Rudden: LNG, Storage Could Alleviate Transmission Problems

New or existing gas storage and liquefied natural gas (LNG) facilities should be relied upon much more by the power industry to alleviate existing and future power transmission problems, according to a new report by consulting firm R.J. Rudden Associates. The regional transmission organization (RTO) process is going much slower than anticipated and alternatives to transmission need to be developed, said J.R. Crespo, managing director at R.J. Rudden.

Transmission shortcomings have taken a back seat to other issues in the debate of electric restructuring despite the fact that a "staggering $55 billion needs to be invested in electric transmission" before the end of this decade just to maintain transmission adequacy, Crespo added.

"We believe that improved siting of gas generation made possible by greater optimization of gas storage, LNG and gas pipeline capacity can assist in addressing some of the current deficiencies in the quickly aging national electric transmission system."

R.J. Rudden's Matthew Cordaro noted that much of the debate over RTO formation has focused on membership, regional scope, governance, transmission cost allocation and revenue requirements, while transmission issues have taken a back seat. "The gap between transmission planning and generation planning has widened at a time of increasing electricity demand and reduced reserve margins," said Cordaro. "This void needs to be addressed and better utilization of gas assets is one potential avenue of success until the RTOs get established and begin the job of regional transmission planning."

Greater optimization of gas storage and pipeline capacity and strategic LNG siting can help address some of the electric transmission problems that will inevitably occur, the consultants said. "While we have traditionally thought of gas storage as being owned by gas utilities or interstate pipelines, it is now time for electric generators to increase their storage capacity and achieve the resulting flexibility on assurance of supply and price," said Crespo. "Another gas asset that needs to be reviewed is LNG facilities." Strategic location of LNG could be a catalyst for new generation, which in turn could alleviate power transmission constraints.

A greater focus on "optimal utilization" of gas assets "can address at least some of the problems created by the voids in transmission planning," said Richard Rudden, president of the firm.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.