Fitch: U.S. Electric Transmission
System Shows Its Age
Nov 2, 2006 - Business Wire
Strains on the U.S. power delivery
system are beginning to show with the current system
characterized by aging infrastructure, significant
underinvestment and outdated technologies, according
to a Fitch Ratings report. Market participants and
regulators are placing new functions on the system,
such as facilitating competitive regional markets
for which it was not designed.
Over the past decade, most transmission
investment was directed toward constructing new
facilities to meet demand, rather than refurbishing
existing equipment. According to the U.S. Department
of Energy, 70% of the transmission lines are 25
years or older, 70% of power transformers are 25
years or older, 60% of circuit breakers are more
than 30 years old.
Compounding these problems are the
duel challenges of parts availability and obsolescence
of older equipment. Electricity demand and generation
has doubled over the past 30 years and that, along
with the advancement of wholesale power markets,
transfers of large amounts of electricity across
the network have increased significantly. Transmission
constraints, while not affecting power supply, have
led to material financial consequences in cases
where lower cost power was unable to be delivered.
The underinvestment has just begun to be addressed
by the investor-owned utilities (IOUs) and transmission-only
companies (transcos). Getting new transmission on
the ground continues to be hindered by sitting,
historically the greatest hurdle to adding new transmission
"Transmission developers still face
a struggle before state utility commissions despite
Federal enhancements to FERC," said Karen Anderson,
director, Fitch Ratings Global Power team.
From a credit perspective, Fitch expects
that utilities will be able to finance their capital
expenditures in a manner that is consistent with
The full report "Frayed Wires: US
Transmission System Shows Its Age" is available
on the Fitch Ratings web site, at www.fitchratings.com.
Also available is a Q&A on the electric transmission
system titled "Transmission 101."