The New England electric grid operator, the ISO-NE, made a wise decision to defer the construction of $260 million in transmission lines made unnecessary because of energy efficiency investments. Transmission costs have grown by about 70 percent over the past five years, and are now the fastest growing component of our electric rates. Maine lags other New England states by not purchasing all energy efficiency that costs less than energy supply. ENE is working hard to make Maine a leader once again; energy efficiency also reduces energy bills, creates jobs and reduces global warming pollution.
The ISO-NE could be doing much more to promote the adoption of energy efficiency to avoid costly new transmission. Grid planners are having a hard time breaking the old habit of constructing transmission lines even when cheaper and cleaner alternatives, such as distributed solar power and energy efficiency, exist.
Financial incentives favor new transmission over alternatives. Congress and federal regulators reward electric utilities with high guaranteed returns — close to 13 percent — for certain transmission investments. Under current rules, a state’s ratepayers pay just a fraction of the costs of a new transmission line, but the full cost of less expensive alternatives. This results in building new power lines that cost more in total than cleaner and cheaper alternatives.
To address the problem of skyrocketing transmission rates and unnecessary construction of expensive new lines, grid planners must change their ways of thinking. They must identify and consider nontransmission alternatives earlier, and provide them fair compensation, if we are to have an affordable 21st-century power grid that delivers clean, low-cost energy.
Beth A. Nagusky of Rockport is Maine director of ENE, a nonprofit concerned about the environment and a sustainable economy.