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The travails of upgrading the grid

Vertically integrated utilities that own generation and distribution in addition to transmission are at the center for why there has been a 30-year trend of underinvestment in the grid. In fact, such utilities have often used transmission as leverage to manipulate markets. They can minimize investments in the transmission system to keep things congested enough to protect high-cost generation.

So says Joseph Welch,CEO of ITC Holdings Corp., an independent operator of grid transmission lines. Speaking at a House hearing on the future of the grid, Welch explained that it isn't easy to rectify underinvestment in grid transmission lines. “I always tell people, being in the transmission business—it's a great business until I do one of two things, and the first ... is build through transmission lines. The minute we start to build them, it becomes a nightmare. And the process is hard, and it's long," he said.

Welch claims the way around such problems is to have "true federal backstop siting authority. .... at the end of the day, we have to get a regional transmission grid built...there are literally thousands upon thousands of megawatts of renewable energy that this country needs to deploy, and we need to deploy it now. And if we start now, we are years and years away from our goal line."

The process of siting transmission lines is regulated by individual states that, says Welch, are naturally are focused on benefits to their respective state, not the region or the nation. "For this reason," he said, "the building of significant regional transmission lines is virtually impossible. In many cases, transmission projects are delayed for years through cumbersome state siting processes.

A transcript of Welch's remarks can be found here:

http://energycommerce.house.gov/Press_111/20090612/testimony_welch.pdf

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