Several recent complaints involving PJM and now at FERC pose fundamental questions on how regulators and grid operators should attempt to price and allocate grid rights and costs. Is the...
Titans of Transmission
ITC and AEP jockey for the lead in building the grid of tomorrow.
companies to build a transmission line within its franchise territory, and then choose whether or not to build the line as its own rate-based asset.
In other words, once a grid project is out there in the public domain, competing for scarce capital and expressions of interest from wind energy developers and others who might want to subscribe to, or gain access to, the promised capacity, the project sponsors remain very much at risk, and could well confront a competing or parallel project that moves in after the fact and seeks to share the same market.
And that’s precisely what has happened to ITC’s Great Plains subsidiary, which has been working with Sunflower Electric Power Co-op. and Mid-Kansas Electric Co. on a new package of interconnected transmission facilities across Kansas and Oklahoma, within the Southwest Power Pool.
In December, ITC had seen its plans overtaken and possibly trumped by twin projects, known as Tallgrass and Prairie Wind, which mirrored ITC’s planned lines.
Tallgrass Transmission LLC and Prairie Wind Transmission LLC are partnerships formed by Electric Transmission America (ETA), a joint venture formed between subsidiaries of American Electric Power and MidAmerican Energy Holdings. OGE Energy Corp. also joined with ETA on the Tallgrass project. On the Prairie Wind project, ETA is joined by Westar Energy (see www.tallgrasstransmission.com; www.prairiewindtransmission.com).
But the point to remember is that while the Tallgrass and Prairie Wind projects won generous financial incentives from FERC under Order 679, despite the fact that ITC’s projects appear somewhat farther along, and also in spite of certain unproven allegations that have injected a hint of bad blood into the case—a native utility with contrary interests took steps to delay the ITC project by sitting on its right of first refusal (see, Dkt. Nos. ER09-35, ER09-36, Dec. 2, 2008, 125 FERC ¶61,248) .
The case developed after SPP had proposed the idea of a comprehensive regional “overlay” of large-scale 345-, 500- and 764-kV (or even higher) lines to transform the regional grid and address long-term transmission needs, and had commissioned a study from Quanta Technology LLC, published in June 2007 and updated in March 2008. That study evaluated the effects of increased wind energy development on the SPP system, and developed and compared four basic overlay designs, including what became known as the SPP “X-Plan,” describing an x-shaped pattern of new grid lines in Oklahoma and Kansas to meet long-range needs for the region (reliability and interregional power transfers) and would add new West-to-East transfer capacity to deliver wind energy to load centers, such as Oklahoma City, Wichita, and Little Rock.
Seeking to design grid projects that would mesh with SPP’s long-range vision, ITC Great Plains sought and won certification from the Oklahoma Corporation Commission as that state’s first transmission-only utility, with authority to construct, own, and operate grid lines in Oklahoma (O.C.C. Final Order 559350, Sept. 11, 2008) . It also won approval for another leg of the X-Plan from the Kansas Electric Transmission Authority (the “KETA Project” segment) and had sought certification of the final segment (the “Kansas V-Plan”) from state