THE BRATTLE GROUP

I. Introduction
In 2013, WIRES published a report developed by The Brattle Group to document available
experience with identifying and analyzing the wide range of benefits offered by transmission
investments. 2 This current report focuses on the costs and risks that an insufficiently robust and
insufficiently flexible transmission infrastructure imposes on customers and society as a whole. It
reviews and documents actual industry practice and the extent to which transmission-related
benefits are or are not considered in the regional and interregional planning processes used by the
regional transmission organizations (RTOs) and in some non-RTO regions in the U.S. We reiterate
the importance of recognizing and considering all transmission-related benefits to achieve a more
cost-effective power system and mitigate risks to consumers and society as a whole, and also to
identify gaps, barriers, and opportunities for planning economically-efficient transmission,
particularly with respect to interregional planning.
The facilities that constitute the U.S. high-voltage transmission system typically have physical lives
ranging from 40 to 80 years. The existing transmission grid was developed over the past six decades,
with the largest percentage of the investment made in the 1960s and 1970s. 3 The large extent to
which we still rely on transmission infrastructure built in the 1960s and 1970s shows that the
infrastructure, once built, is associated with long-term economic benefits of a range and magnitude
far beyond those anticipated at the time when policy makers and market participants planned the
system upgrades. This experience shows that a robust and flexible transmission system provides
many positive externalities not typically considered by planners when they identify the specific
“need” for transmission infrastructure.
While very little transmission infrastructure was added in the two decades between 1985 and 2005,
the most recent decade has again seen a significant increase in transmission investments. Annual
transmission investments by the Federal Energy Regulatory Commission (FERC or Commission)
jurisdictional transmission owners ranged only from $2 billion to $4 billion per year in the decade
ending 2005. However, since 2010, U.S. transmission investments have ranged from $10 billion to
$16 billion per year and, despite year-to-year fluctuations, are forecast to remain at that level
through 2030. 4 The higher recent investment levels lead to a sentiment that enough investment has
been made and that further increases in transmission rates should be avoided. This sentiment has
2
Chang, Pfeifenberger, and Hagerty (2013) (hereinafter 2013 WIRES Report).
3
U.S.-wide annual transmission additions at a voltage level above 132kV ranged from 4,000 to 9,000 circuit
miles per year between 1960s and the early 1980s, but have been only 1,000 to 2,000 circuit miles from
1985 through 2005. In recent years, annual additions have ranged between 2,000 and 6,000 circuit miles.
See Pfeifenberger, Chang, Tsoukalis (2014).
4
Id.
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