A 3,000-mile transmission project that would bring wind-powered electricity from North Dakota to Chicago, Minneapolis and other cities can proceed after getting federal approval today of rate incentives for the seven-state project.
ITC Holdings Corp.'s "Green Power Express" would cost $10 billion to $12 billion and carry 12,000 megawatts aimed at reducing congestion, improving transmission reliability and strengthening aging electricity infrastructure. But the project has faced regulatory snags (ClimateWire, Feb. 12).
The Federal Energy Regulatory Commission approved the transmission-investment incentives for the project, saying it would provide benefits such as improved transfer capability and access to wind power generation.
The commission approved the company's request for an incentive return on common equity of 12.38 percent. FERC also approved deferred recovery for startup, development and pre-construction costs through the creation of regulatory assets; the inclusion of all the construction work in the rate base; abandoned plant treatment; and the use of a 60 percent equity and 40 percent debt capital structure until any part of the project is placed in service.
Michigan-based ITC now will work with the Midwest Independent Transmission System Operator Inc. to complete a review of the project and to determine a cost-allocation mechanism that accounts for all the far-reaching benefits of the project, according to the company.
"This is an exciting step in the process of connecting clean, renewable energy sources from wind-rich areas to urban locations where it is needed," said Joseph Welch, chairman, president and CEO of ITC, in a statement. "We are pleased that FERC recognizes the importance of investing in the nation's high voltage transmission grid as a mechanism to support renewables."
In granting the approval, FERC Chairman Jon Wellinghoff noted the importance of investing in new transmission infrastructure to meet renewable energy goals, and he said building such projects will require planning beyond the needs of a single utility, state or region.
"Meeting our nation's energy goals will require developing extra-high voltage transmissions infrastructure that is needed to bring clean, renewable energy from areas where it is produced most efficiently to areas where most of our nation's power is consumed," Wellinghoff said in a statement. "The commission is examining the adequacy of transmission planning processes and is committed to working with transmission providers and state and regional entities to provide consumers with greater access to renewable resources."
ITC has urged Congress to update rules that govern transmission development to allow projects like the Green Power Express to move forward in time to meet growing demand (E&ENews PM, March 2).
"The Green Power Express Project will be a crucial tool for connecting abundant wind power with the population centers that demand it," Welch said. "We are confident that the FERC will continue to work with ITC to make this historic and ambitious project a reality."