Future of Power Transmission Grid
by William McCall, Associated Press
There is one thing that just everybody agrees has to be done about the thousands of miles of electricity transmission lines that crisscross the West -- build more of them.
The big question is, who pays for them? Another is, who controls them? And finally, how much should it cost to use them?
Utility managers and regulators say those questions need to be answered soon -- before demand outstrips the power supply to some of the fastest-growing areas of the nation.
Otherwise, the risk of a blackout like the one that left the East Coast in the dark in 2003 keeps rising.
The Bonneville Power Administration two years ago completed a transmission system expansion project in the Seattle area, reducing the risk of massive power failures there.
"It reinforced a key link that would have, for sure, put the Seattle area in danger of blackouts had it not been constructed," said Ed Mosey, spokesman for the Portland-based federal power marketing agency.
In Arizona, the largest utility in the state is proposing a new $3 billion pair of 500,000-volt lines to bring power 600 miles from coal and wind turbine plants in Wyoming. It would also let the Arizona Public Service Co. send excess power from the Southwest to the north.
"Arizona's one of the two fastest-growing areas of the country, along with Nevada," said Jim McDonald, spokesman for Arizona Public Service.
The utility relies on coal, nuclear and natural gas-fired generating plants for electricity to accommodate growth that includes Arizona cities like Gilbert, which topped the U.S. Census Bureau's list of fastest-growing cities with at least 100,000 new people from April 2000 to July 2004.
But all that generating capacity has to have a way to reach new businesses and homes -- meaning more high-voltage wires, McDonald said.
"So it's very important to have additional infrastructure in the West because of the way the region is growing," McDonald said. "And there hasn't been a substantial investment in that transmission infrastructure."
On Nov. 17, the Federal Energy Regulatory Commission proposed transmission pricing reforms to promote what commissioners said was long overdue investment in energy infrastructure.
The Energy Policy Act of 2005, which President Bush signed in August, directed FERC to develop incentive-based rates for interstate power transmission. The reforms adopted on Nov. 17 will implement those incentives and provide regulatory certainty needed to reassure utilities and investors, officials said.
The goal is to increase power-grid reliability and lower costs by reducing transmission congestion between states, commissioners said.
"No one is looking at the lights going out," said U.S. Rep. Peter DeFazio, D-Ore. "But what we're looking at now is how do you make the system work better, and how do you avoid duplicate investment in very expensive transmission lines."
Reliability and congestion are issues that have been a struggle for utility managers and regulators across the West for more than a decade, as they have watched transmission line construction fail to keep pace with electricity demand.
"We should have been making plans to build out the transmission system years ago," said David Kvamme, spokesman for PacifiCorp.
The Portland-based utility serves 1.6 million customers in six Western states and must balance regulatory demands in each state with the need for additional transmission capacity. But transmission investment actually declined for 23 years from 1975 to 1998, according to FERC figures.
And over that period, electricity demand more than doubled, resulting in a significant decrease in transmission capacity. Investment has been up and down since, but still trails well behind demand, say regulators.
"We're in the midst of a historic shift in the way this country regulates electric utilities," said Bryan Lee, a FERC spokesman in Washington, D.C.
Some of the problems the West faced in 1992 when Congress first began to deregulate the energy industry still frustrate utility managers and policy-makers.
One of them is how to balance electricity generation and transmission. Building more plants to generate more electricity does little good unless the extra power can be distributed to the cities and towns that need it.
But that raises a conflict over whether the individual utilities that produce the power should also control the transmission grid, or whether it should fall to an independent agency or perhaps to an organization created by the industry.
Robert Kahn, executive director of the Northwest Independent Power Producers Coalition, said his group supports the creation of an independent agency to manage the transmission grid across the West.
Without it, there is a risk of "pancaking," or tacking on costs as power is routed from one state to another, Kahn said.
"I would argue it's like the tragedy of the commons," Kahn said. "They're all pursuing their own interests but in ways that are damaging to their neighbors, and in ways that are not beneficial to the entire grid."
The Federal Energy Regulatory Commission had ordered the development of a regional transmission organization, or an RTO, but the effort was abandoned by the Bonneville Power Administration and large investor-owned utilities after the Western energy crisis of 2001 -- when rates skyrocketed because drought reduced hydroelectricity generation, deregulation failed in California and Enron Corp. tried to rig the market.
"Following the energy crisis when it was apparent there was illegal manipulation of the interstate transmission system and illegal sales of power across high voltage power lines, FERC said there had to be a better system for handling bulk transmission of power," said John Harrison, spokesman for the Northwest Power Council, the agency that plans for energy development in Oregon, Idaho, Montana and Washington state.
The solution may lie with Bonneville, the federal power marketing agency which controls much of the transmission system in the Northwest and other parts of the West -- a unique situation among the four such agencies nationally.
"The BPA is the 800-pound gorilla," said Kvamme, the PacifiCorp spokesman.
But the agency has dropped out of the latest proposal for a regional organization, called Grid West, and left it up to the utilities to discuss the next step.
DeFazio, who has devoted years to energy policy, says it may take a major effort to finally settle on the right system for the West, but it appears that utilities and regulators are headed in the right direction.
"I don't think it's as big a problem as it was two years ago," the Oregon Democrat said. "We got beyond the profiteering and price-gouging model of Enron, which is where this whole thing started. Things have changed since then."
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