July 2001 issue

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Solution to West Coast power crisis includes transmission as well as power

In a situation akin to trying to pour more water through a funnel than the funnel can handle, new megawatts of electricity soon will be coursing though the funnel of the region?s high-voltage electricity transmission system. While the power supply is increasing in response to the regional and West Coast electricity crisis, the transmission system is not. By the end of 2002, about 3,100 new megawatts of electricity will be online in the Northwest, according to an analysis by the Power Planning Council.

While adding more megawatts to the power supply will help ease the West Coast power crisis, the new power will intensify transmission constraints that already exist and make it even clearer that the region?s high-voltage transmission system, parts of which are 30 years old, needs upgrades and expansions.

At best, the transmission system has been made to work more efficiently and handle more power in recent years, but construction of new lines is not keeping pace with construction of new power plants. In short, the system is stressed.

Electricity deregulation, which began under the National Energy Policy Act of 1992, is partly to blame for the lack of new high-voltage transmission facilities. Just as deregulation discouraged new investments in power plants, deregulation also discouraged investors from committing the millions of dollars necessary to build new transmission lines. That is because the price of wholesale electricity fluctuates with supply and demand, and so there is no guarantee that investments will be recovered in rates once the new power plants, or new transmission lines, are built.

Transmission problems, while they have not attracted as much attention as power supply problems, have not escaped attention within the industry. The Northwest Power Pool, an association of electric utilities that coordinates the operations of its members, reported that while the winter peak power load is expected to increase 12 percent between 1998 and 2008, transmission circuit miles are expected to increase only 2 percent.

"Some new generation will be coming onto the transmission system in the summer of 2001. The transmission work must be done now if the region is to benefit from the new generation."

The Western Systems Coordinating Council, in a report on the summer 2001 power supply outlook, reported that transmission constraints in California will exacerbate power supply problems this summer when weather-related demand increases ? particularly transmission between northern and southern California. The WSCC is an association of western electric utilities and one of 10 regional electric reliability councils in the country that comprise the North American Electric Reliability Council.

According to the report, transmission constraints will contribute to blackouts in California this summer:

"Based on current projections, resource deficiencies and transmission constraints are likely to result in the curtailment of interruptible and firm customer loads both during peak periods and at other times due to energy limitations during the 2001 summer within the California Independent System Operator control area, unless conservation or assistance from other areas is greater than projected."

Transmission constraints will make it more difficult for the Northwest to help California with additional power, if there is any to share, the WSCC reported.

The WSCC report also assessed high-voltage transmission in the Pacific Northwest, concluding that "all major Northwest transmission facilities are anticipated to be available, and the transmission system is expected to be adequate for projected ? transfers." But the report also pointed to potential problems, ironically the result of industrial cutbacks that reduce transmission capacity.

"The reduction of industrial loads [in the Northwest] may create more restrictive transmission constraints in areas where through-flow of power can have an impact, as follows:

• Transmission constraints in Western Montana are expected to reach internal east-to-west limits at lower hydroelectric generation levels than previously experienced due to an approximately 700-megawatt reduction in industrial load in the area.
• Transmission constraints on the Northwest-Canada Intertie also will be affected due to a 200-megawatt reduction in industrial load just south of the Canadian border. This will reduce the north-to-south transfer capability and increase the south-to-north capability based on local load and generation conditions."

Investor-owned utilities that operate their own transmission lines in the Northwest are experiencing the effects of increased demand for power, as well. But the biggest impact is on the biggest regional transmission owner, the federal Bonneville Power Administration.

Bonneville recently reported that in the last five years, use of its transmission system has increased by 4.7 percent, but no new facilities have been built. Bonneville?s biggest lines, its system of 500,000-volt lines, are 30 years old. Bonneville has experienced a rapid increase in the use of its system since transmission became a commodity business. From dozens of transactions per day before energy deregulation, Bonneville now schedules literally thousands of transactions per day.

In the past 14 years, Bonneville has made operational and mechanical changes to its system and split off its transmission business operations as a separate division, but built no new lines. Today, the buffer of transmission capacity originally built into the system appears to be gone, Bonneville has reported.

Transmission is constrained throughout the Northwest. There are constraints between Montana and states to the west, between John Day Dam on the Columbia River and points to the north, and across the Cascade Mountains in both Oregon and Washington. Bonneville plans major work at existing substations to install new equipment and reinforce existing transmission lines. Bonneville also recently committed to proceed with a $35 million project to replace aging equipment at the Celilo Converter Station, which is the northern end of the Direct Current Pacific Intertie. The DC Intertie connects the Northwest to Southern California, where the southern terminus is at Sylmar just north of Los Angeles. With the replacements, the DC Intertie will maintain its capacity of 3,100 megawatts; the other alternative was to derate the capacity of the line by about half.

Meanwhile, Bonneville?s Transmission Business Line, which manages the high-voltage transmission system, estimates it will need to spend $1.3 billion between 2002 and 2006 to replace aging facilities, reinforce connections to existing customers and connect with new generating plants. But that may not be enough. Bonneville estimates it may need more money to remove constraints, supply new demands for power and integrate new generating plants into the transmission system. Congress will have to approve increased borrowing authority over Bonneville before the upgrades can proceed.

A proposed regional transmission organization, RTO West, will have the authority to manage existing transmission lines, including Bonneville?s, and build new lines. Transmission owners are creating the organization in response to an order from the Federal Energy Regulatory Commission (FERC) that such organizations be created around the country to improve the efficiency of high-voltage transmission and lower its cost.

RTO West has not been approved by the FERC, and it likely would take five years or longer after that approval for RTO West to complete the planning and construct new lines.

"The region simply cannot wait that eight to ten years," according to a May 2001 Bonneville "Keeping Current" publication on transmission. "Some new generation will be coming onto the transmission system in the summer of 2001. The transmission work must be done now if the region is to benefit from the new generation. BPA believes the best way to ensure open competition that will bring down power prices is to have a strong, safe, reliable transmission system when the RTO takes control. BPA?s transmission construction project will help the region achieve that goal."

For more information, visit Bonneville?s Transmission Business Line website and see BPA's Keeping Current publication.