The absence of long-term transmission rights could exclude potential competition—and cause higher electricity costs.
Laurence D. Kirsch is a senior consultant at Christensen Associates Energy Consulting. He can be reached at lkirsch@CAEnergy.com.
Once upon a time, back in the days of the “traditional regulation” of the electric power industry, one could plunk down a billion dollars on a generation plant and have a pretty good idea of what one would be paying to deliver the power to customers. If one were a transmission owner, the cost of transmission service would depend upon the costs of building and maintaining transmission, which tend to rise over time in a reasonably stable manner. If one were not a transmission owner, one would obtain transmission service from a transmission provider that would be committed to provide service for the life of the generating plant at cost-of-service rates that would, again, rise over time in a reasonably stable manner. In either case, there were the possibilities of transmission service curtailment and of nasty inflationary surprises; but both service quality and prices nonetheless remained fairly stable.