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November 16, 2011
Brattle Economists Contribute Report on U.S. Transmission Cost Control Mechanisms to Alberta Electric System Operator Discussion Paper

Brattle principal Hannes Pfeifenberger and associate Delphine Hou recently authored a report discussing U.S efforts in controlling costs of transmission projects among power markets. Their report, “Summary of Transmission Project Cost Control Mechanisms in Selected U.S. Power Markets,” was featured as an appendix to a discussion paper published by the Alberta Electric System Operator (AESO) on the current cost accountability framework in place for the execution of transmission projects. Mr. Pfeifenberger and Ms. Hou’s report documents and summarizes efforts made in controlling the costs of U.S transmission projects in order to mitigate the risks of significant increases in the cost of planned projects after they have been evaluated and approved. Their report addresses several key questions, including who is responsible for managing transmission costs, what framework approves transmission capital expenditure, and the roles independent system operators (ISOs) and regional transmission operators (RTOs) play in regards to transmission costs and control. Because there has been significant growth in transmission investment over the past several years, there has also been an associated increase in the initial planning-related cost estimates for transmission projects. Mr. Pfeifenberger and Ms. Hou describe the regulatory framework for controlling transmission project costs as well as highlight several mechanisms that have been implemented or are being considered within regions of significant transmission investment activity. Mr. Pfeifenberger and Ms. Hou’s report can be downloaded below. To view the full discussion paper by the AESO, please the AESO website.