The Federal Energy Regulatory Commission (FERC) has approved rate incentives for two transmission projects proposed by Tallgrass Transmission LLC and Prairie Wind Transmission LLC to be built in the Southwest Power Pool Inc. (SPP) region, but set the companies' formula rates and rate protocols for hearing. These transmission projects will allow for a significant expansion in wind electricity generation in the south central U.S.
Tallgrass is owned equally by OGE Transmission LLC, a subsidiary of OGE Energy Corp., and Electric Transmission America. Tallgrass proposes to build a two-segment, $500 million 765 kV transmission project in Oklahoma. The segments run separately from Woodward, Okla., to the Texas and Kansas borders.
Tallgrass' Kansas border project would interconnect with Prairie Wind's $600 million, 230-mile 765 kV project, centered near Medicine Lodge, Kan. Prairie Wind is a limited liability company owned equally by Westar Energy Inc. and Electric Transmission America.
The companies asked for identical formula rates with implementation protocols to recover their projected costs under the SPP tariff, subject to true-up, as well as a 13.3% return on equity that includes 2.5% in incentive adders for participation in a regional transmission organization, new technology and investing in substantial new transmission facilities that will provide for interconnection and delivery of renewable generation in SPP.
FERC determined that the projects are eligible for incentive rate treatment because they are pursuing projects that have been recommended through independent assessments of the long-term needs of the entire SPP region. Regardless of the potential for competing projects, FERC said its policy is to review each request for incentives on its own merits.
The projects also demonstrate a nexus between their proposals and the requested incentives based on their scope, effects, risks and challenges. FERC noted that the 765 kV projects are exceptional, as they will facilitate the interconnection and transport of at least 5,800 MW of the roughly 40,000 MW of new renewable power currently in SPP's queue, with the potential for the interconnection of additional renewable power that is now constrained by the limitations of the transmission system.
SOURCE: Federal Energy Regulatory Commission
