Major Eastern Transmission Lines Promise NE Supply
Diversity
Dec 11, 2006 NGI's Power Market Today
Whether fully recognized or not,
electric transmission has become an ever-more valuable
strategic resource, and the only key remaining question
is who develops and pays for it, according to a preview
provided Power Market Today Thursday of the
Massachusetts-based consulting firm Energy Security
Analysis Inc.'s (ESAI) study focused on the East,
"The New Transmission Vision." The full report will
be published in January.
ESAI's analysis sees at least four
major transmission projects coming to fruition in
the Northeast United States and Eastern Canada. It
counts them as almost sure things, although ESAI concedes
it is still undetermined what organizations will build
which projects, spanning Ontario and Quebec-to-Labrador;
New Hampshire-to-Quebec; New York City/Long Island-to-PJM;
and finally, PJM's western interconnections.
"Taken together, these initiatives
provide substantial promise of portfolio diversity
to the Northeast's urban markets," the draft executive
summary said. "The alternatives to natural gas include:
(1) thousands of megawatts of large-scale hydro capacity
from Canada, thousands of megawatts of new wind capacity,
and finally thousands of megawatts of coal-fired power."
The latter is somewhat problematic,
given the increased pressures for the American power
industry to begin to fully address global warning/GHG
emissions tests.
ESAI's summary report stated clearly
that the "table has been set for new transmission"
with a combination of the Federal Energy Regulatory
Commission's various transmission-focused orders,
starting with Order 888 up to this summer's 2006 transmission
incentives, and upgraded eminent domain powers granted
in the 2005 Energy Policy Act (EPAct).
"Exactly how this will evolve, and
what impacts these projects have on energy and capacity
prices, congestion in urban areas, and the value of
generation assets" is spelled out in the new report,
although ESAI drew short of laying out the whole document
prematurely.
Conclusions are fairly clear, according
to the ESAI summary:
- There will be impacts on natural gas and liquefied
natural gas (LNG) from large-scale transmission
additions.
- Transmission, more than ever, is becoming the
"enabler of competitive wholesale power markets,"
as seen in the capacity values in urban load pockets.
- New transmission projects, with their price tags
in the hundreds of millions of dollar range and
higher, promise to create good opportunities for
utilities and independent transmission developers,
along with project finance firms.
"We're in the midst of a remarkable
and historic period of change in the electricity markets
of the United States and Canada," said Paul Flemming,
ESAI director for power and gas services. "Suddenly,
transmission is a growth industry."
ESAI (Energy Security Analysts, Inc.,
Wakefield, MA) regularly analyzes North American power
markets, and it will deal with a list of issues regarding
Eastern transmission projects that could be transferred
to applicability elsewhere, including the West.
The impact of the 2005 EPAct, proactive
(vs. reactive) transmission development, declining
generation surpluses, LNG implications, and regulated
transmission solutions to fit deregulated markets
all are covered by the latest study.
This report and others will be featured
at ESAI's next "Transmission Development Collaborative
Executive Roundtable" in Boston in April, an ESAI
spokesperson said.
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