Challenges of Transmission
Realizing a robust and effective 21st Century grid requires advanced and coordinated planning; a more efficient siting process; removing barriers to investment; and sharing costs equally across all the stakeholders who benefit from new or upgraded transmission lines.
The transmission grid is a vital part of our country’s infrastructure along with highways, railroads and bridges. Frequently, these other infrastructure investments are seen as more important to our country than electricity investments. But our grid originated in the 1880s. The bulk of the high voltage system that is now so important was built post-WWII. Currently the majority of U.S. transmission lines and power transformers were built before 1980 and still emply analog, electro-mechanical technologies. congestion and higher costs are likely.
“Much of the U.S. energy system predates the turn of the 20th century. Most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and more than 640,000 miles of high voltage transmission lines in the lower 48 states’ power grids are at full capacity. . . . Without greater attention to aging equipment, capacity bottlenecks, and increased demand, as well as increasing storm and climate impacts, Americans will likely experience longer and more frequent power interruptions.”
– American Society of Civil Engineers, 2017 Infrastructure Report Card
State policy and regulation
As much as 85% of the electric utility business is regulated by individual state public service commissions, a testament to the local origins of the electric power business. The federal government is barred from retail regulation. However, the high voltage transmission infrastructure that allows electricity, including renewable energy resources mandated by state, is a “superhighway” for electrons that operates without regard for state, utility, or even regional market boundaries. Because transmission infrastructure remains subject to the patchwork of state, regional, and federal regulation, its development will be costly, inefficient, and severely hampered by multipleplanning and permitting process, and construction rules that can delay projects a decade or more.
States, and in some cases federal land management agencies, are vested with authority to site transmission infrastructure and, de facto, to make determinations about the public interest. Projects that straddle multiple states and technologies like storage, metering, and distributed generation increasingly blur the lines between federal and state jurisdiction. Regulation may become increasingly dysfunctional as a result.
“High Voltage transmission lines will . . . permit the movement of low-cost wind and solar from High Plains and Southwest states to other regions. Such low-cost energy will supplement the higher-cost, locally generated renewable energy to balance energy costs and local job creation pressures.”
– Kansas Rep. Tom Sloan, (2017)
Thirty-one states have some form of renewable energy requirement for their incumbent utilities. These will likely persist regardless of the fate of the Clean Power Plan. Most of the renewable energy potential exists in so-called Red States.
“Unlike that of many other forms of infrastructure, the obstacles to expqnding and modernizing our grid are mainly related to policies and regulatory practices, not a shortage of taxpayer dollars.”
– WIRES coalition letter to Congressional leadership, March 14, 2017
Who pays for new or upgraded transmission?
The courts, FERC, and most policy makers agree that the cost of transmission investment should be borne by those who benefit. However, “beneficiaries pay” has many different formulations that, without further guidance from regulators or policy makers, can become mutually incompatible and a source of controversy instead of economically efficient and fair to consumers. WIRES studies were the first to articulate exactly which benefits can be anticipated from transmission projects and how a benefit-cost ratio can be calculated. Once benefits are defined and the range of beneficiaries are determined, the costs of transmission can be equitably allocated. FERC’s Order 1000 has thus far not sufficiently clarified how this should be accomplished nationally. In the final analysis, transmission will remain the smallest component of the average electricity bill.
“Of course, you have to pay for the transmission lines between power plants, that is, the grid. As it happens, the transmission lines needed to provide reserves are usually much cheaper to build than the equivalent number of power plants, so that it is substantially cheaper to build fewer reserve generators and more power lines..”
– P. Fox-Penner, Smart Power (2010)
“It is important to address [transmission] cost allocation only after transmission projects have been found to be beneficial overall. Estimates of the distribution of the identified benefits can then be used to infor cost allocation . . . Addressing cost allocation too early in the planning process or strictly on a project-by-project basis can create strong incentives for some market participants and policy makers to understate benefits . . . in an effort to reduce their cost responsibility for a project.”
– The Brattle Group (2013)
Increased system reliability, reduced emissions, or regioal economic development will benefit society as a whole, which includes electricity customers. But these benefits may not directly reduce electricity customer bills.”
– The Brattle Group (2013)
Siting and planning
Siting, conventional determinations of need (for new facilities) and how costs are to be allocated to customers involve the thorniest questions with which regulators and policy makers must deal. NIMBY reflects understandable landowner challenges and transmission providers must therefore site projects carefully and in ways that mitigate risks to people or the environment, such as by using existing rights-of-way.. However, the fact that industry must address multiple meritorious but otherwise totally uncoordinated requirements by numerous agencies with differing priorities and regulatory procedures and criteria translates into an engineering, permitting, and construction cycle that is typically 3 times that needed to site a natural gas or oil pipeline.
“On behalf of NARUC and its members, the state of this counrty’s infrastructure is near a crisis level. The D+ grade [given domestic infrastructure including the electric transmission system by the American Society of Cvil Engineers] should serve as a wakeup call that we mus attend to the condition of America’s drinking water, energy and wastewater are essemtial to our individual and collective health, well-being, and prosperity.” NARUC members [i.e., state public utility commissions] “support ASCE’s call for more investment, innovation and planning.”
– Hon. Robert Powelson, NARUC President.
The North American transmission grid is vulnerable to both physical and cyber-attacks. A single attack could leave millions without power. As the threats evolve, so must the technology of the transmission grid.
“Cyber thieves take personal financial data. Cyber pirates steal industrial and commercial intellectual property. But the cyber attacks that threaten to disarm critical infrastructure systems like the electric grid are true declarations of war. . . Grid modernization generally means greater digital control and greater integration. With the advantages of improved dispatch of power over greater distances and smarter, self-healing power networks, come more sophisticated and multidimensional cyber risks.”
– J. Hoecker, Intelligent Utility (2015)
“Hackers Seek to Disrupt Electric Grid Through Smart Devices”
– San Francisco Chronicle
Law and regulation
The methods of accommodating both state and federal regulatory interests that are enshrined in the Federal Power Act (1935) and the Natural Gas Act (1938) are very different despite the fact that electric transmission and gas pipelines are interstate networks that serve vast regions of the country. Cost-effective interregional transmission projects are often stalled or tabled under various state and regional evaluations, which means less transmission is built, resulting in higher energy costs for consumers. This statutory allocation of regulatory responsibility, dictated by the history of these two energy delivery networks, must be reexamined in light of 21st Century technology.
“The facts that cannot be ignored today are the facts of integrated commerce and a political relationship between States and Nation . . . The federalism of some earlier time is no more adequate to account for those facts today than the theory of laissez-faire was able to govern the national economy 70 years ago.” U.S. v. Morrison, 529 U.S. 598, 655 (2000)
– Souter, J.
“The FPA’s division of labor between state and federal regulation . . . has largely centered on the states’ exercise of their long-standing jurisdiction over local distribution, facility siting, and generation adequacy. Utilities and federal policy makers have complained that state generation and transmission siting decisions and state retail rate policies have frustrated federal energy policies. . . . State regulators have complained of FERC encroachment on states’ ability to regulate local distribution and transmission services associated with serving retail load.”
– R. Nordhaus, Energy L. Jl. (2015)