Secretary Chu Unveils Grid Modernization Plan for Federal Power Markets

Secretary of Energy Steven Chu recently released a memorandum directing the four federal Power Marketing Administrations (PMAs) to upgrade and modernize their aging transmission infrastructure to make it more secure, efficient, and reliable. The four- step plan will help these regions to more strategically plan and upgrade their grids, enabling them to integrate cheaper, cleaner power. Specific steps include:

• Implementing new transmission construction and financing powers as authorized in the Energy Policy Act of 2005 and the American Reinvestment and Recovery Act of 2009.
• Improving PMA rate design to incentivize energy efficiency, demand response, and the integration of renewable energy and electric vehicles.
• Improving collaboration between PMAs and grid owners and operators, both within the regions and in neighboring regions. This includes increasing PMA participation in the strategic local planning processes already taking place, including those established by FERC Order 1000.
• Working with Congress to simplify and streamline oversight of the PMAs, including asking Congress to authorize revolving funds for both WAPA and SWPA to expedite capital improvements (BPA already has a revolving fund). This would make it much easier for WAPA and SWPA to make the investments needed to keep the lights on.

Upgrading the rapidly aging power grids in these regions will deliver numerous benefits to families and businesses. It will allow for more clean energy to be integrated into the system, increase deployment of cyber-security technologies to protect the grid, and increase energy efficiency and demand response investments. These steps will make the power grid more reliable, secure, and will lower costs for consumers while stimulating job growth and economic development. In fact, the Brattle Group estimates that U.S.-wide grid investments over the next 20 years will support 150,000 to 200,000 full time jobs while stimulating $30 to $40 billion in annual economic activity.

What’s a PMA?

The federal government operates four Power Marketing Administrations – the Western Area Power Administration (WAPA), the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), and the Southwestern Power Administration (SWPA). These PMAs were created in the early 1900s to market and deliver hydropower from U.S. dams (such as the Hoover Dam). Today, PMAs collectively own 134 power plants and 33,730 miles of transmission lines, many of which are in need of upgrades.