Money may be difficult to come by for Wall Street financiers in these dark days, but apparently not for electric transmission construction—at least so far. A rash of recent orders from FERC shows...
Consultant Ed Krapels makes waves with undersea transmission.
1999, we thought we would just start the project, and then sell it to somebody. For a consultant, that’s not an unusual thing to do.
Fortnightly: And this was back when you first started to think about the Neptune project?
Krapels: Yes. We spent time and money developing the concept. We had an open season, you may recall, which we launched on Sept. 10, 2001. But we actually did have a successful open season. In other words, we had customers for some of the lines of the original big Neptune project, which had something like 80 different links. And we were negotiating a contract with the major winner [when] Enron imploded. The company that we were negotiating with was not Enron, but it was a big power-marketing company, and in all the fallout we lost the ability to use their credit as a source of financing.
So we wound up owning a project that didn’t have a customer. But a year later, LIPA issued its RFP, and we bid into that RFP and were selected in a very competitive process. With that selection, we wound up not selling the project, but rather, [we] had attracted investors. After that, we started thinking about doing a couple more.
Fortnightly: Before you became a power consultant, were you ever a project manager who got your fingernails dirty doing real work?
Krapels: Nope. This is the first time. But I have to be honest. Getting the fingernails dirty is not the part that I do. In the original Neptune team we had five partners; among them were lawyers, engineers, and project-manager types. I was always the economist and the connect-the-dots guy … the guy to look at all the potential projects that we might do to try to select the ones that make the most sense. I’ve probably looked at 50 projects in the last two or three years, but we’re only involved in three.
Explaining the overall economics, with the market impacts and the regulatory structures, you need one person to throw a net over the whole picture—with a whole lot of sense about everything, and not a lot of sense about anything in particular. Transmission really lends itself well to that kind of thinking.