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Turned on to a towering $20B in infrastructure rebuilds


Power-transmission infrastructure expenditures have risen steadily over the past six years, and are on course to post a double-digit gain this year as surging demand fires the need for additional capacity.

"We are in the midst of a transmission infrastructure build-out in the United States, and that build-out is expanding," said Edison Electric Institute (EEI) spokesman Jim Owen. The build-out includes steel-intensive transmission towers as well as transmission lines and substations.

Through 1999 or 2000 there was "considerable disinterest" on the part of utilities to invest in transmission infrastructure, he said. "But since then they have been making numerous moves to substantially increase their investment, both to upgrade existing infrastructure and to build new transmission lines and towers."

Investments in transmission infrastructure by investor-owned utilities—comprising about 70 percent of the U.S. power utilities industry—totaled $7.75 billion last year, up 10.9 percent from $6.99 billion in 2006 and more than double the $3.66 billion invested in 2001, according to the EEI, a Washington-based trade association representing utility companies. Investments are expected to jump to $8.76 billion this year, $9.62 billion in 2009 and $10.23 billion in 2010.

The investment has been sorely needed. "The United States is currently operating in the 21st Century with aging 20th Century transmission infrastructure," said Nick Braden, a spokesman for the American Public Power Association, Washington.

According to the EEI, the U.S. electric transmission grid consists of more than 200,000 miles of high-voltage (230 kilovolts or greater) transmission lines, many of which are propped up by steel-laden towers, whether lattice or pole structures.

"As our country's demand for electricity continues to increase, the system must be expanded and upgraded to meet the needs of our growing population and digital economy," the EEI said. And realizing that, electric companies have earmarked billions of additional dollars for investment in the coming decade to "build the system to better meet current and future demand, to alleviate congestion and to reinforce system reliability."

Reliability is key in today's world, Braden said, a view shared by the EEI.

"In America, we take electricity for granted. We expect the lights to come on every time we flip the switch. But a reliable supply of electricity is more than just a convenience. It's a necessity. Our economy, and our way of life, depends on it. For electric companies, maintaining a high level of reliability requires constant commitment. They must rely on an interconnected network of generation, transmission and distribution systems to power our homes and businesses," the group said.

The majority of the earmarked investments are designed to replace and improve the aging transmission infrastructure, which in many cases is 50 to 60 years old, according to Klaus Bender, director of engineering at the Utilities Telecom Council, Mesa, Ariz.

One current and future growth area is related to the recent push for renewable energy, Owen said. "The power being generated by wind farms and solar collectors needs to be sent over high-voltage power lines from remote areas to the power-consuming centers. The potential for growth is huge."

The lack of transmission infrastructure is one thing holding back the pace of wind-power development. "The capacity to generate power currently outpaces the ability to transmit that power to consumers," Owen said.

While utilities are doing what they can to increase the transmission infrastructure, their plans in many cases have been met with resistance from residents and municipalities in the areas that projects have been proposed.

"These projects need to be sited and permitted and there has been an increase in NIMBYism," Owen said, referring to the "not in my backyard" mindset of many residents living near proposed projects. This has resulted in a very drawn-out siting process—in some cases as long as 16 years.

"It is part of the cosmic stalemate," he said. "Consumers have been increasing their use of power and they rightfully expect their power to never go off. But at the same time they are reluctant to do what they need to do to make sure they have the power they need."

Part of that is "an ill-placed fear that radiation from power lines could cause health risks," Bender said.

As far as the aesthetics of transmission lines and towers, utilities are limited, he said, adding that utilities really can't change the look of towers. "What the utilities have been doing is looking at the route which has the best chance of being approved vs. what would be the shortest distance between Point A and Point B."

While the transmission build-out is clearly an expensive proposition, the recent financial crisis/credit crunch hasn't had a dampening effect, at least not yet, given that these are long-term capital investments, Owen said.

The increased cost of steel and other raw materials has pushed project prices higher, driving some utilities to go to state power utility commissions for rate increases to cover the costs. "This could be a challenge, as nobody likes higher prices," Owen said. "But I think the regulators understand that we have no alternative."

The American Public Power Association has been lobbying the Bush administration and Congress "to step up to the plate and help to facilitate" funding of these transmission infrastructure projects, Braden said. MYRA PINKHAM

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