Investor-owned electric utility companies spent $14.8 billion in 2012 to upgrade transmission infrastructure, and investments in 2013 and 2014 are expected to soar even more, peaking at about $17.5 billion, the Edison Electric Institute (EEI) says in a new report.
The eighth annual publication of the EEI’s report “Transmission Projects: At A Glance,” estimates more than 170 major transmission projects were completed in 2013 or are planned to be completed within the next 10 years by EEI’s members, which represent all U.S. investor-owed power companies.
The increased investment is due to “changing projections of system needs” as the nation’s power mix morphs in response to new federal, state, and local environmental rules, and shifts in the costs of generation and power plant operations, the EEI suggests.
The report forecasts a slight decrease in transmission investment after 2013, even though investment during 2014 and 2015 is expected to be significantly higher than in the years before 2013. The slight decrease can be attributed to load growth forecast revisions in response to the current economic environment, as well as to lower long-term growth rates due to increases in demand side management and energy efficiency.
“Continued investment in transmission infrastructure will be required to maintain reliability, support shifts in the nation’s generation portfolio, offer greater flexibility with the increase in distributed generation, and meet public policy requirements,” the report says. Notably, the report also cites “recent extreme weather events” as a key reason for why the nation’s electric infrastructure needs to be upgraded.
However, the risks of building transmission have not diminished since the first “Transmission Projects: At A Glance” report was published in 2007, the EEI notes. “Recognizing the numerous benefits of a robust transmission system and the inherent risks and challenges of developing transmission are unlike any other utility plant, EEI’s members have a long history of working with policymakers and regulators to support effective policies, such as appropriate returns on equity, to address the substantial risks of developing, constructing, operating and maintaining transmission infrastructure, as well as the challenges of raising needed capital to fund transmission development.”
The industry group called on the Federal Energy Regulatory Commission (FERC) to continue to foster the construction and upgrade of transmission by balancing the need to promote investment in long-term infrastructure assets with the short-term, “cyclical” movements in the capital markets. That would ensure sufficient access to capital to build needed transmission projects that present significant risks to developers, it said.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)