Monday, December 8, 2008

Infrastructure: US FERC approves incentives for transmission lines

First up. from Reuters:
The U.S. Federal Energy Regulatory Commission has approved rate incentives for two power transmission projects that would transit wind power, FERC said on Wednesday.

The proposed projects include the $500 million, 170-mile, 765-kilovolt (kV) Tallgrass Transmission project in Oklahoma and the $600 million, 230-mile, 765-kV Prairie Wind Transmission project centered near Medicine Lodge, Kansas.

Tallgrass is owned equally by a subsidiary of OGE Energy Corp (OGE: Quote) and a joint venture called Electric Transmission America, which is owned by units of major utility parents American Electric Power (AEP: Quote) and MidAmerican Energy Holdings Co, owned by Berkshire Hathaway (BRKa: Quote).

OGE is a holding company for Oklahoma Gas and Electric Co.

Tallgrass is expected to be completed by 2013 and construction to begin before 2010. Prairie Wind is expected to open by the end of 2013.

Prairie Wind is a limited liability company owned equally by Westar Energy Inc (WR: Quote) and the AEP-MidAmerican venture called Electric Transmission America....MORE

MarketWatch had details of the deal:

...FERC approved the following rate components:

--  A return on equity of 12.8 percent which includes incentive adders for
participation in the Southwest Power Pool (SPP) and investing in new
transmission facilities that will reduce the cost of electricity and
promote the public interest by providing for the interconnection and
delivery of renewable generation in the SPP;

-- The inclusion of 100 percent of construction work in progress (CWIP)
in rate base during the development and construction period of the project
after the formula rate becomes effective;

-- The recovery of prudently-incurred investment costs in the project in
the event that the project must be abandoned for reasons outside the
company's control;

-- And, regulatory asset treatment of pre-commercial expenses not
included in CWIP that have been incurred to date, as well as expenses
incurred going forward until the formula rate becomes effective.

FERC set aside for hearing the establishment of the formula rate and
associated protocols.

"This is a significant milestone in our plan to build the first
765-kV line west of the Mississippi River
," said Kelly Harrison,
president, Prairie Wind Transmission, and vice president,
transmission operations and environmental services, Westar Energy.
"The new line will provide reasonably priced and reliable electricity
to customers, better access to renewable generation, significant
environmental benefits and value to shareholders."