A no-holds-barred interview with the electric industry’s chief architect of wholesale electric market design.
Transmission expansion is only part of the remedy for system constraints.
Building new transmission across the entire United States is a concept that continues to dominate discussions about the future of electric power. Many believe large amounts of power need to be moved across the country, or that transmission is needed to relieve congested areas, or to make sure enough renewable power is built.
Con Edison supports building new transmission when needed and the increased use of clean energy. Con Edison principally operates in a restructured State—New York—and has divested most of its generation. 1 We believe the best way to achieve clean energy is to set an economy-wide price on greenhouse-gas emissions. We also believe that the discussion about transmission must be based on sound evidence so that the most economically efficient solution is reached.
Consumers shouldn’t be exposed to unnecessary and unfair costs to build transmission, especially if it isn’t needed for reliability. For example, one of the key features of the recent FERC NOPR on transmission planning and cost allocation is the proposal to consider transmission and non-transmission solutions, a feature that has existed for several years as part of the planning process in New York. 2
Moreover, power from the Midwest—even clean renewable power—isn’t necessarily needed to meet renewable energy goals. New York State has its own ambitious clean energy goal, to achieve a 15-percent reduction in electricity consumption by 2015 and to have 30 percent of electric power come from renewable sources by 2015. 3 And the state has allocated more than $4 billion to achieve these goals. Con Edison supports these goals, which will require sustained efforts to increase both energy efficiency and renewable power, including the increased use of solar in downstate urban areas where it will have the most benefit, and the potential use of offshore wind. In addition, there’s significant wind potential in upstate New York ( i.e., approximately 6,000 MW), and the New York Independent System Operator (NYISO) recently has completed a wind study that shows the need for limited investment in lower voltage transmission facilities in order to make that wind deliverable. 4New transmission isn’t necessarily the only way, or optimal way, to address power flow constraints that can result in increased prices. In particular, recent changes in the natural gas supply outlook and pricing must be considered, especially across the Northeast, where natural gas is the fuel on the margin much of the time and thus the primary driver for the level of electric price congestion. 5 As a result of recent increases in shale gas production, the market price of natural gas has dropped significantly and might stay at these new lower levels. Shale gas development repeatedly has been described as a game changer and has contributed to the dissipation of natural gas price differences among regions. 6 FERC staff recently reported that the “United States is closer than ever before to being a single natural gas market with congestion limited to a