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From gas pipelines to PV arrays, the nation’s contractors are seeing growth in utility infrastructure. Fortnightly talks with executives at engineering and construction firms to learn what kinds of projects are moving forward, where they’re located, and what lies over the horizon.

The Old Drawing Board

PUCs are concerned that a rapid shutdown of coal-fired plants will start a full-tilt dash to gas—similar to the one that caused bankruptcies among independent power producers in the late 1990s and early 2000s. But this time around, ratepayers and not IPP investors will be stuck with the risk, if utilities rush to add all that new gas-fired capacity to rate base.

Category: 
Frontlines
Author Bio: 

Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com

Portfolio planning in the age of gas.

Federal Feud

When Revolutionary War veteran Daniel Shays led an attack on the federal Springfield Armory in January 1787—the spark that ignited the federalist movement—he scarcely could’ve guessed that now, 225 years later, his spiritual descendants would still be fighting that very same battle.

Author Bio: 

Bruce W. Radford (radford@pur.com) is Fortnightly’s publisher, and Michael T. Burr (burr@pur.com) is the editor-in-chief.

The jurisdictional battle rages on, with FERC and EPA squaring off against the states.

Bridging the Seams

With no single entity in charge, transmission planning has plagued projects that span multiple regions. A new framework offers a solution.

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Figure 1 - Building Blocks for an Effective Interregional Planning and Cost Allocation Framework
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Sidebar Title: 
Cost Allocation Principles: An Expanded List
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FERC Order 1000 listed six principles for cost allocation for interregional transmission planning. FERC’s list, however, could be expanded as follows:

1) Commensurate with Benefits: The cost of interregional transmission projects should be allocated to regions such that they are at least roughly commensurate with total benefits identified for each of the regions based on the benefits and metrics specified. Neither region should be allocated a share of the cost of an interregional project in which it receives no benefit.

2) Transparency: The application of cost allocation methodologies and identification of benefits and beneficiaries must be transparent.

3) Different project types: Different cost allocation methods may be applied to different types (e.g., reliability, economic, or public policy requirements) or different portions of transmission facilities.

4) Quantify and Monetize: The identified benefits should be quantified and, if possible, monetized based on all internally used and additionally specified interregional benefit metrics. Non-monetized and non-quantified benefits should also be recognized in the assessment of the overall reasonableness of proposed interregional project cost allocations.

5) Benefits at Least Equal to Avoided Costs: The regions should agree that the monetized reliability, load serving, public policy, or other benefit of an interregional project will be at least equal to the avoided cost of achieving the same benefit solely through cost-effective local or regional transmission upgrades.

6) Hurdle Rate: If benefit-to-cost ratios are used to assess the desirability of an interregional project to a region or the regions as a group, the benefit-to-cost threshold must not exceed 1.25.

7) Regional Net Benefits: Benefits to each region need to be sufficiently large so that each region’s share of benefits exceeds its share of costs consistent with region-internal benefit-cost criteria.

8) Internal Cost Recovery: The costs allocated to each region must be recoverable through the existing internal—local and regional—cost allocation process of each region.–JP, JWC, and DH

Author Bio: 

Johannes Pfeifenberger and Judy Chang are principals of The Brattle Group. Delphine Hou is a former Brattle associate. This article is based on work undertaken for the Southwest Power Pool’s Regional State Committee and the associated report, Seams Cost Allocation: A Flexible Framework to Support Interregional Transmission Planning, April 2012, available at www.spp.org and www.brattle.com. The authors acknowledge sole responsibility for the content of this article.

Interregional planning under FERC Order 1000

A Pricey Peninsula

High prices have turned Michigan against regional planning -- a possible foretaste of what to expect under FERC Order 1000.

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Figure 1 - Proposed Multi Value Project Portfolio Overview
Figure 2 - MISO Prices May 29, 2012 – 1:05 P.M.
Figure 3 - May 29, 2012 – 2:05 P.M.
Figure 4 - May 29, 2012 – 3:35 P.M.
Category: 
Commission Watch
Author Bio: 

 

Bruce W. Radford is publisher of Public Utilities Fortnightly.

Michigan chafes over regional grid planning, providing a policy lesson for the feds.