Black & Veatch Proposal Envisions National Power Grid

By DAN MARGOLIES - The Kansas City Star
Date: 06/07/2001 22:15

With the Bush energy plan emphasizing production, Black & Veatch has unveiled a $15 billion proposal to establish a national power grid and to build power plants close to their fuel sources.

The Kansas City engineering and construction company calls its strategy TAG, short for TransAmerica Grid, and says it would increase supplies and reduce prices while bolstering the nation's grid capacity and reliability.

"The energy crisis is not only about generating more power," said Dean Oskvig, president of Black & Veatch's power delivery division. "It's about getting surplus power to areas that need power."

The markets that stand to benefit most under TAG include the Chicago area, Southern California and the upper Midwest.

The Black & Veatch proposal was developed in conjunction with Siemens AG. The two companies project capital costs of $3.8 billion for the proposed transmission system and about $11 billion for the power plants. The firms began developing the proposal in late 1998 and don't have any customers yet.

The TAG system would address the problem of moving bulk power across the country. Experts say current electrical generation capability is sufficient to meet demand. But existing transmission grids, which move electricity from region to region, are considered inadequate to move electricity from areas of excess capacity to areas facing power shortages.

Black & Veatch and Siemens are proposing to build four power plants near coal mines in South Dakota and Wyoming. The idea is to generate electricity near the fuel source rather than ship coal to wherever the power is used.

That would reduce coal transportation costs to power plants, which traditionally are near their customers. In theory, those cost reductions would translate into savings for consumers.

"We refer to this as a `coal by wire' concept," said Tim Leyshock, senior vice president of Siemens Power Transmission and Distribution. "It is more economical to haul a finished product -- in this case, electricity -- than raw materials."

To get the electricity to distant customers, TAG envisions the construction of high-voltage, direct-current transmission lines connecting the country's East and West coast grids. The new lines would add 6,000 megawatts to the current 1,000 megawatts of east-west transfer capability.

The current transmission system basically consists of eastern and western interconnections that meet in Texas. The grids are separately synchronized alternating-current systems.

"The backbone of TAG is a high-voltage (direct current) system to move large blocks of power around the regions," Oskvig said. "The current grid is being used to move chunks of power in ways it wasn't designed to do. ... With TAG, if there was excess power-generating capability in the eastern U.S., and the western U.S. needed power, we could get it there."

Black & Veatch and Siemens pitched TAG in April to the energy task force headed by Vice President Dick Cheney. The proposal dovetails with a recommendation in the Bush administration's energy plan, unveiled last month, to look at the possibility of establishing a national grid and to identify measures to remove transmission bottlenecks.

Right now, TAG is an idea in search of a customer. And it is not clear the idea would win universal acceptance.

"I don't think that setting up a national (direct current) grid is necessarily the right answer if it doesn't make intelligent use of the lines we have already," said Jack Casazza, president of the nonprofit American Education Institute, a Springfield, Va., firm focusing on electric power policy.

"But I do believe that we have to take a good, hard look at the use of direct current to solve a lot of our problems," Casazza said. "There's no way we can handle our power requirements in the next five years without some major changes."

Other experts, however, lauded the coal-by-wire concept, saying it was an idea that should be pursued.

"In fact, we've been asked by a coal company client, Peabody Coal Co., to look into the possibility of building just such a plant in Kentucky," said Bob Woody, an energy lawyer in Shook Hardy & Bacon's Washington, D.C., office. The firm does not represent Black & Veatch.

Oskvig said the technology underlying TAG was not exotic.

"What we're talking about is the first leg of an interstate superhighway system for transmission," he said.

To reach Dan Margolies, call (816) 234-7740 or send e-mail to dmargolies@kcstar.com.