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By Ucilia Wang

National Grid (NYSE:NGG) plans to improve its electric transmission networks in New York and New England by investing $1.7 billion in the next five years.

Two companies will benefit from this upgrade: NorthEast Power Alliance and New Energy Alliance. National Grid is lining up the two companies to engineer and build substations and transmission lines. The companies expect to sign contracts by April 1.

Upgrading and expanding a transmission network is expensive, the kind of project that power companies can be reluctant to take on. Power companies often run into strong opposition over the locations of transmission equipment and the costs, which are passed on to ratepayers (see California Oks Controversial Transmission Project).

Annual investments in transmission lines fell from $5.5 billion in the early 1970s to less than $3 billion in the 1990s, according to the U.S. Department of Energy (see Wind Power Waiting on Transmission-Line Boom).

The country's growing demand for electricity and an increase in solar and wind power generation have highlighted a need to strengthen the country's transmission networks (see Texas Wind Farms Paying People to Take Power).

National Grid, whose stock is listed on the London Stock Exchange and the New York Stock Exchange, is the largest power producer in New York, the company said. It delivers power to 3.3 million customers in New York, Massachusetts, New Hampshire and Rhode Island. It also delivers natural gas to 3.4 customers in the same region.

Last October, National Grid filed papers with the Massachusetts Department of Public Utilities to develop up to 50 megawatts worth of solar power plants by 2010.

NorthEast Power will work on the transmission project in New York. The company is a joint venture of AMEC, Michels and RG Vanderweil Engineers.

New Energy Alliance will tackle the New England project. The company is a joint venture of Balfour Beatty Infrastructure and Quanta Services' M.J. Electric.

Source: National Grid Plans $1.7B for Electric Transmissions in New York, New England