Article

Cost-recovery for grid upgrades unclear

The Wyoming Infrastructure Authority is tracking seven major electrical transmission proposals at a combined cost of $15 billion, potentially adding 15,000 megawatts of new electrical generating capacity in and around the state. It's the shared ambition of Wyoming, which wants the economic benefits of exporting power, and Western states that want additional megawatts to come from cleaner forms of energy.

The Wyoming Infrastructure Authority is tracking seven major electrical transmission proposals at a combined cost of $15 billion, potentially adding 15,000 megawatts of new electrical generating capacity in and around the state.

It's the shared ambition of Wyoming, which wants the economic benefits of exporting power, and Western states that want additional megawatts to come from cleaner forms of energy.

But how these expensive high-wires are financed, and who pays, remains unclear.

When it comes to regulated utilities such as Tri-State and PacifiCorp, upgrade costs are typically scrutinized and passed on to customers by public service commissions in the respective states where the upgrades occur.

PacifiCorp, which operates as Rocky Mountain Power in Wyoming, has generation and transmission facilities spanning a six-state customer service area.

An upgrade such as the proposed Gateway West Transmission Project -- a high voltage line originating near Glenrock and ending near Boise, Idaho -- could cost an estimated $3 billion.

Typically, the cost of a system-wide upgrade such as transmission could be divided among all of the six states where RMP has... more [truncated due to possible copyright]  

The Wyoming Infrastructure Authority is tracking seven major electrical transmission proposals at a combined cost of $15 billion, potentially adding 15,000 megawatts of new electrical generating capacity in and around the state.

It's the shared ambition of Wyoming, which wants the economic benefits of exporting power, and Western states that want additional megawatts to come from cleaner forms of energy.

But how these expensive high-wires are financed, and who pays, remains unclear.

When it comes to regulated utilities such as Tri-State and PacifiCorp, upgrade costs are typically scrutinized and passed on to customers by public service commissions in the respective states where the upgrades occur.

PacifiCorp, which operates as Rocky Mountain Power in Wyoming, has generation and transmission facilities spanning a six-state customer service area.

An upgrade such as the proposed Gateway West Transmission Project -- a high voltage line originating near Glenrock and ending near Boise, Idaho -- could cost an estimated $3 billion.

Typically, the cost of a system-wide upgrade such as transmission could be divided among all of the six states where RMP has customers. Wyoming's portion for a six-state system-wide upgrade is about 15 percent, according to the Wyoming Public Service Commission.

But that doesn't necessarily mean Wyoming's RMP customers will see a rate hike of $450 million paid for over the next 30 years.

Chris Petrie, chief counsel to the Wyoming Public Service Commission, said there are a number of variables that come into play. Although Wyoming customers would certainly benefit from Gateway West in terms of reliability, the line is primarily for the purpose of exporting power. And that would likely change the cost-recovery formula.

Another variable is independent generation. Regulated utilities like RMP often receive payment from third-party, independent generators who pay to move their power on the utility's transmission lines.

Those revenues also change the cost-recovery formula.

But the proposed upgrades by regulated utilities are just part of the picture. The seven transmission proposals currently targeting Wyoming's energy resources also include several merchant, or non-regulated, shippers.

Those independents rely on power generators -- like a company with a wind farm -- to have a contract in place with a buyer.

"It's the chicken-and-egg problem," said Karyn Coppinger, senior development manager for Invenergy, a Chicago-based wind energy company.

Coppinger explained that potential wind energy buyers -- those utilities or breweries or companies who want to brag about being wind-powered -- won't sign a contract with a wind energy developer until that developer has signed a contract for transmission. And the transmission developer can't attract investors for its power line without contracts from the wind energy producers.

The work of bringing all these parties to the same table falls to organizations like the Wyoming Infrastructure Authority.

"We're looking for solutions," Coppinger said.


Source: http://casperstartribune.ne...

JUL 19 2009
http://www.windaction.org/posts/21296-cost-recovery-for-grid-upgrades-unclear
back to top