NEWS INDEX Archives 2005 July

Governors' pact on electricity transmission a sensible step, expert says

Mark Reutter, Business & Law Editor
217-333-0568; mreutter@uiuc.edu

7/28/05

University of Illinois Photo George Gross, a professor of electrical and computer engineering, says the agreement by Midwest governors to coordinate policies for electric transmission lines is a positive move.

CHAMPAIGN, Ill. — An agreement by Midwest governors to coordinate policies for electric transmission lines is a positive move to improve the reliability of the electric supply system, a University of Illinois energy expert says.

“This is a welcome development because the transmission problem will only be solved on a wide regional basis,” said George Gross, a professor of electrical and computer engineering and in the Institute of Government and Public Affairs.

The pact, the first of its kind, was signed by 14 Midwest governors, including Illinois Gov. Rod Blagojevich, on July 16. It calls on state regulatory agencies to work together to encourage power companies to expand their transmission grids across state boundaries.

Illinois is part of the Eastern Interconnection, the world’s largest network of electricity lines that cover most of the U.S. and Canada east of the Rocky Mountains. Because electric power is not always produced where it is needed and demand undergoes seasonal fluctuations, the transmission grid is essential for balancing power supply and demand and for ensuring reliability of service during rapid load fluctuations.

In the last decade, investment in transmission has not kept pace with rising demand for electricity and the investment in electric generation.

The governors’ pact calls on state energy regulators to “effectively coordinate and cooperate with other governmental permitting and siting authorities regarding proposed electric transmission lines that cross state and national boundaries.”

This is an important step, Gross said, because state agencies historically have balked at approving the siting of transmission lines that do not serve local or state purposes.

The 14 Midwest states currently have 200,000 megawatts (MW) of electrical power generation, split between 161,000 MW from coal-fired plants, 26,000 MW from nuclear plants and 13,000 MW from hydroelectric plants.
In addition to improved reliability, an expanded transmission grid would permit Midwest states to tap into lower-cost electricity and encourage more suppliers of energy. This in turn would generate economic growth across the region, Gross said.

The Illinois expert noted that the August 2002 blackout, which plunged 50 million people into darkness in the Northeast U.S. and Canada, was not caused by a lack of power generation. “The trouble was on the transmission front,” Gross said, “where the stress on the grid led to cascading outages through the interconnections in the Midwest, Northeast, Eastern Canada and New England regional systems.”

The blackout prompted calls for up to $100 billion in infrastructure spending to reduce congestion and increase grid capacity. While the immediate causes of the 2002 blackout have been addressed, very little investment has been made in high-voltage transmission.

“Back in 1975, the nation was spending more than $5 billion a year on transmission; by 2000, that level was down to $2 billion a year,” Gross said.

Despite the wakeup call of the 2002 blackout, power-grid investment is down to about $1 billion a year and is slated to increase at less than 0.5 percent a year between 2005 and 2008.

A related problem is the bureaucratic red tape and confusion that exists on the national level, according to Gross. “Lack of clarity and stability in regulatory prices by FERC (the Federal Energy Regulatory Commission) implies uncertainty in the recovery of transmission investment,” he said. “The electric industry’s most critical need is for new incentives for transmission investment. FERC should be formulating these incentives.”

The energy bill that U.S. Senate and House negotiators agreed to Tuesday night (July 26) could encourage long-term investment in transmission. The bill is set to pass Congress shortly and be signed into law by President George W. Bush.

Gross served on the 2002 National Transmission Grid Study for the U.S. Department of Energy, which assessed ways to improve the nation’s electricity network. He also is the director of the Transmission Business School, an educational program for the electricity industry.