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Blackouts? never Again! (But...)

We ask merchant grid developers if anything can ever be done.
Fortnightly Magazine - October 1 2003

found no economic need for the project and would have denied permission to Pacific Gas and Electric to play a part in the multi-party project. At that time, Trans-Elect's Schroeder had shrugged off the interference, insisting that the PUC would not prevent his company from moving forward on the project, worth more than $300 million.

Trans-Elect would be supplying most of the funding, with PG&E upgrading existing substations and low-voltage facilities and the Western Area Power Administration (WAPA) adding new construction as well as taking title to the land. "It will have no impact on us, and if they don't build it, presumably we will find somebody who will," Schroeder explained.

However, back in March the legal decision was discouraging for those pushing grid upgrades anywhere in North America. California PUC Administrative Law Judge Meg Gottlieb questioned the very idea of looking to transmission expansion as a logical first step in improving wholesale power markets, instead of simply locating new generation closer to load, or improving regulatory oversight of power producers who exert market dominance.

"What this signals to us," Gottlieb wrote, "is a failure to regulate wholesale market players effectively, rather than a failure to build transmission infrastructure."

But the California commission reversed itself and is now supportive of Path 15, because of "a new chairman of the commission, Mike Peevey," Schroeder explains.

Merchant Transmission Boost

As to whether the job of upgrading our transmission system is best left to utilities or to merchant transmission companies, Krapels says the answer depends on location. "In the places where you have locational signals-the Northeast, Texas, California-I think the independent transmission companies are going to be in a much stronger position to compete compared to places like the Southeast, where I just don't see how they can compete," he opines.

Schroeder thinks not being associated with a utility company may make it easier for Trans-Elect. But he tempers that statement. "Part of the problem that a company like Trans-Elect has is that we are new, and newness is not the bellwether of the industry or the regulatory climate." But when a crisis like the August blackout happens, Schroeder thinks it makes a pure transmission company a more provocative option. "I think it may at least get us some attention so we can get in and buy some more systems and prove ... that this is the way to go," he notes.

A test for Trans-Elect came on Aug. 14. The company had spent $290 million on some 5,400 miles of Michigan transmission lines from Consumers Power to be operated by Trans-Elect subsidiary Michigan Electric Transmission Co., which sits in the blackout location. "As it turned out, we were involved in the events, and our system came right back up," Schroeder crows. "We had no permanent damage."

The blackout could be a boost for companies like Trans-Elect. "I think if it turns out that transmission lines played a key role in this incident, then I think there will be new calls for people to invest, whether they keep it or sell it," Schroeder predicts. Still,