Easy transmission a key to cheaper electricity

Lower electricity costs are not solely the product of affordable fossil fuel supplies and ample power generation. For power to be affordable, electricity has to be able to freely flow from where it is created to where it is needed.

The New England region is widely considered to produce a net surplus of electricity, but there are problems with moving that power from state to state and city to city. Boston, Hartford and southern Maine are just three spots where bottlenecks in electricity transmission have provided obstacles to the flow of electricity. In fact, New England’s independent system operator, which is charged with monitoring the transmission and generation of power in the region, has identified as many as 14 locations where the flow of electricity through existing transmission lines are at capacity.

Boston is perhaps the most striking example of how congested transmission can force large population areas to become dependent on aging and uneconomical power plants to furnish them with power. Robert Briggs, president of Bangor Hydro-Electric Co., said recently that older, inefficient and polluting generators remain on line in Boston because the transmission available for moving power into the city for its residents operates at capacity. Though the city still buys considerable power from outside the Boston area, it can’t get any more because the transmission lines are just too clogged.

Maine also has its problems with transmission, Briggs said, adding that state lawmakers overlooked the system of power lines, known as the power grid, when they were developing Maine’s deregulation law.

“The grid has evolved … the state regulations haven’t,” Briggs said. “There’s no concept, under Maine law, of a regional benefit of a transmission line.”

Those sentiments were echoed by David Flanagan, former president of Central Maine Power Co., who said that a deregulated market for electricity demands that there are many ways of delivering power to consumers from many different sources. That, he said, can only be accomplished by expanding the transmission grid.

Electric transmission lines may be compared to highways in that as more and more cars enter the highway, traffic slows. When traffic is at a high point, such as rush hour, it can actually slow to a crawl, leaving more and more cars waiting to get on the highway.

“With a market system,” Flanagan said, “you need even more transmission. It was something that didn’t get a lot of consideration when restructuring was being considered.”

Another problem with expanding transmission systems is that the process gets bogged down in state and local review boards, Flanagan said. The expense of going through the regulatory process to build new transmission lines, coupled with construction costs, could add about 10 percent to the price of electricity, he said.

Keith Cunningham, spokesman for the International Paper mill in Bucksport, said his company views transmission infrastructure issues seriously. Even if the capacity of existing transmission lines is adequate for today’s needs in Maine, Cunningham said, companies and lawmakers must be careful to make sure the transmission system meets the needs of a growing population and expanding economy.

Part of the problem with the transmission grid in New England, some industry people say, is that there is no incentive for companies to improve transmission lines in congested regions. Currently the added cost of such congestion is shared among all people who purchase power in New England – making power in highly congested areas no more or less expensive than in free-flowing parts of the region.

“There is a little bit of a problem in that transmission owners have very little incentive to install new transmission,” said John Brodbeck, director of marketing and regulator policy for PPL Energy Plus. The Pennsylvania-based electricity supplier sells power to commercial and industrial customers in New England. Brodbeck didn’t want to comment on what role state and federal regulators should have with transmission issues, but did say there has to be a regulatory presence that encourages the development of new transmission lines.

One such regulatory pressure is being evaluated by ISO New England, and may be a little more than a year away from implementation. Known as congestion management, the process essentially would apply a surcharge to the cost of power produced in congested regions.

As a result, cities and companies would have incentives to build additional transmission lines to tap into cheaper power produced in surrounding areas. As more and more transmission lines are added, the cost of power stabilizes across the affected market.

Bill Cohen, a spokesman for ISO New England, said his agency is reviewing such a pricing scheme and hopes to have it in place sometime in the next two years.

With a surcharge in the more urban, congested areas, energy companies would likely construct new transmission lines to tap into the lower-priced unsurcharged electricity in the less-congested rural areas such as Maine, Cohen said.

Once more lines are built, more and more suppliers would be able to bring their power to more parts of New England, thus improving competition and theoretically lowering electricity prices.

Cohen said the transmission problems in the New England region have been no secret to anyone. In fact, Cohen said ISO New England considers it a second phase of electric deregulation to be addressed.

“ISO recognizes that our markets aren’t perfect and this would be a second implementation,” Cohen said. “We have known that this was going to be an improvement that had to be made.”