The Rising Cost of Transmission and Distribution

If I’ve told you this before don’t stop me. (I owe that line to my friend Charlie). Well so much for trying to be funny so on to the issue at hand.

I am concerned as most of you are with the issue of the rising cost of transmission and distribution charges and how those costs are going to continue to rise for the foreseeable future. I have attached graphs released by the EIA from 2017 and 2019 which confirm just that. It is interesting that the cost of power production is projected to decrease through 2050 as the T & D costs continue to rise.

The continued rise in transmission costs are mainly due to transmission build out and upgrades as identified by local and RTO planning. Much of this construction is driven by an aging and undersized  transmission system coupled with the congestion caused by the installation of large amounts of renewable energy. FERC has incentivized the construction of new facilities with a guaranteed rate of return based on the system costs. To that end there is considerable motivation to build new facilities. As for the rising distribution costs, those are needed to offset the increased costs of maintaining the distribution system along with those who support it behind the scenes.

The bottom line is that we are stuck with the increased cost of transmission and distribution to the point that some of our members pay as much or more for T & D than for their power costs. As indicated by the EIA this trend will continue at least through 2050. Just a few short years ago the T & D was less than 25% of your total bill. In the coming months and years, regulators will be looking at the process they created to determine if the result is what is best for our electric grid us ratepayers.