Pressure is mounting in the United States to construct new and extensive transmission lines necessary to transport wind energy from remote areas where it's generated to markets where it will be consumed. Power lines hundreds of miles long are proposed to criss-cross the country costing billions of dollars. While wind generators are willing to commit to building projects (heavily subsidized by federal tax credits), the cost of new transmission is expected to be borne by ratepayers and taxpayers in the different regions.
Last week, Texas regulators approved $4.93 billion in public dollars to be spent on a web of transmission lines slated to carry west Texas wind to east Texas. The plan is expected to cost residential electricity customers $4 extra per month to cover the cost. While Texas races to claim the moniker of "wind capital", little has been established as to the economic, environmental, and social impacts of this decision.
Contrast this with the debate occurring within the New England regional power pool. Last spring, several proposals were submitted to the ISO-New England to study whether costs for new transmission to remote areas can be regionalized. A key question before the ISO and the region as a whole is "Who is or should be responsible for paying for transmission system projects that are not focused on maintaining power system reliability, or reducing congestion, but instead are entirely or largely driven by the interconnection of new generation resources?" This is one of several questions posed by Paul Hibbard, Chairman of the Massachusetts Department of Public Utilities, to the ISO-NE. In most cases, the new generating resources referenced by Chairman Hibbard are wind projects proposed for the far northern reaches of Maine and New Hampshire.
In his follow-up comments to the Economic Studies Working Group, Hibbard further notes "the [wind] industry is no longer one that needs to be pampered - wind resource development is now being driven not by local interests or wind wildcatters, but by institutions with extremely deep pockets and sophisticated development strategies" including FPL, T. Boone Pickens, Iberdrola, and Energias de Portugal (EDP).
It is well known that energy prices will be governed at least over the next few decades by the marginal price of the dominant fossil fuel(s) for a region -- which for New England is natural gas and some oil. If the ratepayers in New England and Texas are further asked to bear the mounting costs to construct transmission to remote, windy areas, the much touted "free fuel" starts to look very expensive in real dollars and in environmental costs. (Note: several reports in this week's newsletter focus on the impacts and opposition to new transmission lines).
In addition to socializing the huge costs, building new transmission inevitably involves arm-twisting and outright taking of private property. Texans are known to be at least as protective of their property rights as New Englanders, so where's the outrage?