WORLD-GENERATION MAY/JUNE 2015 V.27 #2
13
PERSPECTIVE
Elliot Roseman, Vice President
ICF International
WHO GETSTO BUILDTRANSMISSION AND WHY?
BY ELLIOT ROSEMAN,KEN COLLISON AND KIRAN KUMARASWAMY
A number of tectonic forces are mov-
ing electric transmission in new directions,
and this article explores two of them: 1) the
emergence of solicitations to determine
who will build new high-voltage transmis-
sion facilities (this is the “who” in the title);
and 2) the impact of proposed regulatory
policies, specifically, the Clean Power Plan
(CPP, this is the “why”). We see these two
forces as major drivers in creating new
opportunities for transmission developers
and incumbent utilities over the next
decade, within the context of the ongoing
challenges to the approval and construction
of transmission that continue to exist.
While FERC Order 1000 does not
require them, transmission solicitations or
RFPs have – in selected organized markets
– become the default method to allocate the
development and construction of new
regional transmission facilities to the win-
ning bidder(s). The active markets for
such approaches are: California ISO
(CAISO); PJM; Alberta and Ontario, with
other markets (e.g., MISO, ISO-NE,
NYISO) in active development, or ready to
be implemented (SPP). The non-RTO (or
bilateral) regions are in earlier stages of
carrying out regional transmission planning
under Order 1000.
For those regions that use them, what
are some of the key lessons learned from
the early RFPs, and where do we expect
such solicitations to head? To address this,
let’s look at an analogous process - the
development of competitive bidding for
power generation over three decades ago.
Figure 1 below depicts that comparability.
What does this analogy tell us? Let’s
look at the role out of generation bids to find
the points of comparability to transmission:
The Launching Pad.
In power gener-
ation, the catalyst for competition was the
Public Utilities Regulatory Policy Act
(PURPA) of 1978, as this law required utili-
ties to purchase efficient types of genera-
tion at the utility’s “avoided cost”. In the
same way, FERC Order 1000 was the kick-
off document for competitive transmission
by not allowing utilities the “right of first
refusal (ROFR)” at the federal level.
The Gold Rush.
In the advent of
PURPA, in the early-to-mid 1980s,
developers offered hundreds of generation
projects to utilities, demanding to be paid,
swamping some utilities (e.g., Niagara
Mohawk). The question of how to pay
them became critical, and states developed
responses (e.g., the New York 6-cent law,
California’s standard offer contracts), some
of which were impractical or unsustainable.
In the same way, states and RTOs (which
did not exist in the 1980s) have been
assessing how to implement Order 1000’s
ROFR requirement in an orderly manner,
Ken Collison, Vice President
ICF International
Kiran Kumaraswamy, Senior Manager
ICF International
PURPA – Opening Gun
Less Organized/
Avoided Costs
Advent of RFPs
Systematic Process
Utility Subs Join IPPs
Project Proliferation
(RTO Formation)
Consolidations, Sales,
Specializations & Spinoffs
Best Companies
R ise to the Top;
Shakeouts Occur
Opportunities Become
Separate from the Law
Figure 1 – Transmission RFPs as a Parallel to Generation Bids
PURPA – Opening Gun
Less Organized/
Avoided Costs
Advent of RFPs
Systematic Process
Utility Subs Join IPPs
Project Proliferation
(RTO Formation)
Consolidations, Sales,
Specializations & Spinoffs
Best Companies
R ise to the Top;
Shakeouts Occur
Opportunities Become
Separate from the Law
(continued page 14)
