Brattle Review of EU, U.S., and Canadian Transmission Planning for Regional Electricity Markets Identifies Key Challenges



    BRUSSELS, Belgium and CAMBRIDGE, Mass., Oct. 30 /CNW/ -- Regional
transmission planning has become a high profile issue in recent years,
following blackouts in the United States and Europe. A study by economists at
The Brattle Group, published by the Australian Energy Market Commission
(AEMC), surveyed transmission planning processes used in the power markets of
different regions across the European Union, the U.S., and Canada, and
identified key challenges in designing effective planning processes.
    "Transmission planning presents new challenges in a world of competitive
markets and long-distance trading of power; it requires close co-operation
between multiple owners of transmission infrastructure," noted Boaz Moselle,
one of the study's authors and head of The Brattle Group's Brussels office.
"Without effective planning, competitive markets may not function well and
security of supply could be weakened. Transmission planning is also key to
efficient development of the new infrastructure required to connect
remotely-located renewable energy resources, whether it's in Scotland or
California."
    The Brattle study surveyed transmission planning processes in regional
electricity markets with multiple transmission owners in Europe and North
America and identified three key design parameters for regional transmission
planning processes:

    
    1. Setting rules for participation.  International experience calls into
       question the effectiveness and efficiency of arrangements based only
       on voluntary participation in regional planning.
    2. Assessing the costs and benefits of new transmission.  Justifying
       construction of new transmission lines primarily based on economic
       reasons rather than technical "reliability" standards requires a
       comprehensive framework to analyse costs and benefits.
    3. Sharing of costs and benefits among transmission owners and market
       participants.  A transparent mechanism to share project costs and
       benefits among market participants is generally necessary to overcome
       opposition to needed expansions, because customers outside the
       investing transmission owner's footprint frequently benefit and would
       not otherwise contribute to the costs.
    
    The study shows that recent regulatory requirements in the U.S. have led
to a number of promising regional transmission planning processes. However,
according to Johannes Pfeifenberger who leads Brattle's North American energy
consulting practice, the U.S. processes rely heavily on a somewhat artificial
distinction between transmission projects that are justified by reliability
standards and those that are justified primarily for economic reasons.
"Unfortunately, the cost-benefit analyses used to justify economic projects
often are very prescriptive and narrowly focused, which can undermine
desirable transmission investments by underestimating their benefits,"
Pfeifenberger commented.
    "Our study also reveals some real challenges that the EU faces in
developing a transmission network that can support an integrated power market
and allow Europe to meet its targets for renewable energy. The Commission's
third energy package lays the basis for more EU-wide planning, but a great
deal of hard technical work is required for successful implementation,"
Moselle added.
    The Brattle study, "International Review of Transmission Planning
Arrangements," is available on the website of the AEMC, at
http://www.aemc.gov.au/pdfs/reviews/National%20Transmission%20Planner/brattle.
pdf (Due to the length of this URL, it may be necessary to copy and paste this
hyperlink into your Internet browser's URL address field. Remove the space if
one exists.) as well as at http://www.brattle.com.
    The Brattle Group provides consulting services and expert testimony in
economics and finance to corporations, law firms, and public agencies
worldwide. Areas of expertise include antitrust and competition, valuation and
damages, and regulation and planning in network industries. For more
information on The Brattle Group, please visit http://www.brattle.com.





For further information:

For further information: Laura A. Waters of The Brattle Group, 
+1-617-864-7900, laura.waters@brattle.com, Web Site: http://www.brattle.com


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