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Promoting Cost-Effective Grid Modernization

Promoting Cost-Effective Grid Modernization

Full Title: Promoting Cost-Effective Grid Modernization
Author(s): Jim Rossi
Publisher(s): Cato Institute
Publication Date: January 22, 2023
Full Text: Download Resource
Description (excerpt):

State legislatures must preserve and enhance the authority of RTOs to ensure that new regional transmission lines are cost-effective. Rather than tightening the grip that incumbent monopolies have over transmission, state legislatures should promote cost-effective grid modernization by encouraging state regulators to work with RTOs to implement robust planning and competitive bidding processes for new regional transmission line projects. Adding project milestones and performance metrics to the regional transmission line bidding process can help to ensure that the best projects are selected to be developed and built in areas that need them, in a manner that is the most cost-effective for customers. Balancing a broad range of factors in need determinations and prudence review is also important to ensuring that the customers who stand to benefit from regional transmission projects do not suffer adverse rate impacts. Regulators have successfully used these approaches with power generation. It is time that they apply the same cost-effectiveness tools for proposals for new regional transmission lines.

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