Western governors ponder transmission issues


By the OGJ Online Staff

HOUSTON, Aug. 14 -- The Western Governors' Association said the cost of new electric transmission lines required to satisfy rising demand in the West would quadruple, if fuels other than natural gas were used for new generation.

But relying on gas has other costs that must be factored into any comprehensive transmission plans. The governors also said energy efficiency measures that reduce peak demand must be considered to offset the need for new transmission facilities.

The governors' association discussed questions associated with the adequacy of the transmission system making up the western grid at their semiannual meeting Monday in Coeur d' Alene, Ida. The group released a report concluding new transmission infrastructure required for gas-fired generation will cost $2.4 billion. If coal, wind, geothermal, or hydroelectric power plants are built, the cost of new transmission would approach $8-$12 billion.

The cost associated with constructing transmission to serve gas-fired generation is lower because these plants are located near load centers. Transmission projects already under way or committed to be on line by 2004 are projected to be adequate. But coal, hydro, wind, and geothermal power plants are usually built in remote areas requiring main grid transmission infrastructure, according to the report.

Determining tradeoffs
The tradeoffs to building or not building transmission involve fuel diversity and whether there is a need to mitigate market power, but the governors said certain questions could not be answered in the preliminary report and deserve further exploration.

Among the questions to be addressed is whether alternatives to gas-fired generation are worth the expense. The report also said there is an issue of how much should be spent on transmission to keep a generator or group of generators from setting the price of electricity within a geographic area.

Other tradeoffs involve the increased variable costs of generation from using natural gas compared to other fuels. But the report noted any conclusions concerning gas-fired generation depend on assumptions about gas prices.

The report estimated nongas power plants would produce savings of $3-$3 billion/year in variable costs or as much as $5 billion with high gas costs. A complete study of whether to build gas or nongas generation would require analysis of the costs of generation, the fuel, capital costs of expanding natural gas pipelines, benefits of fuel diversity, and the value of reducing market power from transmission construction.

The governors also said energy efficiency could reduce overall electricity use, checking the need for extensive new transmission lines. Alternatives to developing new transmission such as more efficient use of electricity, peak load management, and distributed generation located at or near the customer load could reduce the need for transmission associated with peaking plants.

Specifically, the governors' association recommended tiered residential rates that increase with electricity use to promote conservation. In California, state regulators introduced rates that increase12% for customers who use 130-200% more than a base line amount.

As usage increases to more than 300% of the base line, rates increase 47%. In Idaho, the state regulatory commission set rates at 5.7¢/ kw-hr for less than 800 kw-hr/month; 6.54¢/kw-hr for consumption of 801 kw-hr-2000 kw-hrs.; and 8.39¢/kw-hr for over 2001 kw-hrs.

Concerning peak load management, time-of-use rates could sharply reduce system peak loads and related transmission needs, the report noted. It recommended customers pay different prices, depending on the time of the day or based on the real-time prices in the wholesale electricity market.

Several Washington utilities have adopted time-of-use rates for customers that have special meters. The difference between peak and nonpeak rates is up to 3¢/kw-hr.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

Woodside-led Browse FLNG venture enters FEED phase

07/01/2015 The Woodside Petroleum Ltd.-led Browse LNG joint venture has entered the front-end engineering and design phase for a floating LNG (FLNG) developme...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...

Construction begins on Chinese section of Russia-China Gas Pipeline

06/30/2015

Construction has begun on the Chinese section of the Russia-China Gas Pipeline, according to China National Petroleum Corp.

White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected