Letter to WSJ: We Need a Modern Electrical Grid and Must Pay for It

The following is a letter written by former Chairman of FERC and member of Americans for a Clean Energy Grid Jim Hoecker to the Wall Street Journal in response to an article called “The Wind Power Tax.” The letter was published in the WSJ and is cross-posted here.

February 21st, 2013

Your editorial “The Wind Power Tax” (Feb. 11) registers your opposition to modernity and clean-energy development by attacking investment in electric transmission, which is essential to connecting renewables to customers.

You ignore basic facts. Transmission, which is less than 10% of electric bills, is an integrated network that serves multiple societal needs. Major transmission additions are needed to ensure our nation’s electric reliability, replace aging and outdated facilities and reduce the extraordinary costs of congestion on the grid. Only about one-third of the coming grid upgrade must be built to serve remote wind and solar plants. Moreover, federal regulators actually agree with you that the beneficiaries of such new facilities should bear the costs in rates. Those benefits can nevertheless be widespread and powerful, like those of the highway system.

Your jeremiad against the Federal Energy Regulatory Commission’s Order 1000 sides against the market competition among all electricity resources that transmission facilitates, and favors the continued Balkanization of wholesale power markets and an industry model that belongs more to post-World War II America than to the 21st century. The president, the American Society of Civil Engineers and the Bipartisan Policy Center aren’t promoting greater investment in our inadequate electric infrastructure for no reason. They, too, are concerned about the pocketbooks of electricity customers, not just tomorrow but 20 and 30 years from now.

James J. Hoecker

Husch Blackwell LLP

Washington

Mr. Hoecker is a former chairman of FERC and is counsel and adviser to the Working Group for Investment in Reliable and Economic Electric Systems.

transmission blue sky single

Grid Investment Gap Could Cause Blackouts and Brownouts Costing Consumers $200 Billion by 2020

In many parts of the United States, the transmission lines that provide us with reliable, low-cost electricity are rapidly aging, which can lead to increased blackouts and brownouts. Some of the nation’s 450,000 miles of transmission lines are 50 or more years old. In fact, the U.S. Department of Energy estimates that 70% of our transmission lines and transformers are at least 25 years old.

Source: Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure
Source: Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure
As our economy becomes more dependent on electricity, the demands we place on the electric grid will intensify, leading to increased blackouts and brownouts. A new report, Failure to Act: The Economic Impact of Current Investment Trends in Electricity Infrastructure, released by the American Society of Civil Engineers (ASCE) predicts that power outages will cost American businesses and households almost $200 billion by 2020. On the other hand, investing just $11 billion per year in electricity infrastructure can help protect 529,000 jobs, $656 billion in personal income, $496 billion in GDP, and $10 billion in U.S. exports.

While investment in the electric grid has increased slightly in the past decade, we are still underinvesting in our transmission infrastructure. In order to connect remote renewable energy resources, like wind in the Midwest and solar in the Southwest, we need to build the infrastructure to deliver that power to the cities and towns where it is needed. You can’t put wind in a railcar, and you can’t put the sun in a pipeline – you need transmission lines to deliver these renewable energy resources to market. New regulations, such as Federal Energy Regulatory Commission Order 1000 and the Department of Energy’s Memorandum on Grid Modernization in the Power Marketing Administrations, will help spur the investments needed to develop a 21st Century clean energy grid.

To read the full ASCE report, and to view infographics summarizing their findings, click here.

transmission blue sky

California Blackout: What it Tells Us About Our Grid

Two weeks ago, an error by a maintenance worker in Arizona initiated a cascade of events that cut off electricity from Arizona to San Diego to Mexico.  Traffic was snarled, schools were closed, and business activity came to a halt as more than 3.5 million people literally sweated it out in 100-degree-plus heat until power was restored.  Fortunately, only 12 hours had elapsed, and although millions were inconvenienced and total costs will surely run into the tens of millions, the region dodged major economic losses, casualties, and loss of human life.  State and federal bodies have already announced plans to conduct investigations of the incident.  But we don’t need to wait for these reports to refresh some important lessons about the state of our nation’s electric grid and what to do about it:

First, our electric grid is vulnerable and outdated – it has simply not kept up with our ever growing demand for electricity.  Our grid uses technology more than half a century old, and critical facilities in many parts of the country are of a similar vintage.  It must be made smarter and stronger to meet our current and future needs.

Second, we depend more on electricity today than ever, a dependency that will continue to grow in the future.  Electricity is safe, clean, efficient, and flexible enough to perform innumerable tasks.  American homes, offices, health care facilities, and factories are using more electrical devices every day because they dramatically increase productivity and quality of life.  Electricity will power a growing share of our transportation miles over the next several decades.  It is reckless and completely unnecessary to allow reliable and affordable electricity – the lifeblood of our economy – to be put at risk by a rickety and antiquated grid.

Third, our grid, for all of its faults, is now a single interconnected “machine” over a few very large regions of the country.  Equipment failures in Arizona can shut the lights out in California, just as overloaded lines in Ohio blacked out 55 million people in eight states from Michigan to Boston – and the Canadian province of Ontario – in 2003.  Since everyone benefits from a uniformly robust electric system, everyone should share the modest cost of strengthening its weak links.   Transmission accounts for less than 10 percent of the average electric bill, so it makes sense to invest now to prevent the much larger costs of widespread system outages – an estimated $10 billion for the 2003 blackout alone.

Renewable resources like solar and wind are even more dependent on transmission lines.  Unlike fossil fuels, wind and sunlight can’t be moved in pipelines or rail cars.  Power lines are needed to move renewable electricity from remote areas where it is most economically produced – like the Great Plains and Desert Southwest – to where it is consumed, cities and suburbs around the country.  America is home to some of the greatest renewable energy resources in the world – enough to meet all of our energy needs many times over.  A robust and modern electric grid is the key to unlocking their potential.

Making our grid stronger does not mean we can’t make it smarter and more efficient; in fact, we need to do both.  If California’s recent blackout helps us work together toward those goals, we’ll be that much closer to addressing our economic and environmental challenges.