The Next Boom is in Transmission and Distribution

For years, many in the line contracting business have been saying that the nation’s transmission and distribution system (call it “the grid” or T&D system) was due for a major overhaul and additional new construction. It is, in fact, one reason Quanta Services was formed in 1997. Beginning in the early 1990s, as electric utilities prepared for deregulation, they sharply decreased their investment in the grid. Many stopped building and greatly reduced their regular annual spending on maintaining and repairing the system to remain competitive. Fortunately for people in the United States, the system was built very well. Most of the T&D system was designed to have a life span of no more than 30 years. Since many of those systems are approaching 50 years of age, they need help. As we’ve seen in California, part of the problem is that the system is constrained. Limitations in both the location and capacity of power lines mean that the grid is not currently able to transport lower cost power into that state. Therefore, California has been forced to rely upon certain generating plants that can get power into the state—and these plants are able to charge higher rates. Since the United States has hundreds of utilities—investor-owned, municipal, and government-owned giants like the Bonneville Power Administration and the Tennessee Valley Authority—it never approached the idea of building a national grid system. Instead, we’ve built a group of “regional grids.” Thanks to deregulation and constrained supply, more stress is being put on this system by wheeling wholesale power across the lines. We are expecting this patchwork grid to perform as a national system. But the reality is that it can’t, it’s not, and it won’t. The opportunity Essentially, the dimensions opportunity could inspire awe in all of us, especially if you consider that line contractors will need to expand to cover significant increases in work from a shrunken base. Here’s what, in my opinion, awaits electrical contractors—if not next year, or 2003—certainly in the 2005-2010 period: • Utilities will have to play “catch-up” with the deferred maintenance and repair of their T&D systems. There’s no substitute for physically maintaining and repairing these systems-replacing poles, putting in new lines where old ones have deteriorated, you—name-it. It has to happen and it will. • Beyond maintenance, there is the need to upgrade or “reconductor” many existing lines. As a result, system capacity, which is desperately needed, will increase. Electrical contractors will find a great deal of new work in putting in larger conductors or hanging two high-capacity circuits where a single lower-capacity line once stood. • A further step is rebuilding the entire line. The cost of rebuilding makes it a drastic step for a utility. However, there are many places where it is the best solution. • Finally, if our nation builds the hundreds of power plants envisioned by the Bush Administration’s national energy strategy, new lines will have to be built to carry power from the new plants to the homes and businesses where it is needed. There are alternative solutions. Distributed generation, for instance, will work in some places and is just one, local-level option. But it can’t work to solve our national, or even regional, problems. In the short run, power lines that were specified and designed to carry power at 60 percent of rated load are now carrying 90 percent or more of that load. Some people believe that this has solved the problem and deferred the day when the line will need to be replaced. But, many engineers know the lines were designed for specific load criteria for a reason. You can exceed the specifications for short periods of time, but by extending that period, you will encounter severe problems from increased line loads. For example, there will be temperature problems, and additional sags will be generated. Every splice, jumper, and connection in the system will be stressed. You might want to make this point Number Five. The more stress put on the existing system by forcing it to carry a higher-than-rated capacity of electrical power for long periods of time, the more maintenance and repair will be needed. The longer this practice continues, the more work required later. There’s a sixth area to think about: As utilities are forced to become competitive in a deregulated environment, they increasingly find the idea of shedding most or all of their in-house T&D maintenance crews and using outsourcers very attractive. How much work? As the CEO of a publicly owned company, Quanta Services, I am used to getting specific questions from Wall Street analysts. So I’m pretty sure your next question is: How much T&D maintenance and repair, rebuilding, and new construction are we talking about? While it’s obvious that it will be a great deal of work, because of the many variables, we do not have a specific number. My personal estimate is that some 50 percent of the national grid needs attention—significant maintenance, repair, or rebuilding. Many lines need full reconductoring. And, if a utility goes to the expense of reconductoring, it wouldn’t be to raise capacity by a mere 10 percent. Rather, they will aim to boost capacity by 40 to 50 percent. And, as they rebuild, many will find that the wood pole installed decades ago will have to be replaced with a steel one. A more important question than “how much” is “when.” There are not enough skilled linemen in this country to do this overnight. It will take years of dedicated effort to revamp our national grid. One of the “Catch-22” aspects of transmission line rebuilding is that the utility does not want to take the line out of service during the effort to increase system capacity. The only obvious answer, and one Quanta is currently implementing for several customers, is rebuilding or reconductoring while the line is energized. This is increasingly becoming a “hot” commodity and we expect this trend to gain momentum quickly. What has to happen? How do we go from the year 2000 “grid condition slumber” of the nation’s utilities and government to action? While incredibly unfortunate, there’s a lot to be learned from California’s experiences. Essentially, if having electrical power is a right that all Americans treasure, there is a lot of work to be done to uphold that right. It’s good news that Vice President Dick Cheney has talked about including some consideration of new transmission line siting in the national energy policy. There will be political debate on this issue. But if the nation is to build hundreds of electric-generating plants in the coming years, there will have to be a way to deliver the power from those plants to the people. Deregulation has to be finished. The states that want to deregulate must move forward; the FERC must present their version of deregulation. Once the movement to deregulation is complete, utilities will have a final, stationary playing field from which to make decisions, plan maintenance and reconstruction, and get the financing to do it. While that stable playing field is being created, the pent-up demand for T&D maintenance, rebuilding, and new construction is growing every day. My personal preference would be for our nation to start implementing a solution tomorrow, of course. That approach seems to also make sense for every single American because even if we mobilize today, the ultimate resolution is years away. Colson is the CEO of Quanta Services (Houston). He can be reached at (713) 629-7600. ------------------------------------------------------------- Building Power Plants Is Easy, Compared with T&D Lines Building Power Plants Is Easy, Compared with T&D Lines According to Jeff Palermo of KEMA Consulting (Fairfax, Va.), at least part of California’s problem could be solved by building more transmission lines in other places—for instance, Idaho and Utah—to allow the Golden State to import more excess power. But Palermo, an executive consultant at KEMA, an energy consultancy, admits that he doesn’t know why people in Idaho and Montana would welcome new transmission lines, and be willing to pay higher utility bills to finance such construction—to help people in California! “We haven’t built a lot of transmission in recent years,” Palermo said. “We haven’t made any big additions. There have been small improvements—some existing facilities have been upgraded—but it’s nowhere near enough. “Basically, the transmission system is a single huge network. If you make a change in one place, it affects other places. If you upgrade in a place where there’s a bottleneck, you increase usage and soon find out there is another bottleneck on down the road.” Palermo’s California-Idaho-Montana tale is typical, he said, of our national problem. We have a national grid, but new construction must be approved locally. This, he said, will impact the relative success of the Bush Administration’s national energy policy. This will be true even if the policy grants some new Federal condemnation power for transmission. “The most economic solution is almost certainly to build large power plants,” he said. “But they can’t be built close to big cities. So if you build them far from the cities, you need to build, let’s say, 100 miles of new transmission lines. This will create opposition. Perhaps the solution we’ll end up reaching as a society is to built a lot of smaller plants closer to the customers. But there are no easy choices here.” According to Palermo—who regularly testifies in siting cases before utility commissions—it is much easier to site and build a power plant than it is to get the approvals needed and then construct a significant new transmission line. “In this country, you can put in a small—let’s say, 200-Megawatt-gas-fired—power plant in three to five years. A 100-mile transmission line is more likely to take you seven to 10 years. “For one thing, the transmission line is probably going to have an impact on a much greater proportion of the public than the power plant. A power plant is typically in one place—one town, one city—maybe, as a stretch, two municipalities will be involved. But there are many more public entities, such as cities and counties, not to mention parks, rivers, and maybe a National forest, which you will cross in that 100-mile stretch, that have a right to have hearings, and so on.” As a result of this reality, Palermo said, even if the Bush Administration’s national energy policy is the game plan, the ultimate build-out of the transmission infrastructure to service the hundreds of new power plants will extend beyond even a possible second Bush term of office—past 2008, in other words. “I’m fairly certain they know all of this,” Palermo said. “But it’s important, politically, to set a direction—not necessarily dealing with all of the facts.” As someone involved in the day-to-day effort to site power lines, Palermo has a fair share of stories to tell about how difficult it can be. An example is American Electric Power’s effort to build a new T&D line serving southwestern Virginia. “They really need the line to deliver power to that part of Virginia,” Palermo said. “But the opponents noted that the construction of that line would enable AEP to sell more power into Pennsylvania and New Jersey. “That is a fact. The new line would allow AEP to do that. But it’s not the main reason for the new line. It also would bring power that’s vitally needed into southwestern Virginia. This is the kind of thing that a utility is up against when it tries to site a new line.”

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.