Transmission incentives possibly jumpstarted new investment trend – EEI VP

Transmission incentives may have stimulated a new trend in transmission investment, Jim Fama, EEI’s vice president of energy delivery, said at EEI’s Transmission, Distribution & Metering conference last Monday.

While it may be too soon to tell, he said, transmission investment from 1990 to 2006 seemed to trend along a certain slope, but may have climbed in the 2007 to 2010 period, Fama said.

“We had our chief economist and statistics guys dig into this and they think that [after] incentives kicked in … we might have a new trend line, and it is a steeper slope,” Fama said. “We are going to make an argument to FERC that we think incentives are helping out.”

Source: EEI

Fama said 2011 numbers, which initially indicate a “pretty big jump” in investment, will help determine the effect of incentives on investment.

Transmission incentives have been in place for five years, or since they were implemented in the Energy Policy Act of 2005, and are available on a case-by-case basis for projects that reduce congestion or improve reliability.

Of 49 dockets initiated during the five-year period, 45 requests have been granted some sort of incentive, Fama said.

Under pressure from state commissions that argue that companies are spending too much and being rewarded with incentives for doing what they ought already to be doing, FERC recently decided to revisit its policy, Fama said.

“We have comments pending,” Fama said. “We don’t know when [FERC] is going to act. They’re basically trying to preserve what they’ve done before with their incentives policy.”

Fama added that a vote for renewable energy is a vote for transmission and noted that FERC has a lot of interest in developing renewables.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.