Panelists: FERC Order 1000, EPA regulations to impact transmission outlook

The outlook for transmission over the next five to 10 years will depend on several factors, including FERC Order 1000, U.S. Environmental Protection Agency (EPA) regulations and state initiatives, such as renewable portfolio standards, according to Ken Collison, vice president at ICF International.

Investment in transmission has steadily increased over the last decade, bolstered by such regulatory policies as the Energy Policy Act of 2005, Collison said on Nov. 7 during TransmissionHub’s webinar, “Transmission in the East Outlook.”

According to the Edison Electric Institute, between 2006 and 2010, investor-owned utilities spent between $8bn and $10bn annually on transmission projects.

“Over the next few years, we expect this trend to continue, but as we look further into the future, say the next decade or so, it becomes more difficult to determine how things will turn out,” he said.

In discussing FERC Order 1000, Collison noted that the cost allocation issue can become contentious, adding, “[W]e have to wait a few years to determine the impact of Order 1000, but we can see that by addressing these issues now, we are likely to see a positive impact on transmission investment at least in some regions.”

Another webinar participant, Ron Snead, director of planning for American Transmission Company (ATC), said that among the issues the company has an eye on is FERC Order 1000.

“We are involved in the process at the [Midwest ISO (MISO)] very closely to help that process along,” he said. “[We] provide our input into how the MISO would work through and meet the FERC Order 1000 requirements assigned to them. In addition, there are FERC Order 1000 requirements that apply specifically to American Transmission Company and we have already filed a modification to our MISO tariff to address the changes that we need to make in order to be compliant with [the order.]”

Snead also addressed ATC’s decision to reconsider its plan to build the 345-kV Barnhart-Branch River transmission project following an announcement from Dominion (NYSE:D) that it will close its Kewaunee Power Station in Carlton, Wis., next year. “[W]e’re in the process of reevaluating it right now,” he said. “We expect something will need to be done, but we’re still analyzing to determine what we may need to do.”

Collison addressed generation retirements and EPA regulations, noting that in many cases, transmission improvements will be required to address certain reliability problems related to such retirements and regulations.

In New England, for example, following the announcements of certain generation retirements, studies have shown the need to upgrade some transmission lines in the greater Boston area.

Also, Collison added, following FirstEnergy’s (NYSE:FE) announcement of the retirement of certain coal plants, PJM Interconnection studies have shown that more than $500m of transmission upgrades will be required to address reliability problems.

Such federal initiatives as the Obama administration’s interagency rapid response for transmission team address the siting and permitting challenges associated with transmission development.

The effort “shows that the need is recognized and to the extent that such initiatives continue, or that other projects are considered, it could improve transmission investments in general,” Collison said.

Other factors that would affect transmission build ­in the next few years are the integration of renewable resources and the aging of the transmission infrastructure. For the country as a whole, about 70% of the transmission lines are 25 years or older, he said, adding that in New York, 84% of the high-voltage transmission facilities are more than 30 years old.

Strengthening the transmission grid will affect transmission build and is one of the issues addressed in New York Gov. Andrew Cuomo’s Energy Highway initiative, he said.

Indeed, in his 2012 State of the State Address delivered Jan. 4, Cuomo announced a plan to build a private sector-funded $2bn “Energy Highway” system that will tap into the generation capacity and renewable energy potential in upstate and western New York to bring low-cost power to downstate New York.

The recently released New York Energy Highway Task Force’s blueprint calls to add up to 3,200 MW in new transmission and generation, and includes plans to invest $1bn for 1,000 MW of new electric transmission capacity. The blueprint also calls to accelerate $1.3bn of investment in existing transmission and distribution projects to enhance reliability, improve safety, reduce costs to customers and reduce emissions, according to an Oct. 22 statement from the governor.

About Corina Rivera-Linares 3056 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.