DATA Coalition Unveils Whitepaper Addressing Inefficiencies in Transmission Projects

The frustrations over the effectiveness of competitive bidding in energy transmission are increasing among leading industry advocates. The Developers Advocating Transmission Advancements (DATA) Coalition, which comprises prominent names like ITC Holdings Corp., has recently released a detailed whitepaper shedding light on the various inefficiencies that have emerged in competitive transmission planning.

This thought-provoking report, titled "Recent Experience with Competitive Transmission Projects and Solicitations," serves as a critical examination, built upon a foundation of real-world evidence illustrating the shortcomings of the competitive bidding process. The findings argue that the competitive bidding model tends to create inefficiencies, detract from meaningful collaboration, and may lead to inflated costs and diminished benefits for consumers over time.

Key Findings of the Whitepaper

Among the various insights, the document outlines a series of case studies from respected regional transmission organizations such as PJM, MISO, New England, and CAISO. These cases exemplify noted failures in the competitive solicitation process, specifically its inability to reduce costs, spur innovation, and accelerate the development of a dependable transmission network. Here are some highlights:

1. Bait-and-Switch Tactics

Competitive bidding often fosters a risky environment where bidders can engage in dubious practices, such as overlooking crucial project elements. This can lead to situations where local entities need to intervene to salvage poorly selected routes chosen by competitive developers. Furthermore, these bidders often evade accountability for their decisions, exacerbating the issues at hand.

2. Illusory Cost Caps

The concept of cost caps in competitive bids frequently proves misleading. This artificial ceiling can often result in post-award renegotiations that burden customers with increased costs rather than providing genuine protections. The report highlights a case where a binding cost cap was rendered unrealistic, leading to project failure when financial conditions changed unexpectedly for the developer.

3. Impediments to Infrastructure Progress

The reliance on competitive processes has culminated in the selection of projects that do not align with the actual needs of the infrastructure. This misalignment leads to inefficient planning, ultimately placing a heavier financial burden on consumers in the long term. Additionally, the competitive bidding landscape encourages legal disputes over project rights, hindering collaboration and jeopardizing vital infrastructure development in regions like the Midwest.

Jordan Kwok, Director of Federal Regulatory Affairs at Exelon Corporation, articulated concerns regarding the shortcomings of Order No. 1000, implemented to promote competition and innovation in transmission projects. According to Kwok, the policy has failed to deliver expected advantages and has, instead, introduced barriers to progress that are in dire need of reevaluation.

DATA Coalition's Mission and Commitment

The DATA Coalition aims to engage in informed discussions regarding transmission competition through rigorous analysis and evidence-based reports. Their ongoing efforts seek to illuminate the true costs associated with competitive bids and challenge the narrative that competition leads to savings. Recent reports have consistently pointed out the lack of financial benefits derived from competitive scenarios.

The coalition, which includes major energy players such as Ameren, Eversource Energy, Exelon, ITC, National Grid USA, and Xcel Energy, remains committed to advocating for smarter, more efficient solutions for energy transmission across the United States.

About ITC Holdings Corp.

For context, ITC Holdings Corp., based in Novi, Michigan, is recognized as the largest independent transmission company in the U.S. They are dedicated to improving the reliability and accessibility of the energy grid, ultimately aiming to reduce the cost of energy delivery for consumers. Through various subsidiaries, ITC oversees extensive high-voltage transmission infrastructure that supports diverse energy needs across multiple states.

In closing, the DATA Coalition's whitepaper marks a significant step in recognizing challenges within the transmission project landscape. The insights provided can pave the way for critical conversations among policymakers and industry professionals to rethink current strategies for infrastructure development and enhance the reliability and cost-effectiveness of energy delivery to customers nationwide.