Every year in late April, large electric utilities in the United States are required to submit a comprehensive financial and operating report to the Federal Energy Regulatory Commission called the FERC Form 1. Only operating utilities reporting one of the following are required to report: over a million MWh of total annual sales, over 100 MWh of power sales for resale, or companies with over 500 MWh of exchanges delivered or wheeled for other companies. The typical Form 1 filing is a 300 to 400+-page report containing a wealth of revealing data well worth analyzing. As part of a project conducted for power industry intelligence provider Energy Acuity, I compiled data from 91 operating companies that make up the top 20 holding companies reporting transmission in service additions from 2013 through 2016. Electric plant in-service additions provide the original cost of new infrastructure added during the year, which makes it a good indicator of a company’s investment in the grid.
Transmission in service additions include breakouts of land and land rights, structures and improvements, station equipment, towers, poles, fixtures, overhead conductors, and underground conduits and other equipment. This is the first article in a series of articles planned for the next month highlighting analysis of these FERC filings.
Largest Electric Holding Companies Spending more on Transmission
The top 20 U.S. electric holding companies have shown a steady increase in spending on transmission during the past four reporting years. In 2016, they accounted for $18.1bn – up 13.1% from 2015. Over the four-year window, transmission project additions by the 20 largest holding companies totaled a phenomenal $63.9bn. That figure doesn’t include an additional 90 large operating companies required to file Form 1’s, the federal power administrations and many large public utilities spread across the country. The 20-company total of $18.1bn in transmission additions in 2016 was higher than both distribution ($17.7bn) and production ($17.1bn). The last time transmission additions accounted for more than both distribution and production was in 2013 – the same year most of the $7bn Texas CREZ 345-kV buildout was coming to completion.
Source, Federal Energy Regulatory Commission (FERC) Form-1 Filings Compiled by Enerlytics, 2017..
Source, Federal Energy Regulatory Commission (FERC) Form-1 Filings Compiled by Enerlytics, 2017.
Closer Look at Top 10 Holding Companies
It comes as no surprise that American Electric Power led all holding companies in reporting $7.1bn transmission in service additions over the four-year period 2013-2016. AEP owns more than 40,000 miles of high-voltage transmission and nearly 224,000 miles of distribution lines – the largest grid presence in the U.S. Their subsidiary companies Indiana Michigan Transmission Company reported $464.3M, Appalachian Power ($400.0M), Ohio Transmission Company ($251.2M), Transource Missouri ($243.3M) of which AEP is an 86.5% owner, and West Virginia Transmission Company ($224.5M) reported the largest transmission additions in 2016.
Public Service Electric and Gas ranked second over the four-year period in terms of new additions at $6.4bn. One of their larger investments is the Bergen to Lindon Corridor Project involving a new 345-KV double circuit line with additional overhead and underground lines.
Edison International’s SCE Corporation ranked third nationally with $5.7bn. Their long-haul Tehachapi Renewable Transmission Project was completed late last year. Tehachapi involved a series of new and upgraded transmission lines (173 miles) and substations increasing the carrying capacity to 4,500 MW from generators in Kern County to customers in San Bernardino County. It was an incredible undertaking that involved a complex undergrounding of a 500-kV line in the Chino Hills area. SCE has 22 projects listed on their website including the West of Devers Upgrade Project involving the replacement of 48 corridor miles of existing 220-kV with new double-circuit 220-kV conductor. SCE received approval of their Certificate of Public Convenience and Necessity (CPCN) from the California Public Utilities Commission on August 18, 2016 and a Record of Decision (ROD) from the Bureau of Land Management in December 2016.
FirstEnergy Corporation and Dominion Energy round out the top five holding companies reporting the highest transmission in-service additions during the four-year period. FirstEnergy brought online transmission projects with an original cost of $3.9bn. Their subsidiary’s American Transmission Systems ($496.8M) and Trans-Allegheny Interstate Line Company ($296.8M) and Jersey Central Power and Light ($133.4M) reported the highest additions in 2016. Dominion’s subsidiary Virginia Electric and Power ($938.4M) in 2016 was down from ($1,091.4M) in 2015.
Source, Federal Energy Regulatory Commission (FERC) Form-1 Filings Compiled by Enerlytics, 2017
Highest Spend on Transmission O&M
Over the past four reporting years, companies spending the most on transmission Operation and Maintenance (O&M) costs included FirstEnergy ($3.6bn), AEP ($3.5bn), Oncor ($3.3bn), Xcel Energy ($2.2bn) and Eversource ($2.1bn). Transmission O&M includes operation costs like load dispatch, scheduling, reliability planning, transmission service and interconnection studies, station expenses, overhead and underground line expenses and wheeling by others. The maintenance categories include structures, supervision and engineering, computer hardware and software, station equipment and overhead and underground line maintenance.
It’s safe to say that investment in infrastructure, particularly transmission is trending upward. We expect 2017 figures to even be higher given the large number of transmission projects currently under construction.