9/4/2003

AEP’s Draper cites need for regulatory certainty on transmission issues during blackout testimony

WASHINGTON, D.C., Sept. 4, 2003 - Regulatory certainty for transmission siting and cost recovery is needed if America’s electrical grid is to be improved, the head of one of the nation’s largest utilities told the House Committee on Energy and Commerce in testimony today.

E. Linn Draper Jr., chairman, president and chief executive officer of American Electric Power (NYSE: AEP), also told the committee that communications between transmission grid operators must be improved and that the U.S. needs to resolve the continuing debate about regional transmission organizations.

Draper, who was among the witnesses testifying on the second day of a two-day full committee hearing titled "Blackout 2003: How Did It Happen and Why?", didn’t speculate on the cause of the Aug. 14 blackout, preferring to wait for the results of the investigation by the Department of Energy and the North American Electric Reliability Council (NERC). He focused his testimony on what is known - noting that the blackout stopped at the northern edge of AEP’s transmission grid - and on policy needs.

“The AEP system held together - a point of pride for us,” Draper said. “Our protective systems performed automatically as they were designed to perform, our operators performed and communicated as they should and our load and generation remained in balance throughout the day.”

AEP owns the nation’s largest transmission grid with 39,000 miles of transmission line in 11 states. AEP’s 2,100 miles of extremely high voltage 765-kilovolt (kV) transmission lines is considered by many to be the backbone of the Eastern Interconnection.

Had AEP’s automated controls not responded as they did, equipment could have been damaged and kept out of service for an extended time, “further burdening other lines that are, as we all know, already stressed,” Draper said. He also noted that the action by the automated controls to isolate AEP’s transmission system from the blackout likely “avoided cascading outages across the AEP system and probably far beyond, given the central role of AEP’s transmission grid in the Eastern Interconnection.”

“AEP’s system was not the only one to respond this way,” Draper said. “The transmission system serving Consumers Power’s load, among others, also isolated from the problem during the event, and their system held. I don’t know why all systems didn’t perform in a similar manner.”

Draper noted the dramatic - and rapid - change in use of the nation’s transmission grid.

“The electrical grid in this country was designed in large part to get a local utility’s generation to its customers - not to carry thousands of cross-country and regional transactions, as the grid is now called on to do,” Draper said. “In the five-year period during which wholesale electric competition first gained momentum, the number of wholesale transactions in the U.S. went from 25,000 to 2 million - an 80-fold increase.

“Needless to say, transmission infrastructure expansion - which is an expensive and time-consuming prospect at best - did not increase 80-fold in that time frame. In fact, very little expansion has taken place. Clearly, there is a need to strengthen the grid through greater investments - new equipment, new lines and new technologies - to support the grid for the manner in which it is used today.”

Draper outlined factors that would hasten grid improvement:

  • Creating regulatory certainty for transmission siting and cost recovery.

  • Improving coordination and communication among entities that oversee the grid.

  • Resolving the debate over the role of regional transmission organizations (RTOs).

  • Building consensus on an appropriate use of the grid.

  • Enforcing mandatory reliability standards.

Regulatory certainty

“If we need to build new transmission facilities today, we must navigate through multiple state and federal regulators to get that done,” Draper said. “Processes vary in every state. For permits and siting, for instance, we must get approvals from multiple state regulators, and probably multiple federal regulators as well.”

Draper noted that AEP received final clearance this year for the construction of a 765-kV transmission line in West Virginia and Virginia, 13 years and $50 million after the line was proposed in 1990. “While we respect the interests of all jurisdictions in siting decisions, we’ll never get where we need to be if it takes 13 years to get permission to build a power line,” Draper said.

Recovering costs for a transmission project requires a similar regulatory trek.

“For every dollar we spend - and the National Transmission Grid Study quoted a price of $1.8 million per mile for a new 765-kV line - we must go back to those multiple state and federal regulators to receive full recovery,” Draper said. “In this context, it is difficult to understand recent actions by the Federal Energy Regulatory Commission (FERC) to eliminate transmission revenues from third party or wholesale customers. If what FERC is proposing comes to pass, power can move from St. Louis to New Jersey for the same fee as moving power from Pennsylvania to New Jersey. Such scenarios not only jeopardize existing investments, they create a disincentive for future investments since full and fair cost recovery is even more difficult.”

Coordination and communication

Continuous improvements in coordination among various grid operators are necessary to ensure coordinated planning and operations, and quick emergency response, Draper said.

“The reality is that we don’t have one single transmission grid owner and operator throughout the country, nor would it be feasible or wise to do so,” Draper said. “It’s a given that there will always be seams - or boundaries - between various grid operators. … Those who are using this event to promote their desire for a single RTO administering a spot market are not only missing the boat, but misleading you and others into thinking that simply installing such an RTO would answer the reliability issues that have been raised by this event.”

Role of RTO

The ongoing debate over the role of RTOs is hindering progress toward an environment conducive to transmission investment, Draper said.

AEP is at the center of the current debate “largely because of the quality and scope of our system, which is at the crossroads of many markets,” Draper said. “That’s one big reason we’re coveted by market stakeholders in their attempts to expand.”

Energy policies should balance both generation and transmission, Draper said. Transmission owners must receive sufficient revenues to assure adequate investment. Parties that benefit from competitive markets should bear the costs. Those that use the transmission system to receive those benefits should pay for it.

“While some have even suggested splitting up the AEP system (between RTOs), that’s unacceptable and counter-productive,” Draper said. “AEP’s system has been touted as the backbone of the Eastern Interconnect. Splitting it apart amidst efforts to increase the nation’s electric reliability flies in the face of reason.”

Appropriate use of the grid

“If we focus solely on competitive markets and economics, serious implications for reliability and security arise,” Draper said. “We need a balance, but that balance must be tipped toward reliability - the fundamental foundation of the transmission grid. Without reliability, we have no market to structure.”

Draper also noted that the benefits of competitive markets should not only flow to generation owners or electricity users, as seems to be the present policy, but also to the transmission owners “who need to receive a sufficient share of benefits to assure investment in the transmission infrastructure necessary to support competitive markets.”

Reliability standards

Draper recommended approving NERC as the enforcement entity for mandatory reliability standards.

“Our grid is interconnected,” Draper said. “We must all play by the same rules, and we must have a knowledgeable independent entity - such as NERC - empowered to enforce such standards.”

Read the entire text of Draper´s testimony.

American Electric Power owns and operates more than 42,000 megawatts of generating capacity in the United States and select international markets and is the largest electricity generator in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

Melissa McHenry
Manager, Corporate Media Relations
American Electric Power
614/716-1120

More From APCO

Take Charge

Save Money & Energy - Now & Later

Sign Up Now Pay Online for Free with Paperless Billing

Pay Online for Free with Paperless Billing

Learn more

Download our app

How We Restore Power Learn more

How We Restore Power

Visit AEP.com
Use of this site constitutes acceptance of the AEP Terms and Conditions. View our Privacy Policy. © 1996-2019 American Electric Power. All Rights Reserved.

Privacy Policy

Privacy Policy for Appalachian Power, a unit of American Electric Power (AEP)

Scope

This Privacy Policy applies only to AppalachianPower.com and the Appalachian Power customer mobile app (com.aep.customerapp.apco). Other AEP websites and apps may be governed by their own privacy policies, appropriate to the uses and needs of each. Throughout the site or app, we may provide links to resources and sites that are not part of AppalachianPower.com or the Appalachian Power customer mobile app. This Privacy Policy does not apply to those resources and sites.

Consent

By using this site or app, you consent to the terms of this Privacy Policy. Whenever you submit information via this site or app, you agree to the collection, use, and disclosure of that information in accordance with this Privacy Policy.

Information Collected

  1. Passively collected information

    During your use of this site or app, we may collect anonymous information about your visit here through the use of server logs, cookies, scripts, tracking pixels and other Web traffic tracking systems. This information is aggregated and used to improve user experience through analysis of user activities. This information is never combined with any of the personally identifiable information you may provide in your use of the features of this site or app.
  2. Personally identifiable information

    On certain forms of this site or app, you may be asked to provide information about yourself or your account with us, either to identify yourself to us or to request a service from us. In each case, we will inform you what information is provided at your option and what information is required to complete the transaction or activity you are engaged in. If you are unwilling to provide this required information, you will be unable to complete the requested transaction.

Use and disclosure of information

The information you provide to us will be used to respond to requests you may make for services. Some or all of this information may be added to your permanent account record and may be used for research purposes.

In addition, we may use elements of this information in the following situations:

  1. We may transfer the information to Appalachian Power’s affiliates and subsidiaries, unless such transfer is prohibited by law;
  2. We may transfer the information as part of a merger, consolidation, acquisition, divestiture or other corporate restructuring (including bankruptcy);
  3. We may make the information available to third parties who are providing the product, service or information that you have requested (but not your password);
  4. We may make such information available to third parties who are providing services to Appalachian Power (for example, providing the information to third parties performing computer-related services for Appalachian Power);
  5. We may use the information to communicate with you about products and services that may be of interest to you.
  6. We may disclose the information if we form a good-faith belief that disclosure of such information is necessary to investigate, prevent, or take action regarding any illegal activities or regarding interference with the operation of our site or violation of its terms of use; or
  7. We may disclose the information if we believe that disclosure is required by law or regulation or in response to a subpoena or other order of a court or other governmental agency.

Appalachian Power uses Flurry Analytics Service (provided by Yahoo) in order to improve its mobile apps. Flurry’s privacy policy governs the use of this information.

Also, Appalachian Power reserves the right to share any aggregated information (i.e., non-personally identifiable information) with any third parties for any reason, unless prohibited by law.

We will not sell, rent or otherwise disclose the information we gather about you or your account to any third party, except as outlined in this Privacy Policy.

Security

Appalachian Power takes reasonable steps to protect your personally identifiable information as it is transferred to us, through the use of Web technologies such as the Secure Sockets Layer and others. However, no Internet transmission of information is ever completely secure or error-free. In particular, e-mail sent to or from Appalachian Power may not be secure.

How to Reach Us

If you would like to update your personally identifiable information or if you have questions about this privacy policy, please contact us.

Changes to This Policy

Appalachian Power reserves the right to change this Privacy Policy at any time. If this Privacy Policy changes, the revised policy will be posted to this site. Please review this Privacy Policy before you provide any personally identifiable information through this site. Use of our web site after the posting of a revised privacy policy constitutes your consent to the revised policy.

This policy was last revised on December 13, 2017.

Close ×

Sign Up For Alerts

Subscribing to APCO alerts gives you instant notification for:

  • Billing & Payments - avoid late payments and disconnection
  • Outage Updates - find out if there's an outage at your address and when power will be back on

Win an Xbox One with Alerts!

Enroll in alerts to be eligible to win. Subscribing to I&M alerts gives you instant notification for:

  • Billing & Payments - avoid late payments and disconnection
  • Outage Updates - find out if there's an outage at your address and when power will be back on

Loading video...

×