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The Myth of the Transmission Deficit

The grid does not need a Marshall Plan for new investment.
Fortnightly Magazine - November 1 2003

needed for reliability, how can we determine what is needed for economic reasons? Where markets do not exist we will continue to rely on non-market-based institutions to identify, develop, and build new transmission. Where markets do exist and congestion costs are made explicit, the solutions will be market-based. New generation will compete with new transmission, which will compete with demand-side responses.

Our transmission system is not short $50 billion or $100 billion. What we need is a stable regulatory environment that identifies and installs reliability-based infrastructure on a timely and rational basis, and that lets market solutions compete to build whatever new transmission makes sense for economic reasons.

Endnotes

  1. (CBS television broadcast, Aug. 17, 2003).
  2. See John J. Failka, "Power Industry Sets Campaign to Upgrade Grid," . Aug. 25, 2003, at A3 ("The nation's electric power industry … is preparing to launch a public-education campaign to help it raise $100 billion from investors, governments and consumers to upgrade the nation's power grids.").
  3. The Joint U.S.-Canada Task Force does not expect to issue even a preliminary report before the end of the year, and the North American Electric Reliability Council will not issue its report until mid-2004. See "Blackout 2003: How Did It Happen and Why?" Hearings Before the House Committee on Energy and Commerce, 108th Cong. (Sept. 3, 2003). One voice in the wilderness has been Bruce Radford, publisher and editor-in-chief of . In May 2003 he wrote, "Where is the proof that the electric utility industry needs more investment in electric transmission? Is it not possible that we already have enough miles of high-voltage line?" Bruce W. Radford, "Grid Glut?," , May 2003, at 4.
  4. Eric Hirst and Brendan Kirby, "Transmission Planning for a Restructuring U.S. Electricity Industry," June 2001, available at: http://www.eei.org/industry_issues/energy_infrastructure/transmission/transmission_hirst.pdf.
  5. See, , Eric Hirst, "Expanding Transmission Capacity: A Proposed Planning Process," Feb. 2002, available at: http://www.ehirst.com/PDF/PlanningProcess.pdf; Eric Hirst, "Transmission Planning and the Need For New Capacity," Dec. 2001, available at: http://www.ehirst.com/PDF/TXPlanningNTGS.pdf;
  6. See Roger W. Gale & Mary O'Driscoll, "The Case for New Electricity Transmission and Siting New Transmission Lines," at 16, Sept. 2001; Stanford L. Levin, "Electricity Competition and the Need for Expanded Transmission Facilities to Benefit Consumers," at 10, Sept. 2001, available at: http://www.eei.org/industry_issues/energy_infrastructure/transmission/transmission_series.htm.
  7. See U.S. Dept. of Energy, "National Transmission Grid Study," at 7 and 50, May 2002, available at: http://tis.eh.doe.gov/ntgs/gridstudy/main_screen.pdf
  8. Edison Electric Institute, "Energy Infrastructure: Electric Transmission Lines," at 2 (last visited Sept. 25, 2003), available at: http://www.eei.org/industry_issues/energy_infrastructure/transmission/infrastructure2.pdf.
  9. The origin of the $100 billion figure is murky. The , supra, note 2, attributed this figure to the industry, which in turn relied on a report released by the Electric Power Research Institute in August of this year titled, "Electricity Sector Framework for the Future" ("EPRI report"), available at: http://www.epri.com/corporate/esff/. However, this EPRI report has no $100 billion figure; the closest thing is a reference to an October 2002 estimate by "energy analysts at the Oak Ridge National Laboratory" of a $56 billion need in this decade (EPRI report, Volume II, p. 30). It turns out that this reference is