Here it is...I hope don't let you guys down with all of the anticipation...more will be added later and I could probably answer your questions but this is just an overview of everything.
The primary focus of the conference was the need to upgrade the nation’s transmission grid. Issues discussed included the energy bill, problems with government regulation, and technology improvements that would improve the grid.
The US’s power demand continues to increase. The US’s power demand is expected to grow 32% between now and 2020, according to Platts T&D Sourcebook. Each transmission line that is installed has a 30-50 year useful life. Most of the current transmission grid was built between 1945 and 1970, which means that we are at a critical stage in the nation’s grid. (Transmission spending has fallen from $5 billion per year to to $2 billion per year.) Nearly 75% of the nations’ grid is in need of replacement within the next ten years, but the utilities do not want to spend the money. According to a graph in Quanta’s presentation, 850,000-900,000 poles were installed between 1945 and 1970 compared to just ~400,000 poles in the 35-year period since. And this is just replacement! (IFS said that there are also 5,600 miles of new transmission lines will be installed by 2008.) Investment in power generation has increased by hundreds of gigawatts, placing increasing burdens on the slow-growing grid. Additions to the grid are necessary to reduce bottlenecks and help prevent more blackouts like what happened in August 2003. Since the blackout in the northeast two years ago, the utilities have increased their transmission spending somewhat because they are scared that an outage will happen on their portion of the grid.
Siting of projects was noted many times as the main reason that more transmission lines are not going up. AEP spent 14 years and $50 million going through the approval process to get a 90-mile line from West Virginia to southwestern Virginia. The company was forced to settle for a route to a different substation that would have a far smaller useful life. Hopefully, the energy bill will shorten the siting process (3-4 years). The question to be answered is whether utilities will be able to recover siting costs through rate increases.
There were two different perspectives on whether the energy bill will be passed. An attorney from DC who is the head of the firm’s energy and power practice group was bullish on the passage of an energy bill this year. He believes that both the White House and Congress want to be seen as “doing something” about higher energy costs. Nora Mead Brownell, commissioner of FERC, was not convinced that a bill would be passed this year. She believes that fixing the transmission grid is a problem that few people understand. Both Hurwitz (DC attorney) and Brownell said that the repeal of PUHCA would greatly improve the environment for transmission spending. According to Brownell, there is a huge fragmentation problem in the US; there are approximately 400 transmission companies in the US compared to just ~12 in Europe. She believes that lawmakers and agencies are making slow-but-steady progress toward fixing our nation’s transmission problem.
I also spoke one-on-one with Ms. Brownell and Jim Haunty, VP of transmission capital improvements at AEP. Ms. Brownell mentioned 3M’s installation of their composite core cable on a 10-mile line as part of Xcel’s grid in Minnesota in her presentation. She mentioned that it takes the same investment to install the composite cable as it would to install the traditional, 30-year old cables that we’ve been using. She mentioned all of the benefits of the cable and even called for Congress to make them mandatory! After the presentation, I asked her if she had heard of General Cable’s agreement with Composite Tech Corp and told her that I felt their technology was better. She told me that the key problem with new technology in the grid is the lack of a head of technology at the utilities. They have no one to do the research and no one to make the call.
Jim Haunty was even more excited about ACCC cable. He said that ACCC is a “revolutionizing product” with “amazing potential.” He reiterated that the US utilities, as mentioned throughout the conference, are scared to be first. Utilities will be watching foreign grid operators and then if it works, the US will adopt it. They are primarily watching the UK and Mexico grids. They have questioned some technical issues like corrosion because they worry about the durability of the fibers lasting through the weather. He mentioned that “several” utilities are looking/buying the technology besides just AEP and PacifiCorp (which have already been PRed). Referring to the 49-mile installation to begin in September, Haunty told me that the company saved approximately $1 million by using ACCC compared to traditional transmission cables because they didn’t have to replace the poles. He says that ACCC cables will save the industry a ton of money on the rehab side of the transmission grid at first because it actually costs less for each replacement project. After that, ACCC could be used more for new projects.
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