Midwest, East Coast Facing Transmission-System Overload

Transmission capacity is strained in numerous areas across the United States, but there are two states in particular—Connecticut and Wisconsin —that appear to face especially acute problems, according to recent reports. Transmission-line congestion in both states is limiting access to cheaper out-of-state power. In Wisconsin, the situation could also mean fines for transmission-system owners if they aren't able to improve system capacity by next March, when a new regional open-market plan is scheduled to begin operation.

Wisconsin residents face potentially large rate hikes with the March 2004 commencement of the Midwest Market Initiative. A U.S. Department of Energy study forecasts wholesale electricity prices could rise 10% or more as the result of new federal penalties that the Midwest Independent System Operator (ISO) will be empowered to impose on states with overly congested transmission lines. Additionally, because their lines are already pushed to the limit by in-state power generators, residents will not be able to benefit from lower-priced imported power, according to a Business Journal of Milwaukee report.

Some energy companies are now calling on state legislators to pull Wisconsin's membership from the Midwest ISO as a result of the threatened penalties, the Business Journal states. However, opponents of that plan argue that the potential savings offered by a regional market, once transmission capacity is upgraded, are too great to ignore.

Meanwhile, in Maine and Rhode Island, new power plants built following electric-utility deregulation in the 1990s are now underutilized, according to a recent New York Times article. Unfortunately, Connecticut electricity customers largely lack access to the less-expensive power these plants produce, because the state's grid is unable to handle the added capacity. Two major transmission line construction projects—one estimated at $185 million and a second expected to cost $500 million—are currently awaiting approval. However, critics of the plans argue that money would be better spent on efficiency retrofits and new distributed-generation installations.