EEI study forecasts need for $56 billion of transmission capacity


By the OGJ Online Staff

HOUSTON, July 13 -- Nearly $56 billion in new capacity is needed in the next 10 years to maintain US transmission adequacy at its current level, but only about $35 billion is planned, an electric industry group said.

Transmission capacity relative to peak demand has been declining and is expected to continue to decline, the Edison Electric Institute found in a new analysis. The deficit in past transmission investment poses "large challenges" to transmission planners, according to its findings.

It said planning may be too narrowly focused on North American Electric Reliability Council (NERC) standards with insufficient attention to benefits new transmission could offer competitive markets. Moreover, the shift to regional transmission organizations under Federal Energy Regulatory Commission jurisdiction has significant implications, the study concluded.

Transmission capacity began declining 1.4%/year between 1982 and 1999 and has since declined 2.2%/year, according to the analysis. It estimated capacity in 2000 was 17% lower relative to demand than it had been a decade earlier, and projections for 2009 show a further decline of 12%.

The analysis showed the decline was most rapid in the Electric Reliability Council of Texas (ERCOT), Southwest Power Pool (SPP), the East Central Area Reliability Coordination Agreement (ECAR), and Mid-America Interconnected Network Inc. (MAIN).

Planned transmission additions are lower than expected load growth in all 10 regional reliability councils, with the fastest declines likely in the Florida Reliability Coordinating Council (FRCC), Southeastern Electrical Reliability Council (SERC), and the Western Systems Coordinating Council (WSCC).

Separation of generation from transmission and of retail service from transmission poses difficulties obtaining information needed for planning. Transmission owners and independent systems operators are receiving so many requests for generation interconnections, they don't have time to plan transmission, the study concluded.

And because transmission planner have insufficient time and resources, little information is being provided energy marketers on the cost and location of congestion, the EEI found. Yet such information could help potential investors in new generation decide where to locate new units and load-serving entities determine what kind of dynamic pricing and load-reduction programs to offer customers in different locations.

Because generation can serve, in some cases, as an alternative to new transmission, grid planning needs to explicitly consider such nontransmission options, it said. The study recommends "at a minimum" transmission planners should provide information on suitable sites for new generation and load management. It noted congestion costs can provide valuable information on where and what to build.

In the future, advanced technologies may improve control so that systems can be operated closer to thermal limits, expanding capacity without increasing the system's footprint. Other advances could make it attractive for private investors to build merchant transmission lines. But, the study said most of the technologies are still too expensive for widespread application.

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