Robert Mitchell, CEO of independent transmission pioneer Trans-Elect LLC, thinks 2007 could be the year of transmission. Mitchell sees a bellwether for transmission upgrades from what he called the "responsiveness" of industry, regulators and Congress over the past two years. As a result, he said the transmission sector had a record year for announcements of new projects in 2006. "We know that announcing projects isn't the same thing as getting them built, but it is a first step, and that first step had been remarkably absent for many, many years in the past," Mitchell says. "One of the reasons the California Path 15 project got so much attention a few years ago is because there really had not been many major transmission projects done up to that point."

Currently, annual investments in the North American transmission system total approximately $4 billion -- nearly twice that of 2000-2002 -- according to the Edison Electric Institute. Nevertheless, Mitchell thinks that figure should be double -- at least $8 billion -- given the growing gap between demand and investment in transmission infrastructure. At $4 billion, the nation isn't even beginning to address the need for a smarter, more congestion-free grid, he says, contending that billions of dollars are lost annually in the United States because of the massive, chronic problem of grid congestion.

Enter Trans-Elect, which just may be poised to help solve some of the nation's grid problems. The company was formed in 1999 and was acquired by AES Corp. last year. Starting in 2002, Trans-Elect had acquired interests in the AltaLink transmission system in Alberta, Consumers Energy's Michigan transmission system, and a stake in the expansion of the Path 15 transmission line in California. In 2006, Trans-Elect sold off most of its assets, providing returns to its mostly private investors. A relative newcomer to the energy industry after years in the public policy arena, working in the U.S. Senate and elsewhere, Mitchell thinks the nation has made a significant paradigm shift in converging environmental and energy issues. And this year may bring a serious push in Congress for a national renewable portfolio standard (RPS), which would force energy planners to deal with the nation's infrastructure shortcomings, Mitchell says.

Mitchell says states are going to do more, with or without a significant national push, to emphasize renewable, clean coal and transmission projects. Cleaner energy resources inevitably lead to more remotely sited generation, which necessitates new and upgraded transmission. With new financial backing from a global energy developer/operator, AES Corp., Trans- Elect plans to capture its share of this future need, he says. "As they relate to renewable, and even many fossil fuel generation opportunities, projects are going to have to be developed in remote areas," says Mitchell, noting this will be true in the West and other areas of the country. "And if you can't come up with transmission solutions, you are not going to be able to develop those facilities." The model he thinks will be replicated is the Wyoming Infrastructure Authority, a state- authorized commission created in 2004 that is responsible for planning, financing, building, maintaining and operating interstate electric transmission and related facilities.

In the 2005, WIA partnered with Trans-Elect and the Western Area Power Administration to consider the expanding transmission capacity across the TOT3 interface located along the Wyoming-Colorado border. The project is on target to emerge in two phases -- a first part bringing wind-generated power from southeast Wyoming to eastern Colorado, and a longer-range link from southeastern Wyoming to the northeast Powder River Basin area of the state when clean coal plants get built up in that area. "We're anticipating that in late summer this year, we will begin to secure contracts and likely have an open season for a major portion of the capacity in the proposed (TOT3) line," Mitchell says. "Without the line we're proposing, the wind development can't really proceed."

Beyond the Wyoming project, the challenge for the transmission sector, unaccustomed to the spotlight, is to try to meet industry and political pressure to bring online huge amounts of intermittent renewable power resources and help address a newfound cause of reversing global warming. "There is no question that it is a huge challenge," Mitchell says. "In order to meet the existing standards, it takes a lot of new generation, and there are going to be even more states setting RPS standards. So, a gap between what is being developed and what needs to be developed is growing. I wouldn't be at all surprised if we got a national RPS standard, and how the nation meets that will be a real challenge."

Like many of his colleagues, Mitchell recognizes that utility operations people think there are "serious and legitimate issues" regarding integrating a lot more nonfirm power into the grid system, but says it's imperative that the United States rises to the challenge. "We're a great nation with smart people and great resources, so I think it will happen and needs to happen, but it won't be easy; it's not a free ride. This is clearly a transition we have to make as a nation," he said.

In the current transition, which Mitchell sees as critical for the U.S. electric transmission sector, several interwoven factors play major roles -- streamlined permitting, financing, and research/development -- but regulatory reforms are the ultimate icebreaker. The 2005 federal energy act (EPAct) backstop siting authority for the Federal Energy Regulatory Commission (FERC) will help a little, but much more is needed, he says. "Streamlining the regulatory process needs to be emphasized and reemphasized," said Mitchell, noting it is extremely critical, particularly for siting. "There is a lot of talk and recognition that the process is too long to get a line sited. I think the federal backstop siting in some limited cases will be helpful," Mitchell told Prospects. He said the state of New York, under the threat of FERC backstop siting, changed its standard state procedures to eliminate the possibility of the federal process ever being evoked. New York requires state agencies to determine siting within a year. (The FERC backstop can only kick in for cases lingering for more than a year.) "I see that FERC authority as limited because the backstop authority doesn't apply unless a transmission line has been supported by a regional planning process or has been found to be part of the national corridors identification process. It really is quite limited," Mitchell said. With some responsive, timely decision making, projects will find adequate financing, and R&D will also help overcome any of the hurdles that have kept new generation and transmission from moving ahead, according to Mitchell. "I think it is well established that there is capital available to finance projects," Mitchell says. "The bigger issue is financing the development of projects. That is where our relationship with AES becomes so important. We have an investor who understands you have to use risk capital in the early stages to get transmission projects built. Once you have all siting and approvals, environmental and engineering studies and contracts all in place, finding financing at that point is not all that difficult." In 2006, Trans-Elect sold off most of its assets, providing returns to its mostly private investors. In research, Mitchell thinks there is a "fair amount" ongoing by private companies and by the federal government supporting such efforts to improve conductors and capacitors, expand superconductivity and cable applications. Nevertheless, the transmission sector commercially is still somewhat limited in the applicability of technology advancements, he says.