In a detailed response released today, Brattle economists responded to a recent critique from Concentric Energy Advisors by reiterating their assessment that competitive transmission processes have the potential to stimulate innovation and meaningfully reduce the cost of transmission investments.
The response comes as a follow-up to an April 2019 Brattle report, “Cost Savings Offered by Competition in Electric Transmission: Experience to Date and the Potential for Additional Customer Value,” which summarized U.S. and international experience with competitive solicitations for the development of major transmission projects. In the report, the Brattle authors discussed that using competitive solicitations in transmission development is estimated to save 20% to 30% of project costs compared to the traditionally developed transmission projects. As a result, the authors recommended that policymakers and system planners consider expanding the scope of competitive solicitations for transmission projects, estimating that doing so could save $8 billion over the course of five years.
In June 2019, Concentric Energy Advisors then issued a report about competitive transmission development entitled “Building New Transmission: Experience To-Date Does Not Support Expanding Solicitations.” In the report, which was largely a response to the April 2019 Brattle study, the Concentric authors take exception to Brattle’s conclusions by critiquing three aspects of the Brattle study.
In this newly published response, the Brattle authors refute the Concentric authors’ criticisms by demonstrating that Brattle’s prior analysis presents a balanced view and uses the best information available in the industry, including international experiences. Further, Concentric authors had used inappropriate cost comparisons to artificially reduce the likely cost savings that competitive transmission projects can provide to customers. To reiterate their prior finding, competitively developed transmission projects provide cost protection to customers through cost containment contracts and when compared to traditionally developed projects, they provide savings even if their costs increase in the same proportion as the traditionally developed projects. The Brattle authors maintain that the analysis presented in their April 2019 report provides a reasonable view of the potential cost savings of competitive solicitations, and federal and state policy makers should expand the scope of competitive transmission processes.
The Brattle response, “Response to Concentric Energy Advisors’ Report on Competitive Transmission,” is authored by Brattle Principals Johannes Pfeifenberger and Judy Chang, Senior Associate Michael Hagerty, and Senior Research Analyst Jesse Cohen.