The Department of Energy on Friday said it will participate in a first-of-its-kind partnership with a Houston company to develop a $2.5 billion wind energy superhighway from the Oklahoma Panhandle to the southeastern United States.
The federal government's involvement in Clean Line Energy Partners LLC's 700-mile transmission line represents the first use of a previously untested provision of the Energy Policy Act of 2005 intended to help overcome barriers to siting interstate electricity infrastructure projects.
The Plains & Eastern direct-current line would provide a pathway for 4,000 megawatts of low-cost wind energy from the Oklahoma and Texas Panhandle area to the Southeast, where there is currently little wind energy penetration. Clean Line would deliver 500 MW in Arkansas and the rest to a substation near Memphis, Tenn.
Michael Skelly, Clean Line's co-founder and chief executive, said the decision paves the way for construction of the line starting next year.
The wind industry and other supporters hailed DOE's decision as an economic boon that will bring thousands of construction jobs to Arkansas and Oklahoma and millions of dollars in tax and economic benefits to the region.
The line also will be key to helping inject the Southeast with clean energy on a large scale and reducing dependence on coal and natural gas, a move that takes on added significance if the courts uphold U.S. EPA's Clean Power Plan to reduce power-sector carbon emissions.
"High-voltage, direct-current transmission projects that allow for the import of substantial quantities of low-cost wind power are an important component of the clean energy strategy for utilities in the Southeast," said Simon Mahan, director of the Southern Wind Energy Association.
But just as Plains & Eastern has stoked enthusiasm among environmentalists and renewable energy advocates, it has also stirred anger among farmers and rural landowners opposed to giving a merchant transmission company the right to use eminent domain.
Involvement from the Obama administration has only heightened political tension over the federal government's role in the buildout of infrastructure to improve access to renewable energy.
Utility regulators' rejection fueled federal involvement
Clean Line's decision to seek federal participation in the project follows failure to win approval from utility regulators in Arkansas five years ago.
In a 2011 ruling, the Arkansas Public Service Commission determined the company didn't qualify for a certificate to build the line because it didn't meet the statutory definition of a public utility. And with no assets and no customers, Clean Line couldn't achieve designation under Arkansas law.
In an interview with EnergyWire, Skelly said the company decided to seek approval under Section 1222 of the Energy Policy Act rather than lobby to change the decades-old definition of a public utility in Arkansas. "Changing laws is quite a Herculean task," he said.
The provision in the federal law, signed by President George W. Bush, allows the Energy secretary to act through a federal marketing administration to build and operate new transmission projects within the administration's footprint if the project meets certain criteria, including reducing congestion or meeting electricity demand.
While the language mainly provides a funding mechanism that allows a third party to pay for the process, it has stirred opposition because it allows the federal government to advance a power line over state objections.
"I think 1222 is pretty clear that Congress intended to give DOE authority here that's more expansive than the authority federal regulators normally have" as long as the agency is working with certain federal entities involved in the supply of energy in the interstate market, said Jim Rossi, professor of law at Vanderbilt Law School in Nashville, Tenn.
In Friday's announcement, DOE said the Plains & Eastern project addresses a previously identified infrastructure challenge.
"Moving remote and plentiful power to areas where electricity is in high demand is essential for building the grid of the future," Energy Secretary Ernest Moniz said in a statement. "Building modern transmission that delivers renewable energy to more homes and businesses will create jobs, cut carbon emissions, and enhance the reliability of our grid."
Next step: customers
With regulatory approvals in place, Clean Line still needs suppliers and customers on the other end that are willing to enter long-term agreements for the energy.
Skelly said Clean Line will need agreements in place representing about half of the line's capacity -- about 2,000 MW -- in order to obtain project financing. And he is confident that won't be a problem.
Wind developers with rights to more than 16,000 MW of projects in southeast Kansas and the Oklahoma and Texas Panhandle have signaled interest in the project under a 2013 request for information by Clean Line.
"There's plenty of supply," Skelly said. "But they can't build those projects today because there's no way to get to market."
There is also strong interest among Southeast utilities and large energy users such as data centers and manufacturers, which seek access to clean, low-cost energy with no fuel price risk, he said.
The Tennessee Valley Authority has 1,800 MW of wind under contract and is planning for an additional 500 to 1,700 MW as part of its long-term energy plan. But executives previously said it was premature to fully incorporate the Plains & Eastern project into forecasts.
A TVA spokesman on Friday confirmed that the utility has been working with Clean Line and will continue assessing the transmission project.
"It certainly looks to be a potentially valuable option for our customers and residents," said TVA's Jim Hopson. How the line would interconnect with TVA's grid and the cost of a long-term purchase agreement are key factors.
"I know the technical reviews are ongoing," he said. "Our goal is to always look for those reliable, low-cost options that will allow us to best serve our customers."
Another large Southeast utility, Georgia Power, has a 20-year agreement to buy 250 MW of wind from Oklahoma. But the utility also told regulators last year that its review of wind projects from which it could buy electricity would not work for various reasons.
Opposition sees 'unprecedented executive overreach'
As the Clean Line project becomes more viable, that may renew a push from renewable energy advocates to compel Georgia Power to take another look.
Clean Line officials also know that DOE participation won't silence opposition. Within hours of Friday's announcement, Arkansas' congressional delegation issued a statement attacking the decision as "a new page in an era of unprecedented executive overreach."
"Despite years of pushback on the local level and continuous communications between our delegation and Secretary Moniz, DOE has decided to forgo the will of the Natural State and hand over the historic ability of state-level transmission control," the Republican congressmen said in a statement.
Skelly, however, downplayed the significance of the federal government's role in interstate transmission projects.
"The federal government is involved in transmission and infrastructure siting around the country," he said, citing the government's role in siting and approving interstate natural gas pipelines.
The federal government played a big part in developing the bulk power grid across large swaths of the rural West.
"I think it's a mistaken notion that the federal government isn't involved in transmission," Skelly said. "The notion that this is unprecedented doesn't square up with the way the grid has been built and the way it will be built."
DOE's decision drew attention not only in Arkansas and Oklahoma, but throughout the Midwest. That's because Clean Line is developing two other long-haul transmission projects originating in Kansas and Iowa.
Clean Line's bid to get approval for the Grain Belt Express project, a 770-mile line from southwest Kansas to Indiana, was turned down by Missouri regulators last year (EnergyWire, Jan. 27).
While the project could be a candidate for federal participation under Section 1222, Clean Line will first seek to obtain state approval by refiling its application with the Missouri Public Service Commission.
Opponents of the Grain Belt project took note of DOE's decision and said they'll continue to fight the project regardless of whether it's at the state or federal level.
"If Clean Line attempts to override the clear majority vote of the Missouri PSC and the vast majority of impacted and nonimpacted landowners, they will be in for a major fight," said Jennifer Gatrell, a spokeswoman for the opposition group Block Grain Belt Express. "We will never allow the precedent to be set that a private company can gain the right of eminent domain for their private gain."
Reporter Edward Klump contributed.
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