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WIRES: Proactive Transmission Planning Could Save U.S. Ratepayers $47 Billion Annually

June 15, 2016 By Cheryl Kaften

Reforming transmission planning processes to address the new challenges of the rapidly evolving energy generation mix could save electricity customers as much as $47 billion annually, based on research results just released by WIRES, an industry group that promotes investment in electric infrastructure.

The study, Well-Planned Electric Transmission Saves Customer Costs: Improved Transmission Planning is Key to the Transition to a Carbon-Constrained Future – conducted by the Cambridge, Massachusetts-based Brattle Group – addresses how improving the transmission grid will be critical for cost-effectively adapting to a shift in the U.S. generation mix from coal to natural gas and renewable resources.

The more proactive approach to transmission planning encouraged in the white paper is recommended – regardless of whether the generation shift is driven by evolving energy markets, technological changes or the requirements in the Environmental Protection Agency’s Clean Power Plan (CPP).

“There are important changes occurring in the electricity industry that are being driven by such forces as environmental regulation, market forces, and new technologies,” stated WIRES President Bob McKee, of American Transmission (ATC). “To ensure that electricity is delivered to customers in the most cost-effective, reliable, and safe manner, high-voltage transmission needs to be considered as part of the solution to making this transition,” “

Along these lines, WIRES said, the group supports the efforts of some regional transmission organizations (RTOs) – such as MISO, PJM and SPP – that are continuing planning efforts to look at what upgrades to the grid might be needed to comply with the CPP and to keep up with the quickly changing generation mix.

The paper contends that traditional planning processes seldom identify transmission solutions that can address long-term uncertainties and consider the broad range of benefits transmission provides customers. The researchers, Johannes Pfeifenberger and Judy Chang, maintain that the industry must improve regional and interregional transmission planning processes by proactively “tak[ing] into account the uncertainties about future growth in energy use, fuel costs, technological changes, technology cost, shifts in supply and demand patterns, environmental regulations and other state, regional and federal policy goals.”

There is no time to waste in anticipating future needs, argue the authors. The paper identifies a number of supporting studies that have shown that more “proactive” or “anticipatory” planning of the nation’s regional and interregional transmission grid would reduce U.S. customers’ overall electricity costs significantly.

Such a forward-looking approach, they say, moves beyond customary 5-10 year planning horizons and the dominant – but limiting – focus on preserving reliability. In sum, the net savings associated with a proactive transmission planning and development process in the U.S. have been estimated to range from $30–70 billion of savings in total generation and transmission investment costs through 2030 for compliance with current regulations to $47 billion/year of savings in annual customer bills under an even more environmentally-constrained future in which fossil generation is reduced further and a well-planned grid significantly reduces generation investment and operating costs.

“The positive case for modernizing, integrating and upgrading the high voltage system can and should be made by its planners, especially in organized markets,” explained Jim Hoecker, WIRES counsel and former Federal Energy Regulatory Commission (FERC) chairman. “But, old habits die hard. It’s easier to focus largely on reliability needs, or to limit planning to incremental grid additions, or to wait and see what transpires at the generation level of the system.

“What concerns me about inattention to future infrastructure needs is the inherent limitation it places on the influence of technological innovation, the trends – like electrified transportation – we will not be prepared for, and the low-cost resources we won’t be able to reach,” Hoecker added. “Transmission investment is about preserving options and delivering value, long-term. This white paper makes clear that the failure to plan proactively could impose real costs on consumers and the economy.”

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