Transmission Investment: Adequate Returns and Regulatory Certainty Are Key
A Robust Transmission System Is Critical To Electric Reliability
The numerous benefits of a robust transmission network are undisputed, and EEI’s members have a long history of making cost-effective investments in needed and beneficial transmission infrastructure. At the same time, electric companies have invested in cleaner energy sources, greater efficiency, and more resilient and flexible distribution facilities that use modern, smart technologies.
The Federal Energy Regulatory Commission (FERC), Congress, and the Administration have determined that cost-effective, properly planned electric transmission investments are needed, and they all have taken actions in the past decade to promote investment. These investments ensure a reliable and efficient electric power grid that can promote robust competitive wholesale electric markets; reduce congestion; support delivery of renewable and cleaner energy resources; respond to emerging security threats; and safely and securely meet the needs of a 21st-century digital economy that increasingly relies on electricity.
Transmission Investment Requires Significant Capital
The electric power industry is the most capital-intensive industry in the United States, with transmission assets accounting for just one aspect of overall utility investments. Compared to other assets, transmission investments are extremely risky and require long lead times for the planning process and stakeholder involvement. They also often face extensive and sometimes successful litigation on siting and related issues; in addition, cost recovery can be challenging. As a result, investors require predictable, sustainable, and reasonable returns, or they will reallocate their capital into one of the many other sectors that offer a more competitive return and less risky investments. There are many attractive investment options at this time.
Key Regulatory Policy Goals Must Be Sustained
EEI seeks to ensure that returns are sufficient for utilities to gain access to needed capital to make transmission infrastructure investments on reasonable terms. It is critical that FERC stay the course and provide regulatory certainty. Otherwise, the nation’s electric utilities and their investors could divert needed capital to investments with greater returns, jeopardizing transmission reliability.