Transmission development is not really changing; who owns a particular line is the difference, American Electric Power (NYSE:AEP) executive Lisa Barton said on Oct. 29 at TransmissionHub‘s TransForum East event held in Washington, D.C.
Speaking on competition and whether non-incumbents would win such processes, Barton, executive vice president – AEP Transmission, said she thinks projects will be awarded to non-incumbents, adding: “Will it be something that’s real speedy and happening here, there and everywhere? No, I think it will be slow.”
Due to the highly regulated nature of transmission and the fact that states are a bit reticent to give up all control with respect to the transmission being developed in the state, “I think it will be slow, but I do think it will be awarded,” she said.
“What I like about FERC Order 1000 is that it really encouraged – forced – the RTOs to be transparent, so even if a state were to legislate and say, ‘Look, if you’re not a transmission owner today, you won’t be a transmission owner tomorrow,’ … what FERC has said to the RTOs is, ‘ You have got to have transparency in your process and if [a non-incumbent] would have been that entity that you would have picked, then you have to make that transparent and indicate that.’ So, I think that will start to change the way that the states view things and make them feel perhaps a little less threatened.”
Rudy Wynter, president, FERC regulated business, with National Grid USA, agreed that incumbents will lose projects to non-incumbents.
“I think you’ll also see some partnerships between some of those new entrants and the incumbents,” he said, adding that in assessing what National Grid needed for the future, it acknowledged that it was not good at partnering.
“[W]e’re going to have to be superb at partnering [going forward] because in some cases, we’re going to be partnering with a company on one project and competing with them on another,” he said, adding, “I think we’re going to see some of those non-incumbents win some things with some innovative partnerships with eventually some incumbents. But eventually, if this works right, you have to see some of those non-incumbents win.”
Boundless Energy CEO E. John Tompkins noted that non-incumbents avoid certain jurisdictions because “you’re not wanted.”
Similarly, Duke-American Transmission Co. (DATC) President Phillip Grigsby said it is important “to pick your spots. I don’t think all of the areas are created equal [and] all markets aren’t created equal. There will be barriers in certain states, in certain regions. There are certain places that DATC does not currently look to develop projects, and part of that is we just don’t think we can be competitive with incumbents.”
Proving one is qualified “can go a long way,” he said, adding that there are regions that “very much want to have non-incumbents come in” and will select an entity that can perform within the cost it has indicated and “doesn’t come in like a bull in a china shop and start condemning land all over the place.”
Barton agreed one must first demonstrate one is a qualified entrant, adding, “As AEP, for example, or as Transource with AEP behind it, we’d be a qualified entrant.”
Transource Energy is a partnership between AEP and Great Plains Energy, which owns Kansas City Power and Light (KCP&L).
On exploring projects that are in another utility’s service territory, for instance, Barton said: “[I]t is important to remember that things move in this space by a glacier’s pace. So, despite the fact that this is a change in the market place, it will be slow and it will certainly be challenging along the way.”
Two projects in Missouri are in the process of being transferred from KCP&L to Transource, which will “give Transource that foundation for growth. It has secured public utility status in the state.”
Such status helps in getting that particular state “comfortable with you as a provider, so that’s one of the things we’ve been focusing on.”
Grigsby said: “It’s really going to be about cooperation, and cooperation with the incumbent utilities in a number of cases and … we’ve tried to include very early on in our discussions of projects that an incumbent utility may be impacted, we may need to connect to their substation, and generally, I think we’ve found a very receptive audience in that. I think folks recognize there’s power in working together and getting a part of something is better than” all or nothing.
Among other things, Tompkins said that “some utility entities want to partner with someone like ourselves [who offer] creative ideas and a new way of doing things and competition – we [have] to lower the cost to the customer – it’s what you’re after.”
National Grid is a subsidiary of National Grid plc.
Check back on TransmissionHub.com for more coverage of TransForum East.