ORIGINAL REPORTING: The Fight To Grow Transmission With Competition
With new transmission urgently needed, FERC Chair hints at a new Order 1000 proceeding; Brattle Group data shows the landmark Order has failed to grow competitive transmission
Herman K. Trabish, May 31, 2019 (Utility Dive)
Editor’s note: The need for new and renewed transmission continues to grow but the debate to open building up to competition goes on unresolved.
The U.S. power system is considered one of the greatest engineering achievement of the 20th century, but it urgently needs a 21st century upgrade. But electricity consumers pay billions due to congestion and outages, according to the U.S. Energy Department. System operators report that new wires significantly reduce those costs. But transmission and distribution developers are at such odds with one another over who should do the upgrades and how they should be selected that the Federal Energy Regulatory Commission (FERC) may step in.
"New development should be through competitively-bid projects," Brattle Group Principal Judy Chang, co-author of a new study on recent transmission expansions, told Utility Dive. "We documented that competitive solicitations lower customer costs."
Brattle's study was commissioned and endorsed by LSP Transmission Holdings, a major U.S. transmission owner-developer. Other major U.S. transmission owner-developers object to the study's conclusions. “FERC's adoption of Order 1000 laid the framework for competition," and American Electric Power (AEP) "was the first utility to create a successful competitive transmission company," AEP spokesperson Tammy Ridout emailed Utility Dive. But Brattle "significantly overstates the cost saving opportunity" from competitive bidding that would go to customers.
"Everyone seems to agree that Order 1000 is not working as intended," but "that's about the only thing stakeholders can agree on," FERC Chair Neil Chatterjee emailed Utility Dive. "We owe it to consumers to put our best effort forward on making competition work," and stakeholders must "come together to address these big issues." This suggests a new Order 1000 proceeding could be coming. "It is time to open up Order 1000 again," former FERC Chair Jon Wellinghoff, who oversaw the Order's 2011 passage, told Utility Dive.
The need for transmission Order 1000, issued in July 2011, was intended to expand transmission to help meet the growing demand for renewable generation. It revised rules on transmission planning, on allocating transmission costs and on competitive bidding. New transmission has come online, but 70% of the system is over 25 years old.
Order 1000 was a "well-intentioned attempt" to address "obstacles holding back transmission investment," but it has suffered from "unintended consequences and lackluster implementation," a May study from Grid Strategies Vice President Michael Goggin, who has testified to FERC on Order 1000 issues, reported… click here for more
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