The Myth of the Transmission Deficit

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

We don't know what caused the Aug. 14 blackout, but somehow we know that our transmission system needs $50 billion to $100 billion in investment and upgrades. And utilities need higher returns to raise that kind of money. Talk about making lemonade out of lemons.

The reality is that we aren't short $50 billion or $100 billion in our transmission system. The study said to support that proposition just doesn't do the job.

The commonly cited signs of trouble-frequency of calls for transmission loading relief (TLRs) and magnitude of congestion cost-do not support any particular level of new transmission. The TLRs that curtail firm transmission are few and far between. Congestion cost is a measure of energy price differences-not an automatic mandate for more transmission.

Instead of macro estimates for new transmission, we need regulatory structures that will give the right micro answers to two questions: What new transmission is needed to sustain reliability? What new transmission is needed for economic purposes?

The need for -based transmission has been, and should continue to be, the focus of micro, bottoms-up analysis by the regional reliability councils. A stable environment for the systematic determination of need to sustain reliability will have no problem attracting capital on a traditional, regulated basis.

The need for -based transmission should be determined by the market. So long as transmission is enabled to compete with other solutions, capital will flow to the most efficient approach.

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