Contrary to conventional wisdom, electricity demand isn’t immune to price elasticity, and rate designs can encourage conservation. In particular, inclining block rates coupled with dynamic pricing...
PJM Addresses Local Supply Issues
Electric shortages and the generation overbuild continue to co-exist.
horizon from 5 to 15 years to better address reliability and economic needs and major system changes.
The first 15-year RTEP was approved in June 2006. PJM expects its board-authorized $1.3 billion in transmission additions and upgrades by 2011 to result in annual congestion cost savings of $200 million to $300 million. PJM approved Allegheny and Dominion Energy’s proposed 240-mile, 500-kV transmission project between southwestern Pennsylvania and northern Virginia. This project is estimated to cost $800 million to $850 million, with commercial operation planned for 2011. Allegheny and Dominion plan to initiate construction in 2009.
In addition, the PJM RTEP has identified areas with major physical constraints that together with robust load growth, generation retirement, and slow generation development affect the system’s ability to handle customer demand reliably: Eastern PJM, Southwestern PJM, and the Delmarva Peninsula. The RTEP continues to draw attention to limited energy transfers into Southwestern PJM and Eastern PJM through the interstate transmission system from the west, augmenting reliability and congestion concerns. The RTEP identified six facilities as limiting west-to-east transfers:
• Bedington - Black Oak 500-kV line;
• Wylie Ridge 500/345-kV #5 and #7 transformer;
• Doubs - Mt. Storm 500-kV line;
• PJM Central Interface/Juniata 500 kV;
• Harrison - Kammer Tap 500-kV line; and
• Fort Margin - Pruntytown 500-kV line.
Project Mountaineer Enhances West-to-East Transfers
In May 2005, PJM introduced the “Project Mountaineer” concept to identify required transmission projects to improve the ability of the cheap coal-fired generation in the west to access eastern PJM. This initiative establishes cooperation among PJM, state regulators, the coal industry, and PJM utilities to advance the required upgrades and address siting, environmental, cost recovery, and ownership issues. Project Mountaineer uses the RTEP process to evaluate alternatives for improving fuel diversity and relieve west-to-east transmission congestion. It initially was estimated that between 550 and 900 miles of 500- or 765-kV lines, at a cost of $3.3 million to $3.9 million, would be needed to increase west-to-east flows by up to 5,000 MW. 4 Last year, two major projects—detailed below—were proposed to achieve the benefits of Project Mountaineer.
AEP Interstate Project
On Jan. 31, 2006, AEP proposed through its new subsidiary, AEP Transmission Co. LLC, to develop a 765-kV transmission line and associated facilities originating at its Amos 765-kV station in West Virginia, extending through Allegheny Power’s Doubs Station in Maryland, and terminating at Public Service Electric and Gas’ Deans Station in New Jersey. The line would run about 550 miles and cost approximately $3 billion—if built above ground and excluding necessary related upgrades by utilities. AEP projects an in-service date of 2014 for this project, assuming three years to site and obtain certifications and five years to construct.
Referring to PJM’s high congestion costs, AEP stresses that its transmission development would bring about substantial congestion relief and reliability improvements increasing Midwest-to-East transfers by 5,000 MW and fulfilling the published goal of Project Mountaineer. In addition, AEP Interstate would reduce peak-hour loss by 280 MW, and provide opportunities for the development of interim transmission investment by incumbents that eventually would integrate