WRITING THIS IS A STRETCH FOR A GUY WHOSE LIVELIHOOD DEPENDS ON UTILITIES HANGING WIRE IN THE AIR. But building more lines is not always the optimal solution. And today, after years of under-investment, utilities find their lines heavily loaded with constrained circuits, reducing our industry's ability to transmit power efficiently and cost-effectively.

Historically, we looked first to wires solutions, and when backed into a corner, we would investigate generation or myriad load control options. As an industry, we no longer have that luxury.

FINANCIAL SITUATION OF TRANSMISSION OWNING ENTITIES

Because we delayed building transmission for so long, most of our bulk power system has been significantly depreciated. This means that any major investment in new transmission will have a significant impact on the overall cost of transmission services. I talked to one utility manager who stated that the book value of his company's transmission assets would triple if his company built just one major line. Of course, generating companies and distribution companies want access to a stable and robust grid. But, at the same time, they are not excited about 20% to 30% increases in their transmission expenses.

This is where non-wires solutions come into play. If utilities can leverage demand-side management, time-of-day rates and access to customer-owned generation, they can more easily manage their costs in upgrading transmission infrastructure by delaying or canceling the construction of some facilities, therefore reducing expenses while stretching their construction program over a longer time period.

I'm particularly impressed with efforts underway in the northwest United States, where Bonneville Power Administration (BPA) is playing a leading role in implementing non-wires solutions. BPA is the 900-pound gorilla in the northwest, owning and operating 15,000 miles [24,140 km] of transmission and 285 substations.

Brian Silverstein, BPA's vice president of operations and planning, spent a few hours sharing details about the non-wires initiative his utility is supporting. Silverstein informed me that the system is being operated at or near capacity, due primarily to the fact that BPA did not undertake any major transmission construction between 1987 and 2001.

In 2001, BPA realized it was time to address existing load constraints in preparing for load growth in the region. BPA commissioned an in-depth study of its internal transmission planning process, requiring that non-wires solutions be considered. According to Silverstein, BPA identified 20 problem areas, of which six were considered top priorities. Several were candidates for non-wires solutions. Pilot projects were then launched to test existing technologies and build confidence in non-wires products and services. Here are a few of the initiatives launched:

• Aggregated distributed generation: BPA is investigating ways to tap into small-scale power generation (including backup power at government and hospital sites) on the Olympic Peninsula to gain access to 5 MW of capacity and thus reduce the need for a contemplated 230-V line.

• Demand reduction: A demand reduction pilot was carried out over a four-day period in March 2004. BPA simulated a severe weather event and asked a utility and three large electricity users to reduce their need for transmission services. BPA posted the hourly rate it would pay for each megawatt of reduction. BPA was able to purchase an average of 22 MW of demand reduction during each hour of the test. The power saved is equivalent to more than one year's load growth.

• Direct load control: A pilot is being launched in Ashland, Oregon, where BPA will test the feasibility of residential and commercial load control to reduce demand charges and contribute to transmission line deferrals. Customers and BPA will be linked via the Internet, enabling BPA to remotely monitor and shift electricity use away from peak periods. Another pilot is being launched in rural areas to remotely control irrigation pumps to reduce peak demand using standard wireless communication networks. Agricultural customers of Benton County and Franklin County PUDs in Oregon will participate; these utilities expect to control at least 5 MW during critical peak periods.

• Regional round table: BPA's Silverstein is also co-chair of the regional Non-Wires Solutions Round Table. Participating in the round table are representatives of the Industrial Customers of Northwest Utilities, the National Resources Defense Council, the Northwest Energy Coalition, the Northwest Independent Power Producers Coalition, the Northwest Power Planning Council, representatives from two public utility commissions, Puget Sound Energy (Bellevue, Washington, U.S.), Inland Power & Light (Spokane, Washington) and the City of Ashland. This round table meets quarterly to discuss institutional barriers including pricing, load forecasting and the reliability of non-wires solutions. The wide range of backgrounds and interests represented ensures broad understanding and support for non-wires solutions, while simultaneously building a level of trust with stakeholders, so that they would support a wires solution where no reasonable alternatives could be identified.

The round table members review existing pilots, conduct new pilots, and search out new round table members and vendor partners. Round table members also assist BPA in developing a non-wires outreach strategy, support tech transfer to utilities in the region and encourage public utility commissions to provide incentives for non-wires solutions. Silverstein expected that most of the round table discussions would revolve around engineering issues, but found that institutional issues ultimately will determine the success of the non-wires initiative. The biggest issue Silverstein runs into when coming up with viable non- wires solutions is determining who pays.

“In our region, roughly 10% of the cost is transmission. If we go to a fluorescent bulb that reduces energy use from 65 W to 17 W, BPA doesn't have to transmit and the distribution utility doesn't have to distribute,” states Silverstein. “We have historically funded our non-wires solutions from the conservation bucket. BPA can front a portion of the money to fund these initiatives but we need financial help from generators and distributors. How all parties ultimately accomplish this is an institutional issue, which is why we have regulators involved.”

“Another institutional issue is getting our own employees to buy into the concept of ‘negawatts,’” says Silverstein. “When we ran a demand-side management pilot, we found that our system operators really got it when they saw the load drop when staff launched a Web-based demand response program to bring on local generation and reduce load.”

Silverstein made it clear that BPA is not steering away from constructing lines and substations if wires-based solutions make the best sense. BPA has constructed three new 500-kV transmission lines within the past three years. In fact, BPA just energized a 63-mile [101-km] section of line that brings power from central Washington to the Yakima area. Placing these three lines into the rate base, along with other capital investments, will result in rate increases on the order of 12.5%. And like other utilities, BPA must borrow the money to build lines while BPA customers pay higher transportation fees.

Silverstein sees significant value in using non-wires solutions that will enable BPA to spread its transmission investments over a longer time horizon.

I expect other utilities will see value in integrating non-wires solutions into their long-term planning strategies to find low-risk, high-return solutions as they seek to deliver power to customers.