Jose Delgado knows how to get grid upgrades done

Jose Delgado knows how to
get grid upgrades done

Jose Delgado, CEO of American Transmission, the merchant grid operators, knows how to get grid upgrades.
    A big problem is overcoming local opposition.
    He knows how.
Delgado's firm spends well into the six figures each year on public relations to convince locals to support projects.
    Giving people a lot of advanced notice and getting them involved in the planning process has proven to be helpful in getting projects sited, he said.
    Stand-alone grid owners are in the best position to get transmission built, he added.
    He told the Infocast conference in Washington how the upper Midwest suffers from congestion growing out of a lack of investment.
    The grid owner has spent $500 million on its 9,000 miles of wire since 2001 and plans to spend about $300 million/year on projects for the next five years.
Independent companies build what customers want, Delgado explained, and everybody is a customer.
    The goal of open access was that everybody would stop fighting over transmission and everybody was to pay, he explained.
    So what is stunting grid investment in general?
    A lack of support from regulators was one reason.
    Another is the lack of performance-based rates since cost-based rates don't reward superior operation.
    Merchant owners don't build unless they see an opportunity and IOUs don't want to build for others especially when they can invest in other areas and make more money.
    And for the record, Delgado doesn't want or "need" FERC's incentive adders.
    "What FERC giveth, FERC can taketh away," he observed.
    Bob Welch, CEO of International Transmission Co (ITC) reminded the conference ITC was the first stand-alone company and is purely independent.
    American has ties to the utilities that divested their grid into the firm.
    Independent companies had been surviving by buying up IOU networks -- a market that "dried up" in the wake of the SMD failure but may be coming back.
    Welch designed the creative financing that upgraded California's Path 15.
    He teased that ITC was putting together another financing deal with an IOU and would be announcing that project in a couple of months.
    Welch believes one reason transmission isn't getting built is that engineers come up with the projects but the plan doesn't get turned over to the people that can sell it to the public.
    He agreed with Delgado on public relations.
    "Do stand-alone companies have any disadvantages?" one attended asked.
    "We don't have eminent domain power," replied Robert Mitchell, president of Trans-Elect's New Transmission Development.
    Delgado's ATC does have such power since it's a regulated utility.
    But he called use of eminent domain a "failure" in selling the project although it might be necessary if state regulators order a line built.
    Michael Calviou from GridAmerica told us he was very encouraged by what he heard at the conference and the general awareness of issues facing independent transmission owners.
    He heard more consensuses about solving problems than ever before, Calviou added.
    It was good to see that Commissioner Joseph Kelliher was "thinking hard" about the issues, he noted, and that the commissioner had an "open mind" about what rules were or were not needed.
    Originally published in Restructuring Today on March 11, 2005

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