December 6, 2012 / 1:35 PM / 5 years ago

PJM approves nearly $1 bln in U.S. power transmission upgrades

* More transmission needed as coal power plants retire

* Natural gas plants displacing older coal units

* PJM OKs $4.7 bln in transmission upgrades in 2012

Dec 6 (Reuters) - The operator of the U.S. Mid-Atlantic and Midwest power grid approved nearly $1 billion in additional electric transmission upgrades to help maintain reliable power supplies.

In a release late Wednesday, PJM Interconnection, which serves 60 million people in 13 states and the District of Columbia, said its board has now authorized $4.7 billion in transmission projects in 2012.

“The regional transmission expansion planning process keeps us on a steady course of focusing on long-term reliability even amid a sea of changes like those we’ve seen this past year,” Terry Boston, PJM president and CEO, said in a release.

“We’ve seen announced retirements of almost 16,000 megawatts of generation and a dramatic shift toward an increase of natural gas-fired generation,” he said.

One megawatt can power about 1,000 homes.

Most of the retiring units are older and smaller coal-fired plants which can no longer compete with more efficient and cheaper to operate natural gas plants since gas prices are lower than coal in many regions.

The operators of the coal plants have said it does not make economic sense for them to spend tens of millions of dollars to upgrade emissions control systems at the older units to meet the latest federal and state environmental rules because the units don’t run that much anymore.

Natural gas, which posted a decade-low price earlier this year, has been selling below its 10-year average of almost $6 per million British thermal units (mmBtu) for almost three years due to a boom in shale gas production. Natural gas was trading at about $3.70 per mmBtu Thursday morning.

PJM said the transmission plan includes a variety of projects throughout the region, including improvements and changes to substations, transformers and other existing facilities.

Since the grid operator’s formal transmission planning process began in 2000, PJM said its Board has authorized $23 billion in transmission additions and upgrades.

The biggest power companies in PJM include units of Duke Energy Corp, Exelon Corp, FirstEnergy Corp , American Electric Power Co Inc, Dominion Resources Inc and Public Service Enterprise Group Inc .

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