Growth in Transmission Investment
Some commissioners on the Federal Energy Regulatory Commission (FERC) wonder whether electric companies are building enough transmission facilities. Part of FERC's concern is that a lack of transmission investment might constitute an exercise of vertical market power-electric companies might use lack of investment as a way to protect their generation. If FERC determined this, then market-based rates for some transmission-owning companies would be at risk.
But statistics about transmission planning are surprisingly difficult to get: Many companies look on their five-year plans as competitive information. Still, a March study of shareholder-owned electric utilities shows that investment has grown and will continue to grow. (The response rate to the study-conducted by Edison Electric Institute-was 90 percent.) From 1999 to 2003, annual transmission investment by shareholder-owned utilities increased 12 percent annually and totaled $17 billion. (See Figure 1.) From 2004- 08, the responding utilities have invested or are planning to invest $29 billion, more than a 60-percent increase over the earlier period. Combined actual and planned investment over the entire period increases 10 percent annually.
Also, planned investment in 2004 was about 10 percent of net book value of all transmission assets.
