The "Free Rider " Syndrome

Implications: The issue of access to crucial transmission infrastructure is not limited to wind power. Much the same argument can be made about pipeline access for non-conventional natural gas developments in areas of the midwest or indeed for conventional forms of merchant power generation. Ask any merchant generator about his negotiations for access to any of the regional power grids and you will likely hear the same complaint. Namely, that the existing utility should cover the expense of requisite switch gear and reliability checks, plus pay a higher price for the power being supplied. The porblem is not new and the ultimate suolution is a motivated customer base.

Analysis:

 Sad to say, the cost of moving gas out of Colorado or Wyoming can result in a negative basis of $2-3.00/mcf as newly discovered coal bed methane and shale gas competes for access to limited transportation infrastructure. Perhaps the most extreme example is the case of stranded gas in Alaska which has very low values, on the order of $2 to 3 dollars/mcf becuase of the absence of pipelines to move the gas to more populated areas. Unfortunately the two pipelines proposed will cost a total of $45 billion. There the question as always is who pays?
 
In the Wyoming gas case, corporations are actually spending in excess of $4 billion to build the Rockies Express pipeline which will move gas from West to East, terminating at the Ohio/Pennsylvania line. They are able to do this because there are willing long term buyers of the transportation capacity in the eastern half of the US. Similar export lines are being constructed, again with private financing, to move gas to the west coast markets.

While I sympathize with the issue of stranded power resources and the potential they represent, perhaps the real issue with stranded wind power is more a lack of committed customers than it is a lack of transmission infrastructure. Arguing that "the public good" requires capex and opex costs associated with new transmission to be included in the general rate structure (or tax base) seems a bit premature until market based solutions have been exhausted.