Transmission Spending Trails Need

Nationwide investments in transmission continue to fall behind those of the rest of the world and trail the need despite the 60 percent jump in such spending planned by the nation?s electric utilities, National Grid chief executive officer Nick Winser told a Federal Energy Regulatory Commission conference April 22. The resulting ?risk-reward equation clearly does not work for investors,? stated Brendan Kirby, a senior researcher at Oak Ridge National Laboratories. To change the equation, Kirby called on FERC to increase regulatory certainty. That would include separating new transmission project cost recovery from the entire cost-of-service rate, reducing the process time and providing decision certainty before investments are made. Beyond the basic regulatory problems are conflicting federal and state regulatory policies that can result in unrecoverable costs, according to Southern California Edison chief executive officer Alan Fohrer. He added that growth in utility transmission spending lagged behind the nation?s growth in electricity demand from the mid-1970s until 1999. ?Since 1999, however, we have seen a dramatic reversal of this trend through strong growth in transmission investment by the industry,? Fohrer said. He cited a recent Edison Electric Institute (EEI) survey showing that annual spending increased from $2.6 billion in 1999 to $3.6 billion by 2000, and continued growing steadily to hit $4.1 billion by 2003. ?Industry plans for the future are even more impressive, reaching levels not seen in the last 30 years,? Fohrer said. A recent survey of EEI member companies reveals a projected $28 billion in new investment over the 2004-08 time period. When compared to the $18 billion in recorded investment over the 1999-2003 period, projected investment is expected to increase by 60 percent. As a case study, the conference looked at the $3.3 billion Frontier Line announced early this month by the governors of California, Nevada, Utah, and Wyoming, a power line that grew out of the Rocky Mountain Area Transmission Study started in September 2003 ( Circuit , April 8, 2005). Steve Ellenbecker, an energy policy adviser to Wyoming governor Dave Freudenthal, told the conference that the Frontier Line is part of the study?s recommendation that calls for a $12.3 billion investment in generation and transmission and proposes two transmission lines into California?one into the Bay Area from Idaho and the other into the Los Angeles area from Utah.

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Transmission Spending Trails Need

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