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Transmission Investment: All Talk and Little Action

Except for local reinforcements and new generation interconnections, few transmission construction proposals are moving forward.
Fortnightly Magazine - July 2004
  1. total U.S. transmission grid, with municipal, federal, and rural cooperative utilities, and transmission-only companies owning the rest.
  2. Data for the last three years are from NERC.
  3. North American Electric Reliability Council, "Transmission Loading Relief Procedure Logs, Trend Charts,"
    ftp://www.nerc.com/pub/sys/all_updl/oc/scs/logs/trends.htm, Princeton, N.J., accessed Jan. 18, 2004.
  4. NERC has six levels of TLR, ranging from 1 (least severe) to 6 (emergency conditions). Level 2 requires the system operator to "hold Interchange Transactions at current levels to prevent Operating Security Limit violations." Higher levels restrict nonfirm transactions first and then, if necessary, firm transactions.
  5. North American Electric Reliability Council, , Princeton, N.J., May 2003; North American Electric Reliability Council, 2003/2004 Winter assessment, Princeton, N.J., November 2003; North American Electric Reliability Council, 2003-2012 Reliability Assessment, Princeton, N.J., December 2003.
  6. According to Jones (personal communication, Electric Reliability Council of Texas, Taylor TX, February 2004), "ERCOT is very active in improving its transmission infrastructure and has added over 700 miles of new 345 kV and 200 miles of 138 kV transmission in the past three years. Many more miles are now in the construction and certification phase."
  7. Only seven of these projects are retirements, with a total of only 220 miles of transmission lines to be retired between 2002 and 2012. Even if transmission lines have a 50-year lifetime, at least 2,500 miles would be retired each year (or, more likely, replaced with newer facilities using the same right of way). The unreasonably small number of retirements is another indication of data-quality problems.
  8. Projections of new transmission capacity have traditionally been optimistic, overstating the construction that actually occurred.
  9. L.S. Hyman, "The Next Big Crunch: T&D Capital Expenditures," , 86!93, R.J. Rudden Associates, Hauppauge, N.Y., January 2004.
  10. T. Boston, personal communication (citing a study done by the Electric Power Research Institute), Tennessee Valley Authority, Chattanooga, Tenn., April 2004.
  11. Energy Information Administration, "Agency Information Collection Activities: Proposed Collection; Comment Request," 69(64), Washington, D.C., April 2, 2004.


Transmission Infrastructure: How Much To Invest?

How much should we invest in the U.S. transmission grid to meet the needs of our growing economy? Estimates range from $27 billion over the next several years1 to $50 or $100 billion during this decade.2 The answer to this question is fraught with difficulties, including:

  • Size and shape of load: How do population and economic growth, combined with changing technologies, affect growth in electricity use (megawatt-hours) and demand (megawatts)?
  • Location of generating stations: How does the spatial distribution of generation (addition of new units minus retirement of old units) change over time? In particular, are new units primarily built near load centers or in remote locations (, wind- and coal-fired stations)? What is the relationship between the locations of generating units and the topology of the transmission network?
  • The importance, as a policy matter, of robust wholesale electricity markets: More transmission will be needed, all else equal, if national policy favors large regional markets for electricity (as does the Federal Energy Regulatory Commission [FERC] through its initiatives promoting regional transmission organizations and standard market design). On the other hand, if we return to the days of