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Released December 17, 2012 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--More than $100 billion of electric transmission projects are scheduled to kick off across North America between 2013 and 2017. But tens of billions of those projects likely will be delayed or cancelled, a victim of local opposition, changing market conditions and a longstanding divide over national transmission policy between Congress and the Federal Energy Regulatory Commission (FERC) (Washington, D.C.), speakers told an industry webcast last week.
"We are seeing a historic build-out of the U.S. transmission system," said Randy Rischard, vice president of data and analytics at EnergyCentral (Aurora, Colorado). "The transmission landscape can and probably will change a lot."
Click on the icon at right for a chart showing planned transmission investments in North America.
The companies with the largest portfolio of planned transmission projects include:
Click on the icon at right for a chart showing miles of planned transmission investments across North America.
The key drivers pushing this build-out include power plant retirements, reliability projects, connecting renewable energy projects to the grid, and federal transmission policy, including FERC's willingness to award higher rates of return to transmission project owners to compensate them for the high risks inherent in developing transmission projects. Nearly $18 billion of above-market rates have been awarded by FERC between 2008 and 2012, pursuant to the agency's Order 679. But Rischard noted that FERC is taking a stricter view of the need to award incentive rates to encourage transmission development.
"Coal plant retirements are shifting the regional dynamics of power markets," Rischard continued. "Those retirements change where the congestion spots are, and they affect regional plans for generation as well as transmission."
Rischard also wondered whether the nation's natural gas infrastructure is robust enough to handle the significantly increased reliance on gas-fired power. He cited data showing more than 60,000 megawatts (MW) of new gas-fired generation is scheduled to kick off between 2012 and 2016.
The EnergyCentral executive also said the wind industry would be "devastated" if Congress failed to extend the federal Production Tax Credit (PTC), a 2.2-cent-per-kilowatt-hour tax credit that is available to wind power owners for 10 years, providing their plants are operating by the end of 2012. Despite broad bipartisan appeal and sustained lobbying by wind energy advocates, Congress has been unable to pass an extension, citing budget crunches.
Congressional inaction on the PTC has caused the development of new wind power projects to drop off dramatically during 2012, as developers and utilities have been reluctant to commit to new projects that will break ground after the end of this year. Instead, developers and utilities have concentrated on finishing construction of projects before the end of the year.
This year's slowdown in wind power development likely will affect the viability of some planned transmission projects, Rischard predicted, noting that nearly half of all transmission projects built in recent years have been tied to renewable energy projects.
Beyond the fallout from the collapse of the wind power market, transmission project development is threatened by environmental issues and local opposition, speakers at the December 12 web conference said. The Western Sage Grouse, a candidate for listing on the federal Endangered Species List, has caused more than one transmission project to be delayed or abandoned. And one speaker on the web conference noted the interruption of construction of the Tehachapi Renewable Transmission Project, a $2 billion project, because residents of the Chino Hills community have loudly objected to having the line built in existing rights of way through their community.
Finally, because interstate transmission lines are regulated by FERC, a conflict between that agency and Congress threatens to delay or derail some transmission projects. Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy, noted that "federal transmission policy is controversial now, but always complex. Her group opposes FERC's Order 1000 on the grounds that the agency "overstepped its authority under the Federal Power Act" and "broadly socialized the cost of transmission lines in ways Congress never intended."
Sheridan said her group opposes the way FERC's Order 1000 imposed a "top-down federal transmission planning model" on states, and allowed utilities to charge customers for transmission projects in the absence of identifiable benefits to those customers.
Once FERC receives its Order 1000 compliance findings early next year, Sheridan said she expects the agency's rule to be litigated in federal district court. She also noted that Senator Ron Wyden (D-OR), the incoming chair of the Senate Energy and Natural Resources Committee, is one of several that have expressed concern about that FERC order. Sheridan, a former congressional staffer, said she expects the Senate to hold hearings on Order 1000 next year. Hearings are also possible in the House of Representatives, she added.
"Transmission development is essential, but it's a thankless task today," Brock Ramey, Manager of North American Power, said in an interview. "It's no longer a question of NIMBY--'Not In My Backyard.' Instead, the new acronym governing transmission development seems to be BANANA--'Build Absolutely Nothing Anywhere Near Anyone.'"
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"We are seeing a historic build-out of the U.S. transmission system," said Randy Rischard, vice president of data and analytics at EnergyCentral (Aurora, Colorado). "The transmission landscape can and probably will change a lot."
Click on the icon at right for a chart showing planned transmission investments in North America.The companies with the largest portfolio of planned transmission projects include:
- PacifiCorp (Portland, Oregon), a unit of Berkshire Hathaway Corporation (NYSE:BRK-A) (Omaha, Nebraska), with 4,291 miles of projects
- Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota), with projects totaling 3,535 miles
- Clean Line Energy Partners LLC (Houston, Texas), with 2,750 miles of projects
- A partnership between Duke Energy Company (NYSE:DUK) (Charlotte, North Carolina) and American Transmission Company (Waukesha, Wisconsin), with projects totaling 2,577 miles
- The Western Area Power Administration (WAPA) (Portland, Oregon), with 2,177 miles of projects
Click on the icon at right for a chart showing miles of planned transmission investments across North America.The key drivers pushing this build-out include power plant retirements, reliability projects, connecting renewable energy projects to the grid, and federal transmission policy, including FERC's willingness to award higher rates of return to transmission project owners to compensate them for the high risks inherent in developing transmission projects. Nearly $18 billion of above-market rates have been awarded by FERC between 2008 and 2012, pursuant to the agency's Order 679. But Rischard noted that FERC is taking a stricter view of the need to award incentive rates to encourage transmission development.
"Coal plant retirements are shifting the regional dynamics of power markets," Rischard continued. "Those retirements change where the congestion spots are, and they affect regional plans for generation as well as transmission."
Rischard also wondered whether the nation's natural gas infrastructure is robust enough to handle the significantly increased reliance on gas-fired power. He cited data showing more than 60,000 megawatts (MW) of new gas-fired generation is scheduled to kick off between 2012 and 2016.
The EnergyCentral executive also said the wind industry would be "devastated" if Congress failed to extend the federal Production Tax Credit (PTC), a 2.2-cent-per-kilowatt-hour tax credit that is available to wind power owners for 10 years, providing their plants are operating by the end of 2012. Despite broad bipartisan appeal and sustained lobbying by wind energy advocates, Congress has been unable to pass an extension, citing budget crunches.
Congressional inaction on the PTC has caused the development of new wind power projects to drop off dramatically during 2012, as developers and utilities have been reluctant to commit to new projects that will break ground after the end of this year. Instead, developers and utilities have concentrated on finishing construction of projects before the end of the year.
This year's slowdown in wind power development likely will affect the viability of some planned transmission projects, Rischard predicted, noting that nearly half of all transmission projects built in recent years have been tied to renewable energy projects.
Beyond the fallout from the collapse of the wind power market, transmission project development is threatened by environmental issues and local opposition, speakers at the December 12 web conference said. The Western Sage Grouse, a candidate for listing on the federal Endangered Species List, has caused more than one transmission project to be delayed or abandoned. And one speaker on the web conference noted the interruption of construction of the Tehachapi Renewable Transmission Project, a $2 billion project, because residents of the Chino Hills community have loudly objected to having the line built in existing rights of way through their community.
Finally, because interstate transmission lines are regulated by FERC, a conflict between that agency and Congress threatens to delay or derail some transmission projects. Sue Sheridan, president and chief counsel at the Coalition for Fair Transmission Policy, noted that "federal transmission policy is controversial now, but always complex. Her group opposes FERC's Order 1000 on the grounds that the agency "overstepped its authority under the Federal Power Act" and "broadly socialized the cost of transmission lines in ways Congress never intended."
Sheridan said her group opposes the way FERC's Order 1000 imposed a "top-down federal transmission planning model" on states, and allowed utilities to charge customers for transmission projects in the absence of identifiable benefits to those customers.
Once FERC receives its Order 1000 compliance findings early next year, Sheridan said she expects the agency's rule to be litigated in federal district court. She also noted that Senator Ron Wyden (D-OR), the incoming chair of the Senate Energy and Natural Resources Committee, is one of several that have expressed concern about that FERC order. Sheridan, a former congressional staffer, said she expects the Senate to hold hearings on Order 1000 next year. Hearings are also possible in the House of Representatives, she added.
"Transmission development is essential, but it's a thankless task today," Brock Ramey, Manager of North American Power, said in an interview. "It's no longer a question of NIMBY--'Not In My Backyard.' Instead, the new acronym governing transmission development seems to be BANANA--'Build Absolutely Nothing Anywhere Near Anyone.'"
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
