A recent Energy Information Administration study concludes that the electricity transmission system in the northeastern United States is capable of absorbing increased interregional trade, thus producing small cost benefits, but suffers from certain constraints that prevent all regions within the area from benefiting equally. Increased electricity trade across regions, one possible outcome of the restructuring of the electricity industry, is of interest because of its possible effects on electricity prices and the environment.

The Electric Transmission Network: A Multi-Region Analysis modeled increased trade in an area stretching from the mid-Atlantic and New England coasts westward to Indiana, Kentucky, and Michigan. The area included four of the administrative regions defined by the North American Electric Reliability Council: New England Power Pool (NEPOOL), New York Power Pool (NYPP), Mid-Atlantic Area Council (MAAC), and East Central Area Reliability Coordination Agreement (ECAR). In all but one case (not discussed in this Energy Plug), the analysis assumed the generation capacity existing in the summer of 1997, plus two units (Millstone 2 and 3) not in operation at that time. The four cases considered here include two reference cases, which assumed levels of interregional trading of power equal to those present in 1997, and two test cases (the "super-region" cases), which assumed that power could be traded freely between regions (when transmission capacity permitted) and that power flows were optimized to reduce costs to a minimum. One reference case and one super-region case assumed peak demand, while the remaining two cases assumed "shoulder" demand (80 percent of peak demand), a condition intended to represent off-peak loads.

The super-region cases projected increased interregional trade, which rose about 2 percent in the peak-demand case and nearly 48 percent in the shoulder demand case (from 8,120 megawatts to 11,980 megawatts). Marginal generating costs showed a mixed pattern (see table). In the peak-demand cases, MAAC's projected marginal cost dropped the most from the reference case to the super-region case, although it remained the highest-cost region. NEPOOL's projected marginal cost dropped very slightly, while NYPP's and ECAR's both rose, as relatively expensive supplies in those regions were tapped to displace even costlier units in MAAC and NEPOOL.

Projected marginal costs were lower in all four shoulder demand cases than in the respective peak demand cases, sharply so in MAAC and ECAR. NEPOOL and NYPP realized lesser benefits, which suggests that transmission capacity may limit power flows from lower- to higher-cost regions. In general, the transmission system appears capable of producing modest cost benefits under conditions of interregional trading, but certain transmission constraints prevent those benefits from being distributed evenly.

The Electric Transmission Network: A Multi-Region Analysis, 16 pages, 7 tables, 7 figures. This article is available only via the Internet.

Questions about the report's content should be directed to:

Thomas Leckey, Office of Integrated Analysis and Forecasting

thomas.leckey@eia.doe.gov

Phone: (202) 586-9413

If you are having technical problems with this site, please contact the EIA Webmaster at webmaster@eia.doe.gov or call 202-586-8959. For general information about energy, contact the National Energy Information Center at 202-586-8800 or infoctr@eia.doe.gov.

URL: http://www.eia.doe.gov/emeu/plugs/pletn.html
File last modified: September 26, 2000