Can Expanding Transmission Reduce Electricity Costs?

Nick Loris and Travis Fisher write for RTO Insider on transmission and its impact on electricity costs.

Advocates of large-scale transmission expansion have recited a simple slogan for years: There is no transition without transmission. By this, they mean that the shift to renewable energy will require vast new power lines. Whatever one thinks of climate policy, that argument no longer carries much weight. The relevant question now is whether building more transmission will make electricity more affordable.

Yes, expanding transmission can reduce electricity costs for consumers, but only if the buildout uses consumer welfare as the North Star and ignores narrow political or business interests. The goal of transmission reforms in Congress should be straightforward: Deliver reliable power that meets our growing needs at the lowest possible cost to end users.

In nearly every other sector — pipelines, railroads, ports, broadband — infrastructure is built when customers are willing to pay for the value it provides. Projects move forward based on contracts, price signals and risk-taking. Investors bear losses when they guess incorrectly. That discipline helps ensure that infrastructure is built to meet demand at least cost.

Read more in RTO Insider here.