Concentric Energy Advisors report finds significant shortcomings in ‘competitive’ bidding for regional transmission projects
NOVI, Mich., August 16, 2022 /PRNewswire/ — ITC Holdings Corp. (ITC) and other members of the Developers Advocating Transmission Advancements (DATA) Coalition draw attention to new research showing that unintended consequences of Federal Energy Regulatory Commission (FERC) Order 1000 include increases project costs and schedule delays.
The study, “Competitive Transmission: Experience to Date Shows Order 1000 Solicitations Fail to Show Benefits” prepared by Concentric Energy Advisors, reveals that completed and active competitive transmission projects awarded to non-incumbent developers experienced an average of 12 months of delays and 27% cost increase, contrary to promises made by competing developers in winning bids.
Ten years ago, FERC issued Order No. 1000 in response to the growing challenge of planning and building new transmissions to keep pace with national and state energy policy priorities. The order allows transportation utility providers to use tenders to solicit transportation projects or project developers. Now, a decade later, new emerging data on so-called “competitive projects” currently in service, or in advanced stages of development, show significant shortcomings.
Using six projects awarded to developers through competitive solicitations, the study examined claims that Order No. 1000 solicitations contribute to cost savings and timely development of the transmission infrastructure.
- A project in the New York Independent System Operator’s service territory saw a cost increase of 67% over the cost cap promised by the developer, which is now trying to recover from customers. This raises the question of whether competitive processes encourage outside developers to bid too aggressively to win projects.
- Another example from the Mid-Continent Independent System Operator (MISO) region revealed that the final cost of a competitive project was approximately equal to the cost estimate at the MISO planning level and the average of all bids submitted, indicating no benefit from the solicitation.
For the first time, these case studies provide decision makers with the most accurate assessment of the Order 1000 competitive process.
“These results add to the growing argument that it’s time to move in a new direction,” said Nina Plaushin, vice president of regulatory and federal affairs at ITC and member of the DATA Coalition. “As FERC considers further reforms to regional transmission planning processes, it is clear that we need to return to a collaborative planning model that has proven to result in cost-effective transmission infrastructure. saving clean energy and meeting the nation’s climate goals, there is no time to waste.”
The study was prepared on behalf of the DATA Coalition, a proprietary transmission utility group comprised of Ameren, Eversource Energy, Exelon Corporation, ITC Holdings Corp., National Grid UNITED STATESPublic electricity and gas company and Xcel Energy.
ABOUT ITC HOLDINGS CORP.
ITC Holdings Corp. is the largest independent electricity transmission company in United States. ITC provides transmission network solutions to improve reliability, expand market access, enable new generation resources to interconnect with its systems, and reduce the overall cost of energy delivered. Through its regulated operating subsidiaries ITCTransmissionMichigan Electric Transmission Company, ITC Midwest and ITC Great Plains, ITC owns and operates high voltage transmission infrastructure in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahomaand developing in Wisconsin. These systems serve a combined peak load of over 26,000 megawatts along 16,000 circuit miles of transmission line, supported by 700 employees and 1,000 contractors. ITC is based in Novi, MI. For more information visit WWW.ITC-HOLDINGS.COM. ITC is a subsidiary of Fortis Inc., a leader in the regulated North American electric and gas utility industry. For more information visit WWW.FORTISINC.COM.
About Concentric Energy Advisors
Concentric Energy Advisors specializes in management consulting and financial advisory services focused on the North American energy and water industries. Through its subsidiaries, CE Capital Advisors and Concentric Advisors ULC, Concentric provides capital markets advisory and advisory services in Canada.
SOURCEITC Holdings Corp.