Some are calling it a whiplash of energy dominance, while others cite it as a rare example of continuity on energy policy. However it is positioned, the fact that the Department of Energy’s (DOE) Loan Program Office (LPO) guaranteed a $1.6 billion loan to upgrade thousands of miles of transmission lines in the Midwest is notable for several reasons. While this is literally an announcement of federal funding, it is a symbolic roadmap around the details and direction that will garner federal support in the near term.
First and foremost, the deal indicates that the LPO is not far from funding projects to strengthen the grid using dollars. The deal gives an American Electric Power (AEP) subsidiary the money it needs to rehabilitate and rebuild about 5,000 miles of lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia. In light of the many headlines surrounding canceled projects that may be running out of such funding, this news is proof that those funds still exist and are still being allocated.
That said, the larger number is a clear indication of the quality of the current administration’s plan evaluation. Some outlets have not considered what makes this plan so different from others that have been canceled, but the distinction is clear in the DOE’s own release.
In the first line, you can see the phrase, “Strengthen grid reliability and ensure lower electricity costs.” While it is true that news about virtually every and any utility project mentions these terms somewhere, their importance and focus is key to the LPO’s official narrative. And the absence of other terms and titles that typically describe this type of release is equally instructive. Utilities need to consider both unofficial mandates at the federal level.
It’s a mandate that means the utility’s ability to demonstrate concrete, measurable increases in grid resilience and service continuity should be the scope of any major project proposal. The re-conductor that partially defines this project is an excellent example of such a reliability-first priority.
Of equal importance is the ability of a project to help avoid political challenges that have already been identified with rising electricity costs. While this news release does not outline the details, this low-interest LPO financing could relieve cost pressures that would otherwise be reflected in AEP customers’ bills.
And yes, you can find both of these terms in the release that reap the benefits of many of these canceled plans, but their importance and focus in this update is really different. This means that the messaging and focus for these topics must be kept in mind. This is evidence that projects designed to make an impact in these areas should be expedited and packaged for potential federal funding.
What this focus means for long-term energy trends in the United States is an entirely different issue, and there is an endless supply of commentary outlining positions at each end of the spectrum. I would leave such musings to others, and instead ask what the reliability and affordability of your current project pipeline and communication strategy is. Are they currently being prioritized? Or with other topics of equal importance?
These are questions that need to be asked and fully answered for both internal and external purposes, as this news is a testament to the support that can come from the federal level when they are addressed. And it’s further proof that the eternal utility challenge to keep costs down while ensuring the lights are on is the same as before, but now even more focused and specific.
