What Seems Efficient May Be the Opposite
Steve Mitnick is President of Lines Up, Inc., Executive Editor of Public Utilities Fortnightly, and co-author of a new book, “Front Lines to Power Lines,” and before that the author of “Women Leading Utilities, the Pioneers and Path to Today and Tomorrow,” “Lewis Latimer, the First Hidden Figure,” and “Lines Down: How We Pay, Use, Value Grid Electricity Amid the Storm.” Mitnick was formerly an expert witness in proceedings before the utility regulatory commissions of six states, the District of Columbia, the Federal Energy Regulatory Commission, and in Canada, and a faculty member at Georgetown University teaching undergraduate microeconomics, macroeconomics and statistics.
A proposed transmission project would cost a billion dollars if it is built. If it is built.
This is a big if. The proponents of the project must maneuver their way past the formidable obstacles of siting and cost allocation. On these rocks, many such proposals founder.
According to Homer, the ancient Greek hero Odysseus did manage to navigate his ship past Scylla and Charybdis. Will the proponents of the billion-dollar project similarly succeed (confronting the two sea monsters that menace any proposal to construct transmission)? The odds are long indeed.
Parties in a cost allocation process argue passionately, typically, about the portions of that billion to be taken on by this jurisdiction versus that jurisdiction. The ensuing melee drags on and on and ultimately the torturous journey can wreak havoc. Many proposals do not survive this stage.
Which is so sad. Notwithstanding the allocation, whatever the formula is that is proposed or opposed, the impact on individual customers' costs might be so small that it is barely noticeable to them. For a billion dollars is surely a big number. But slice it and dice it over so many customers and over so many years of useful life. That big number, when it is expressed as the project's total cost, asymptotically approaches zero when it is an increment in a single customer's monthly bill.