Dive Brief:

Global consulting firm Brattle Group's transmission competition study showed utilities could save billions on major transmission projects by opening up competition for the projects.

Only 2% of the transmission projects studied by Brattle went through a competitive bidding process, and costs grew an average of 34% over original estimates when large utilities handled them. The study estimated independent companies that won bids for the projects, reduced costs on average by 40% below estimates.

"Transmission investments have helped reduce total costs but those savings could be larger" if the "scope of competition was expanded," according to Johannes Pfeifenberger, a Brattle economist and engineer. "What we’re saying is that the savings can be larger if the scope of competition was expanded."

Dive Insight:

According to the Brattle study, focused on the potential savings achieved by Federal Energy Regulatory Commission Order 1000, the regulations establishing competitive processes for developing transmission projects are limited.

"It's really up to the regulators to expand the scope of how these competitive processes are being used," Pfeifenberger told Utility Dive.

Brattle's previous work has shown that "transmission investments can reduce overall customer cost," Pfeifenberger said, adding that spending on transmission could result in more savings on the generation side.

Because the few projects "that have been subjected to competitive bidding resulted in more cost effective transmission investments," more competitive bidding could lead to "a larger cost-decrease," he said.

However, the transmission competition study estimated savings of $8 billion in five years by opening up one third of major transmission projects to competition from third-party contractors. That study was paid for by transmission product companies, LSP Transmission Holdings and GridLiance​.