What is "wheeling"?
"Wheeling" refers to the transfer of electrical power through transmission and distribution lines from one utility's service area to another's. Wheeling can occur between two adjacent utilities, or between utilities in different states. Under existing law, qualifying facilities may only transmit their output to their local utility.‘What are the advantages of wheeling? "Wheeling" allows utility areas with too much supply to transmit excess power to other utilities with too much demand. The ultimate goal is to move the least-cost power to where it is needed, maximizing efficiencies. If wheeling is an option, a utility can determine if it is cheaper to build a new electric generation facility or buy power from another service area. From the QF perspective, wheeling allows QFs to develop renewable, indigenous resources, such as wind or hydro, in remote areas that do not need the power, and send it to areas with higher demand.
What are the disadvantages of wheeling?
One problematic aspect of wheeling is determination of the value of transmitted power. In other words, how much should someone charge for allowing a electric generator to transmit power through its transmission lines? Private utilities also argue that access to too many parties will reduce the reliability of the system. However, utilities have been wheeling for years. The alleged problems with increased access to transmission are attempts by the investor-owned utilities to restrict their competition. Of course, increased access to transmission should be implemented carefully to protect the integrity of the system.
Why is wheeling important to independent energy producers?
Independent energy producers do not have the power of eminent domain and generally do no own transmission lines. Therefore they are dependent upon utilities to move their power to market. In a competitive marketplace, where independent energy producers are competing with utilities or their affiliates, access to transmission can be used to limit the participation of independent energy producers.
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