Electricity is an everyday part of our lives, but have you ever wondered how the cost of delivering it to your home affects your monthly electric bill? One critical factor is the electric transmission system, a vast network of high-voltage lines that play a pivotal role in the reliability and affordability of your electricity.
Your Electric Bill & Electric Transmission Costs
Impact on Your Electric Bill
The cost of building, maintaining, and upgrading the electric transmission system plays a crucial role in your monthly electric bill:
Construction Costs: Building transmission lines, especially in challenging terrains or populated areas, can be costly. These expenses are ultimately passed on to consumers.
Maintenance and Upgrades: Ongoing maintenance and necessary upgrades to ensure the reliability of the transmission system also contribute to your bill.
Transmission Construction Costs are Increasing
Over the years, the cost of transmission construction has been on the rise:
"Over the past decade, major utilities in the United States have been spending more on delivering electricity to customers and less on producing that electricity," according to the U.S. Energy Information Administration in 2020.
Utility spending on power delivery was 65% higher in 2020 than in 2010, a trend that could continue as utilities invest in grid modernization, according to S&P Global.
The need for grid updates and capacity expansion due to the growth of renewable energy sources, improved resilience and reliability, and the electrification of industries is a significant driver of these costs.
Competition to the rescue!
Free market competition can bring savings of 20-30% or more in transmission construction – and those costs are passed on to consumers. But some states may eliminate competition – and the cost savings – by enacting “Right of First Refusal” (ROFR) laws.
The Role of Electric Transmission
Electric transmission lines are like the interstate highways of the electricity world. They carry power from power plants to local distribution systems, ensuring electricity reaches your home. Here's how it works:
Power Generation: Electricity is generated at power plants, which can be powered by various sources like nuclear, coal, natural gas, wind, solar or hydroelectricity.
High Voltage Transmission: This electricity is transmitted at high voltages (think of it as long-distance travel) over transmission lines. These lines can span hundreds of miles to reach your region.
Substations: At local substations, the voltage is reduced to a level suitable for distribution to homes and businesses.
Local Distribution: Finally, the electricity is distributed through lower-voltage lines to your home or office, ready to power your devices.
High Voltage Transmission: This electricity is transmitted at high voltages (think of it as long-distance travel) over transmission lines. These lines can span hundreds of miles to reach your region.
The Need for Updated Transmission for Grid Reliability
Ensuring the reliability of the electrical grid is paramount. Here's why transmission updates are essential:
Renewable Energy Integration: We're transitioning to cleaner energy sources like wind and solar. Updated transmission lines and increased capacity are necessary to efficiently transport this renewable power from where it's generated to where it's needed.
Grid Resilience: Updated transmission systems are more resilient to extreme weather events, reducing the likelihood of power outages and their associated costs.
Economic Benefits: A reliable grid attracts businesses, promotes economic growth, and can lead to job creation.
