck: 
Facing a cash crunch, transmission owners look for new funding sources.
Fortnightly Magazine - April 1 2003
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Facing a cash crunch, transmission owners look for new funding sources.

In recent months, discussions about the shortfall in transmission have touched on market structures and regulatory issues related to participant funding, nodal pricing, independent transmission companies (ITCs), multi-state entities, and the role of standard market design (SMD). However, with much more investment in transmission required now than in the past, the major issue is finding money for transmission expansion. This is the essence of the capital expenditure ("capex") problem that persists currently in the industry.

Transmission financing is on the verge of dramatic change, with funding in the very near future coming from several sources that may surprise you.

Financing Sources

Of the three principal types of transmission investment, most utilities in recent years have focused with regard to transmission investment on retrofits-modest improvements to existing lines, transformers, operations, and rights of way to ensure the continued reliable flow of power from utility-owned power plants to their customers. Occasionally, the utility might need to upgrade (e.g., double-circuit) a line to enhance reliability and increase the flow of power, but such need is infrequent. Transmission was developed primarily to ensure reliability, rather than to support commerce.

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