NCPA - National Center for Policy Analysis

Need For Additional Electricity Transmission Lines

March 20, 2001

More electric power generating plants need to be built -- especially in areas designed to serve the California market, experts agree. But what about the facilities needed to transmit that power: transmission lines?

Experts say there has been no major new investment in transmission lines over the past 10 to 15 years.

  • As power demand increases a conservatively estimated 9 percent through 2004, the industry plans to add only 6,000 miles of lines -- a 3 percent increase -- to an already overtaxed system.
  • The Federal Energy Regulatory Commission all but mandated regional transmission organizations, or RTOs, as part of deregulation -- with the aim of ending excessive access fees charged by some utilities and to generate investment in new transmission capacity.
  • Under FERC requirements, utilities swap their transmission assets in exchange for equity in RTOs.
  • But there is no guarantee RTOs will attract sufficient investment to build new transmission lines -- much less upgrade existing ones.

The capital costs could be huge -- up to $2 million per mile to build above-ground lines and more than twice that for underground ones.

Moreover, citizens protests have scuttled new construction of power lines in at least 13 states.

Source: Rob Wherry, "Crossed Wires," Forbes, March 5, 2001.


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