Electric
Cooperatives' National Association's Views for Transmission
Reliability
08/29/2003
(In light of the recent Northeast blackout, the National
Rural Electric Cooperative Association (NRECA) - the association
for over 1,000 member-owned electric cooperatives - made a statement
in regard to future transmission reliability.)
Congress should enable any willing entity to build needed transmission and reduce the economic risk associated with constructing transmission facilities required for reliability.
North America needs the new electric transmission equivalent of the interstate highway
system:
The current transmission system cannot reliably handle the dramatic increase in transactions since the 1992 Energy Policy Act.
Transmission shortages are contributing to wholesale and retail electric market failures that are harming consumers.
High rates of return are not an acceptable means of attracting investment in
transmission:
The incentive approach only increases costs for consumers, the people who were supposed to have seen lower prices from competition.
High transmission costs do not strengthen wholesale electric markets, they narrow them. The high rates act as Òtoll gates,Ó narrowing generation markets and protecting the monopoly power of local generators.
Instead of increasing costs to consumers, lower the risk of building
transmission:
Direct FERC to ensure that any entity that builds a qualifying transmission project recovers its costs.
Remove barriers to the construction of new facilities, including:
Restrictions on RUS borrowers limiting their ability to build facilities required for regional reliability.
State law restrictions that prohibit cooperatives, non-utilities, and out-of-state entities from constructing transmission required for regional reliability
To qualify for federal assistance, the proposed transmission project must:
Be identified through a regional joint-planning process to be necessary for the reliable operation of the regional transmission system.
Be constructed according to best engineering practices.
Be operated by the relevant RTO.
Offer service pursuant to traditional cost-of-service principles Ð the cost-of-service should take into account the low risk provided by FERC's obligation to assure cost recovery.
Kentucky Association of
Electric Cooperatives, Inc.
4515 Bishop Lane * Louisville, KY 40218
502-451-2430 * FAX: 502-459-3209 Terms of Use
