Grid deserves more attention in US infrastructure plan: transmission, environmental groups

Houston (Platts)--13 Feb 2018 548 pm EST/2248 GMT

President Donald Trump's $1.5 trillion infrastructure plan pays "not enough attention" to significant upgrades needed in the US transmission system, advocates for transmission development and sustainable energy said during webcast Tuesday.

"Obviously, the word of the day is infrastructure," said James Hoecker, holding up a newspaper section with that word spread across the page, referring to the White House plan released Monday.

Hoecker is senior counsel and energy strategist at the Husch Blackwell law firm; counsel for WIRES, a transmission advocacy group; and a former chairman of the Federal Energy Regulatory Commission. He was speaking during WIRES' joint briefing with the Environmental and Energy Study Institute, a group that focuses on developing a sustainable energy future.

"In the president's proposal ... you will find not a great deal of information about electric transmission," Hoecker said. "We think it's a critical network that not enough attention is being paid to." Between $80 billion and $90 billion has been spent on the transmission system over the past decade, Hoecker said, "mainly to make up for a lack of investment" in prior decades.

Julia Frayer, Boston-based managing director of London Economics International, acknowledged that short-term load forecasts around the US tend to show relatively slow, flat or negative power demand growth, but that does not diminish the need for new transmission, because the locations for load expansions do not always match up with the existing transmission grid.

For example, manufacturing loads may be diminishing in some areas of the Rust Belt, but loads are growing in other areas, said Nina Plaushin, WIRES president and vice president for regulatory federal affairs and communications at ITC Holdings, an independent transmission owner and developer owned by Fortis.

"We have a very large data center going into Iowa," Plaushin said, adding that the location now has relatively low-voltage transmission.

On the supply side, the changing generation fleet mix is trending away from coal plants, frequently located near coal mines, to wind fleets in flat rural areas and sites on top of major shale natural gas reserves, Frayer said.

Frayer and Hoecker also said that the nation's transportation fleet is transitioning to electricity, which Frayer said is expected to add about 1,000 TWh of annual load by 2030 and about 2,000 TWh by 2050.

Hoecker said, "It's clear to those of us in the business that the grid is not as robust as it needs to be to meet the coming demands of the electrified economy."

One factor that may diminish policymakers' and ratepayers' enthusiasm for transmission development is that each project tends to require a large, relatively certain, up-front capital investment, while the benefits are spread over decades and may seem much less certain, Frayer said. But "the fact that we have uncertainties should not stop us from doing analysis," Frayer said, which should "help us make a robust decision on long-term investment."

"To be unprepared has a big cost or price tag as well," she said. Also, benefits begin as soon as work begins, with the construction jobs associated with the project, congestion and power production cost savings beginning as soon as it is complete, and long-term benefits from enhanced reliability, Frayer said.

Also, organized markets such as the Midcontinent Independent System Operator conduct extensive studies to ensure each project's benefits significantly outweigh its costs before recommending a project to be built. For example, the MISO Transmission Expansion Plan for 2016 indicated that its portfolio of multi-value projects was estimated to provide between $6.8 billion and $32.8 billion in net benefits above the estimated costs of $8.8 billion to $16.4 billion. MISO requires that multi-value projects have a benefit-to-cost ratio of at least 1.8 to 1. The MTEP 2016 indicated the net present value of the MVP portfolio to range from $21 billion to $57.3 billion, with a total benefit-to-cost ratio of ranging between 2:1 to 2.7:1.

Also, ITC's Plaushin noted that failing to act has a cost, too. For example, if a company wanted to locate a large business demanding access to high-voltage transmission on Michigan's Upper Peninsula, a wires company might have to say, "That's great -- in seven years, you can put your business up there." --Mark Watson,

--Edited by Annie Siebert, ann.siebert

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