When regulators grant changes to utility rates of return, they estimate growth on the basis of gross domestic product (GDP). But do utilities have any chance of growing at the same pace as GDP?...
Transmission Investment: All Talk and Little Action
Except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward.
There's plenty of talk about transmission, says Theo Mullen. "But real action on transmission construction is scant," he adds. "Conferences and reports abound. Projects of all sizes are being proposed. But, except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward. The vast majority of larger projects are stalled for lack of financial commitment." 1
Furthermore, the amount of money needed for transmission investment will depend on which categories are considered (). Opinions vary widely on the severity of our transmission problems and the need for additional capital expenditures. Steve Huntoon and Alexandra Metzner suggest we need "a stable regulatory environment" to address the "myth of the transmission deficit." 2 They believe new transmission needed for reliability purposes should be determined on a regional basis through existing institutions, and that transmission needed to relieve congestion should be built on a competitive basis when that is the most efficient solution to congestion. I, along with my earlier coauthor Brendan Kirby, believe that separating reliability from economic needs is very difficult and that substantial investments for both purposes are required. 3 Others believe that serious transmission problems exist but can be addressed in large part with nontransmission solutions, in particular dispersed generation and demand management. 4
Historical Data: Looking at the Numbers
For the past few decades, the Edison Electric Institute (EEI) has collected and published data each year on the number of circuit miles of transmission lines in the United States. 5 Since 1989, the North American Electric Reliability Council (NERC) has published similar data. 6 Together, these two data sets provide a long historical record on the amount of transmission capacity available to move electricity from generators to distribution systems.
Although these data sets contain much useful information, they suffer from data-quality problems. For example, the NERC data show several occasions when the transmission mileage in a region drops from one year to the next. Almost 20 percent of the year-to-year changes in historical transmission mileage show declines. It is highly unlikely that a utility would retire a line from service rather than replace the conductors or towers with newer ones (perhaps with higher voltage and MVA ratings).
In addition to data-quality issues, multiple issues () complicate the interpretation of this data. In particular, the location of generating units relative to load centers has an enormous effect on the need for transmission. Also, not all transmission facilities add mileage to the system; devices such as transformers, capacitor banks, breakers, meters, and communication systems are important elements of the grid.
The NERC data from 1989 through 2002 and the EEI data for the earlier years allow for the development of a record of transmission capacity (in both circuit miles and megawatt-miles); see top part of Fig. 1. 7 Utilities added transmission lines at a much higher rate during the first four years of this period than during the following 20 years (3.8 percent versus 1.2 percent per year).
Normalized capacity figures by peak