WIRES, which is a group of industry lobbyists and their sycophants, has bought a study prepared by The Brattle Group (proud industry whore since 1990) that supposedly identifies and analyzes a whole bunch of “new” benefits of building transmission that they feel will, when added to current planning evaluations, ensure that transmission wins every time! *cha-ching $$$$* WIRES pretends that it is only concerned about the good of society. Baloney. It’s all about the money!
WIRES and their well-paid former FERC Commissioner counsel have submitted this study to FERC because, “It is our expectation that this new analysis will be helpful to the Commission and to parties filing in compliance with the regional and interregional planning provisions of Order No. 1000. Although Order No. 1000 compliance involves numerous additional dockets, we believe the report should at least be part of the record in the overarching rulemaking proceeding so that parties are able to access and use its contents.”
Right, let’s allow WIRES buy some new FERC policy with our money. You know how I know this report is made-up crap? Because it uses sources such as Clean Line Energy Partners’ self-serving analyses and other industry-commissioned “studies,” as well as clueless NYT blogger Matt Wald and other biased media sources. Any trained monkey can compile a whole bunch of dubious sources to come to pre-determined conclusions. Congratulations, Brattle Group! I wonder how much they charged WIRES for something a 3rd grader could have accomplished?
So, how speculative are all these new “benefits” that transmission planners must consider in order to force unneeded transmission?
WIRES says, “An analysis that ignores or rejects benefits that are not measured with precision implicitly assumes that the value of such benefits is zero. This will systematically understate the overall value of transmission investments. It will also, in turn, lead to the unintended consequence of rejecting valuable transmission projects that offer a broad set of long-term benefits with total values that exceed project costs.”
Or, perhaps there’s a reason these “benefits” have historically been given a value of zero in order to ensure that only cost-effective and needed transmission projects are actually built?
Here are the “benefits” that WIRES insists be calculated, no matter how specious they may be:
1. Production cost savings;
2. Reliability and resource adequacy benefits;
3. Generation capacity cost savings;
4. Market benefits, such as improved competition and market liquidity;
5. Environmental benefits;
6. Public policy benefits; employment and economic development benefits; and
7. Other project-specific benefits such as storm hardening, increased load serving capability, synergies with future transmission projects, increased fuel diversity and resource planning flexibility, increased wheeling revenues, increased transmission rights and customer congestion-hedging value, and HVDC operational benefits.
Production cost savings are one of the traditional ways transmission “benefits” are derived. However, “As noted earlier, production cost savings only measure the reduction in variable production costs, including fuel, variable O&M costs, and emission costs. This means that production cost savings, even if the simulations capture the additional factors discussed above, will not capture the benefits associated with reliability, capital costs, increased competition, certain environmental benefits and other public policy benefits, or economic development benefits. These benefits provide additional value to electricity customers and to the economy as a whole.”
WIRES would rather have us concentrate on those hard to quantify “economy-wide benefits” that can be concocted out of whole cloth and come in handy to tip the scales in favor of questionable projects. In addition, WIRES recommends that regions bundle a whole bunch of such dubious projects into “project portfolios” (as MISO has done). When “benefits” of many projects are combined into an impossible to separate mega-project for regional transmission organization approval, WIRES believes this sleight-of-hand spread of “benefits” among a wider pool of consumers makes cost allocation easier.
“We also suggest aggregating beneficial transmission projects into larger portfolios of projects to simplify the necessary cost allocation analyses, reduce misperceptions that benefits appear to accrue only to a limited subset of market participants, and facilitate less contentious cost allocation processes.”
And although the report fails to mention it, this combination of many small projects, owned by many different entities, into one big mega-project also allows for convenient re-separation of each smaller segment in order to sail through state or local approvals while shepherded by incumbent utilities that have developed relationships with communities, legislators and regulators.
Here are a couple of spurious gems from the WIRES “report” that had me snorting with laughter. Do they actually think that intelligent people will fall for this dreck?
“For example, transmission lines that allow for increased imports of lower-cost generation from a neighboring region can provide benefits to both regions: the importing region through a lower cost of delivered power [to consumers] and the exporting region through increased revenues to the exporting suppliers. The increased export revenue can also be a benefit to electricity customers in the exporting region if these additional revenues are used to offset the cost of regulated generation assets or if wheeling out the revenues paid by exporting merchant generators can be used to offset the exporting region’s transmission revenue requirements.”
That’s right… new transmission simply levelizes electricity prices between regions. While the importing region gets the benefit of lower electricity prices, the exporting region gets the “benefit” of higher electricity prices PLUS a share of the cost of the transmission project that raised their electric rates. What a bargain! All benefits to an exporting region go right into the coffers of generation companies. And here’s a perfect example from the report:
“The economy-wide benefit of the deferred generation investments was estimated at $320 million, about half of which was estimated to accrue to customers in Texas, with the other half of the benefit to accrue to merchant generators in Louisiana and Arkansas.”
Building transmission to import renewables from coast-to-coast is not economic, and when given a choice between high-priced renewables or affordable "dirty power" utility bills, consumers overwhelmingly vote with their wallet. In spite of also being motivated by its collective wallet, WIRES just doesn’t get it:
“In such cases, despite the fact that both transmission and retail electricity rates may increase, the transmission investment can reduce the overall cost of satisfying public policy goals.”
Sometimes, new transmission has unintended effects. Perhaps our Pollyanna environmental warrior friends, who are backing transmission expansion that they optimistically believe will result in renewable energy super-highways, should take a lesson:
“Similarly, the CREZ projects in Texas have also provided new opportunities for fossil generation plants to be located away from densely populated load centers where it may be difficult to find suitable sites for new generation facilities, where environmental limitations prevent the development of new plants, or where developing such generation is significantly more costly.”
In addition, new transmission can perpetuate environmental and social injustice whereby the poor and politically under-represented continue to bear a disproportionate share of the burden to supply the needs of the rich and politically connected in their own or other regions.
WIRES tried to give their dubious “report” more credibility by having it peer reviewed. Despite being able to choose its reviewers and having sole power to approve or disapprove the content of the review, WIRES still couldn’t prevent a little sanity from sneaking in at the end of the report. The peer reviewers opined:
“The electric power system is a complex, interconnected whole. While the interconnection may be argued to be the transmission system, the whole incorporates generation (both central and distributed), storage (again central and potentially distributed), distribution in all of its complexity, and the interaction with end users at all levels and at all levels of complexity in use and control.
It is difficult, if not impossible, to fully evaluate the benefits of transmission without reaching into the competing benefits of investments in other sub-systems of the power system. Technology is not standing still in terms of the transmission system or in terms of the other sub-systems of the power system. Two examples of changes whose impacts upon asset growth in transmission have yet to be quantified are:
• The impact of significant investment in distributed generation and potentially storage within the distribution system. These changes are being brought about by public policy decisions combined with a dramatic expansion in communications and controls allowing for the development of distributed energy systems that interact with the larger utility system
• The impact of sensing and control of the transmission system that allows for dynamic reconfiguration of the topology of the transmission system. Often referred
to as “line switching,” the benefits have been known by system operators for decades. It is only with increased monitoring, advances in analytic techniques, and computation speed that these concepts can be brought into the operational time frame.
Technological changes are adding points of pressure to the power system in general and specifically to the transmission sub-system as the interchange network that allows the system to remain balanced.”
While WIRES is trying to hurry along the filling of its members’ pockets, the electric utility industry is undergoing a sea change that’s going to make most of this new transmission obsolete before it becomes used and useful. But these guys don’t care if a huge investment in unneeded transmission is left for their grandchildren to repay, as long as the money comes rolling in today.
If we’re going to make up a whole bunch of new transmission “benefits” that must be considered in any regional planning cost-benefit analysis, how about if we also now consider the true cost of building new transmission? WIRES thinks that the true cost of building transmission is contained in the annual transmission revenue requirement of any particular project. However, that does not consider the true costs to communities, individuals, landowners, ratepayers, or society as a whole. But where are we going to get the money to hire an industry whore economist to make up a bunch of crap like WIRES did? Oh, not to worry… the way transmission opposition is expanding lately, it’s only a matter of time before some transmission routing doofus uses his etch-a-sketch to draw a line through the backyard of an economist or two (or maybe that’s already happened, or maybe the opposition leadership is quite capable of preparing their own cost-effective analysis and report -- The Costs of Electric Transmission: Identifying and Analyzing the True Cost of Transmission!) If you want to be part of our brain trust and help us identify the true cost of new transmission, just let me know!