THE BRATTLE GROUP

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This report was prepared for WIRES. All results and any errors are the responsibility of the authors and do not represent the opinion of The Brattle Group, Inc. or its clients. Acknowledgements: The authors acknowledge the valuable contributions of the WIRES member companies but especially these individuals: Paul Dumais, Flora Flygt, Donna Fulton, Spencer Hanes, Joe Hartsoe, Terron Hill, Steve Metague, Carl Monroe, Mary Ellen Paravalos, Dan Prowse, Diana Rivera, Kathy Shea, Raja Sundararajan, Brian Thumm, David Treichler, and Evan Wilcox. We would also like to thank WIRES Counsel Jim Hoecker and Brattle colleagues Onur Aydin, Heidi Bishop, James Mashal, and Sam Newell for their research, input, comments, peer review, and discussions. About the Authors: Judy W. Chang and Johannes P. Pfeifenberger are Principals, and Akarsh Sheilendranath is an Associate at The Brattle Group, an economic consulting firm with offices in Cambridge, Massachusetts; Washington, DC; San Francisco; New York City; London; Madrid; and Rome. They can be contacted at www.brattle.com Copyright © 2015 The Brattle Group, Inc.
Table of Contents Executive Summary .................................................................................................................................. ii I. Introduction ...................................................................................................................................... 1 II. The Wide Range of Economic Benefits of Transmission Investments .......................................... 3 III. The High Costs and Risks of Inadequate Transmission Infrastructure ......................................... 9 A. Insufficient System Flexibility Increases Costs and Risks in Both the Short- and Long-Term ............................................................................................................................. 11 B. Understanding the Costs and Risks of Inadequate Transmission ....................................... 13 C. Improved Scenario- and Sensitivity-Based Planning to Recognize Long- and Shortterm Uncertainties ................................................................................................................ 18 IV. Regional Transmission Planning Practices ................................................................................... 20 A. The Status of Regional Transmission Planning Practices ................................................... 20 B. The Role of Policy Makers in Regional Transmission Planning ........................................ 21 C. Inefficiencies of Current Planning Processes ...................................................................... 23 D. Implications and Recommendations .................................................................................... 24 V. Interregional Transmission Planning ............................................................................................ 25 A. The Value of Interregional Transmission Infrastructure .................................................... 26 B. Overview and Limitations of Current Interregional Planning Practices ........................... 31 C. Limitations to The Type of Projects that can be Considered in Interregional Planning .. 33 D. The “Least Common Denominator” Approach As a Barrier to Development of Beneficial Interregional Transmission Infrastructure ......................................................... 34 E. Implications and Recommendations .................................................................................... 36 VI. Summary of Conclusions and Recommendations ........................................................................ 37 List of Acronyms ...................................................................................................................................... 41 Bibliography ............................................................................................................................................. 43 Appendix A: Case Study of Transmission Project to Mitigate the Risk of Large Increases in Societal and Customer Costs Appendix B: Addressing Uncertainties Through Improved Use of Scenarios and Sensitivities Appendix C: Case Studies of Proposed Interregional Planning Processes Case Study 1: SPP-MISO Interregional Planning Case Study 2: MISO-PJM Interregional Planning i | brattle.com
Page 1 and 2: THE BRATTLE GROUP Johannes Pfeifenb
Page 3 and 4: WIRES Preface Purpose of This Repor
Page 5 and 6: promote low-carbon strategies. 4 Be
Page 7 and 8: een called “anticipatory transmis
Page 9: Toward More Effective Transmission
Page 13 and 14: From this perspective, today’s pl
Page 15 and 16: I. Introduction In 2013, WIRES publ
Page 17 and 18: The remainder of this report is org
Page 19 and 20: account only those expected costs a
Page 21 and 22: is clear that utilities have made s
Page 23 and 24: III. The High Costs and Risks of In
Page 25 and 26: A. INSUFFICIENT SYSTEM FLEXIBILITY
Page 27 and 28: project were rejected in a planning
Page 29 and 30: As the PVD2 analysis further shows,
Page 31 and 32: other words, building the project w
Page 33 and 34: industry) 21 and has already been e
Page 35 and 36: $12 million. 26 This focus on relia
Page 37 and 38: C. INEFFICIENCIES OF CURRENT PLANNI
Page 39 and 40: planning regions. So far, we find t
Page 41 and 42: interregional transmission capabili
Page 43 and 44: These studies thus suggest that at
Page 45 and 46: generation the estimated benefit of
Page 47 and 48: enefit metrics that are even narrow
Page 49 and 50: investment costs, reduced costs of
Page 51 and 52: long-term flexibility benefits and
Page 53 and 54: actively encourage and support such
Page 55 and 56: List of Acronyms BPS Bulk Power Sys
Page 57 and 58: Bibliography American Transmission
Page 59 and 60: Federal Energy Regulatory Commissio
Page 61 and 62:
Pfeifenberger, J., K. Spees, K. Car
Page 63 and 64:
Appendix A: Case Study of Transmiss
Page 65 and 66:
Figure A‐1 Benefits and Costs of
Page 67 and 68:
Figure A-2 also documents the fact
Page 69 and 70:
Figure A‐3 Range of Projected Soc
Page 71 and 72:
Appendix B: Addressing Uncertaintie
Page 73 and 74:
The simulation of short-term uncert
Page 75 and 76:
transmission issues and solutions a
Page 77 and 78:
Expansion Plan (RTEP) criteria; and
Page 79 and 80:
Requiring projects to pass the join
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THE BRATTLE GROUP

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