Comparing Interstate Regulation and Investment in US Natural Gas and Electric Transmission

The interstate electric and natural gas sectors in the United States share some common regulatory elements, although the simpler economics of network expansion in gas pipelines allow the industry to operate on a contract-based framework that would be highly inefficient in electric transmission. The strong incentives for new pipeline development have allowed new gas pipeline infrastructure to be built quickly. Federal policymakers have created a range of policies to encourage new regulated electric transmission investment, but actual investment levels have remained relatively low. Recent experience suggests that cost allocation for multi-jurisdictional electric transmission projects remains a key issue.