Competitive Procurements for Transmission Projects Announcements

October 31, 2022
John Dalton

On October 26th there were two major announcements regarding competitive procurements for transmission projects to support the development of renewable energy to achieve state clean energy goals: (1) the New Jersey Board of Public Utilities announced the results of its coordinated offshore wind transmission solution procurement conducted under PJM’s State Agreement Approach, approving $1.07 billion of transmission projects and grid upgrades to connect offshore wind generation to the onshore grid; and (2) the Maine Public Utilities Commission selected two projects that responded to its Northern Maine Transmission and Generation RFP: a 345 kV transmission line and a 1,000 MW onshore wind project. Both of these announcements offer valuable lessons and demonstrate the benefits of coordinated action by states. Here I focus on the Maine procurement.

The Press Release announcing this award noted that “the Commission did not make a final determination as to how much of the cost of the project Maine ratepayers can reasonably absorb but directed Commission staff to look to other states to assess if there are partnerships that could reduce the costs to Maine…to provide a report…as to the initial determination of regional partnerships, and … recommend next steps to advance these projects.” The Commission Chair noted “the influx of renewable energy into the regional grid will also place downward pressure on electricity prices, benefiting consumers in Maine and throughout New England. Importantly, these benefits will accrue to Maine whether we pay for this line or someone else does.” If the costs of these facilities are borne solely by Maine ratepayers and the benefits are shared throughout New England, the threshold of ensuring that the projects are cost-effective is much higher. This is a fundamental aspect of cost-benefit analyses in multi-state RTOs, where benefits typically are dispersed throughout the RTO. Broad participation by the New England states overcomes this challenge. From this perspective the New England states Transmission RFI, which increases the prospects for coordinated action for transmission development by a number of the states, is a favorable development.