FAQ

Following are answers the most frequently asked questions regarding WIRES, its purpose and goals as well as the history and status of the transmission industry.
 

Why is there new interest in the "wires" business?

Interest in the "wires" business has resurfaced because of more than 25 years of underinvestment and the significant increases proposed for future electricity demand and the generation capacity needed to meet that demand.

 

Why the sudden need to focus solely on the transmission business?

Because transmission has only recently been recognized as a separate business or sector by the Federal Energy Regulatory Commission (FERC) and other influential industry entities, there remains significant risks for the success of the transmission business and strong competition for capital.

 

What is WIRES going to do to help the situation?

The creation of WIRES is a response to a growing need for transmission infrastructure investment and the related need to highlight policies essential to support that investment. Getting the right policies in place depends on viewing transmission as (1) integral to an efficient wholesale power system, (2) critical to effectively functioning markets, (3) a way to bring choice, fuel diversity, and system flexibility to power markets and customers, and (4) an area where investment in new technologies can often expand the capacity or efficiency of the grid without siting new linear facilities.

 

Aren't there other organizations that represent transmission owners or customers? What is WIRES going to do that's different?

While there are other major contributors to the discussion about transmission infrastructure, pricing, and access: e.g., Edison Electric Institute (EEI), Transmission Action Policy Study Group (TAPS), Electric Power Supply Association (EPSA) and others, their resources and attention are more heavily invested elsewhere. Transmission remains the only sector of the electric business not represented by a broad-based national trade group, and yet transmission is critical to the reliable operation of the system and the success of energy markets across the nation.

WIRES is “of, by, and for” the high-voltage transmission system that knits the country’s electric system together. The organization, which is modest by any standards (no bureaucracy or big budget), was established to identify and advocate for policies that facilitate and promote needed investment in transmission on a national basis and among diverse groups within and outside the industry. We will work with these “transmission infrastructure” organizations when the situation is appropriate.

 

What challenges face the power system today, especially in the area of transmission?

  • Aging infrastructure in all areas of the business
  • Uncertainty about the course of federal and state energy policy
  • More than 25 years of underinvestment in transmission infrastructure
  • Growing demand for power and the inevitable need for major generation facilities
  • Need for high-quality power for clean, high tech industry, and modern life-styles
  • Additional stress and congestion on the antiquated electric grid due to wholesale power markets (e.g., larger scale transfers of power and larger numbers of transactions)
  • Almost reaching generation capacity, which can be costly both economically and environmentally
  • Far distance of renewables from generation centers
  • Ineffective substitutes to reduce stresses on the grid – such as energy-efficiency programs, demand-side management, and distributed generation - instead of focusing on providing a more robust transmission infrastructure to deliver remote renewables and more conventional power supply to customers
  • High cost and time lag when transitioning from electro-mechanical to digital control technology

 

Why isn't transmission getting the financial backing it needs? And how will WIRES help improve capital attraction for transmission?

Transmission is becoming a more attractive investment but there are regulatory and execution risks that are slowing the infusion of capital needed to keep pace with the foreseeable increases in electrical demand and the competition for customers. Transmission investors need a more certain risk/reward equation when it comes to cost allocation, rates, and the siting of facilities; they too often conclude that they should invest elsewhere when faced with tying up resources for years in a process with an uncertain financial outcome. This is simply not acceptable; the stability and reliability of the electric grid is critical to the quality of electric service and the success of regional economies.

WIRES will emphasize the broad benefits of transmission: facilitation of regional markets, the critical link to renewable and other remote energy sources, high levels of reliability, and efficient use ofexisting generation capacity. Decision makers need to recognize that transmission costs represent only a small – less than 10 percent – portion of customers' electricity bills.

 

What can be done about policies and regulations in the transmission business?

Economic, environmental, and regulatory policy for electric high voltage (EHV) transmission should recognize that transmission is a shared network industry. But transmission is subject to diverse and often inconsistent regulation in several areas. If not coordinated, these policies will hinder investment in much-needed infrastructure. A multiplicity of rules could therefore lead to reliability problems in the future. Because a utility's regulatory environment is a critical factor in determining its investment attractiveness, WIRES will keep regulators and lawmakers sufficiently informed of the issues and available solutions.

 

How will WIRES seek to influence policymakers?

WIRES will ensure that transmission not only "shows up" in energy policy decision making, but is recognized as a priority. That does not mean that it will be easy to expand the system or that the industryor customers will always decide that more transmission is the best option. But, where there is effective planning that takes into account both reliability and economics and the environmental effects, the benefits of transmission for customers can be demonstrated.

WIRES anticipates that it may be called upon to conduct studies, submit testimony, reports, or comments, educate the public about the benefits of stronger infrastructure, engage in dispute resolution, andcommunicate its views to policy makers and the public through the Internet and other media.

Developing new transmission will be a collaborative process among the relevant regulators, industry interests, and customers. WIRES' job is to make this sector more visible and to highlight its benefits and challenges.

 

How will WIRES' members benefit from its legislative actions?

Transmission is a distinct business line and the WIRES members all place a high priority on enhancing and expanding the transmission system to serve their customers and their regional markets. WIRES' vision for the grid includes well-planned facilities and a flexible system that provides reliability first, captures the economics of enhanced transmission, and identifies the best technology for aparticular application. But WIRES would not exist if everyone who has a stake in the electric industry – providers and customers alike – believed that the system was already optimal or that it would not be cost-effective to build out the transmission system or operate it better. Our members believe the public stands to benefit from WIRES successfully meeting its short- and long-term goals.

 

Some major transmission interests aren't involved. Why not?

We are still early in the process of educating companies and industry groups about WIRES, and we are focusing our efforts on those entities in which the message of transmission investment will resonate. WIRES is designed to include a wide variety of transmission operators (TOs), customers, technology companies, policymakers, regional grid managers, and investors. And it is converging on a constructivediscussion about the future of transmission investment, whether there is consensus or debate.

 

Aren't WIRES members making transmission investments? What do they have to complain about?

Yes, new transmission is on the drawing board and regional plans are beginning to emerge. Yet, in each instance, WIRES members are facing regulatory and financial obstacles. Current and future WIRES members represent a variety of perspectives on the business:

variety of perspectives on the business:
 - Major TOs
 - Transmission dependent entities that just want fair access and liquid markets
 - Interested in investing in greenfield or brownfield projects
 - Looking for financial partners to expand transmission capacity
 - Beginning to view transmission as a separate line of business, profit center, or service even within an integrated structure
 - Participating in regional coalitions to promote specific projects

The question common to all these groups is "how can we and our customers obtain the benefits of more transmission capacity?" WIRES is dedicated to finding an answer to that question through a reality-based solution.

 

Is WIRES just about transmission independence?

Since 1996 (and Order Nos. 888 and 2000), most transmission policy has been about independence and non-discriminatory access to the network in one form or another. But WIRES is not just a group of independent transmission companies. While some members own or develop only transmission and provide only transmission services, others are focused on this specific sector from within integrated utility structures or from the standpoint of investors or purchasers of transmission services. Consequently, WIRES does support transmission independence in the sense that its focus is distinct from, or independent of, other segments of the business, and that the electric transmission network is the critical link among all elements in the power market.

 

Will WIRES oppose or argue against distributed generation projects, or against demand-side or efficiency measures that might prevent the need for more facilities?

No. We believe the grid is the future --- the North American electric system will have to operate over the long term as an integrated network capable of serving a wide variety of needs at different times and places. Transmission is the underlying infrastructure which, like the highways, the Internet, or other network industries, supports a constant and highly liquid commerce in a critical commodity and service --- electric power. The grid is what WIRES is dedicated to strengthening but the electric system will draw on a diverse portfolio of resources.

WIRES believes growth in generation capacity is one principal factor that will drive the need for more transmission. Major coal or nuclear plant additions are likely to require substantial transmission enhancements. Distributed generation and other alternative resources even if serving niche markets will nevertheless be supported by the reliable operation of the grid. Generation from renewable resourcesand other remote generation (e.g., clean coal) will typically require more transmission to compensate for their distance from load centers. In other words, transmission links generation to customers; it is most often generation's facilitator, not its competitor.

 

Isn't it an exaggeration to claim that transmission has environmental benefits?

No. An adequate transmission grid can bring renewable energy products to market. Customers increasingly want to buy from those resources and we want to help make that possible. As it minimizes congestion,cost-effective transmission investment can also help the whole power system function more efficiently and make generation close to load less necessary, which is an environmental benefit.

The "not in my backyard" (NIMBY) exists for all new infrastructure. We don't minimize those concerns. But where new facilities are needed, experience shows that they can be sited in a responsible way if processes are collaborative and there is ample leadership from public officials. WIRES believes that once decision makers (at all levels) and the public better understands the benefits and tradeoffs of major transmission enhancements, the grid will be viewed as a net positive for the environment.

More information about WIRES can be obtained by contacting Jim Hoecker (counsel and advisor to WIRES, former Chairman of the Federal Energy Regulatory Commission) at 202.549.0584 or jhoecker@helppllc.com or by visiting our Web site at www.wiresgroup.com.