The Cost to Connect: Are Transmission Owners Penalizing Generators?

October 20, 2000

Owner-developers of new generation say an old boys club of transmission asset owners-particularly owners linked to generation-is making it tough to interconnect to the grid.

Transmission owners allegedly are using a variety of stall tactics, including cumbersome review processes, demands for excessive security deposits and even altering project queues. Outsiders say its slow and expensive tying in to the system.

Transmission lines are a natural monopoly; there are many things people can do to delay the use of those lines, said a U.S. Department of Justice antitrust attorney who requested anonymity. You can charge extremely high prices for interconnection, you can conduct endless studies on the impact of new capacity on the system, you can implement burdensome specifications to interconnect.

The rise of regional transmission organizations per Federal Energy Regulatory Commission Order 2000 is looked upon by the disgruntled as a step in the right direction. But no one sees RTOs as ending what many feel is blatant discrimination against new generation.

Its a very real problem; generators can find it extremely difficult to secure interconnection for new plants; its basically exerting market power concerning transmission, said Jonathan Gottlieb, partner in the North American Utility and Energy Products Group of the law firm Baker & McKenzie.

Much of the evidence is circumstantial. Generators may grouse and complain privately, but few push the issue. And for good reason: A developer wants to get its project built and operating. If a company asks FERC for action, the result could be simply more time and money-and, in some cases, may put a project in jeopardy.

http://www.ftenergy.com/FullStory.asp?ID=9048206

-- Martin Thompson (mthom1927@aol.com), October 23, 2000