Huge ‘Green Power Express’ Wind Grid Gains Federal Rate Incentives

Joe Romm
April 16, 2009 PM

Wind power is coming of age as the U.S. becomes the global wind leader and probably the biggest source of new jobs in the energy industry. I previously wrote about ITC Holdings’ plans to build a $10 to $12 billion power transmission network to move 12,000 megawatts of electricity from the Dakotas, Minnesota and Iowa to the Chicago area (see here, click on figure to enlarge).

Now this network has received a huge regulatory boost The Federal Energy Regulatory Commission (FERC), as Energy Daily reports:

Turning aside concerns from several state regulators and utilities across the Midwest, FERC announced Monday it has approved all of the rate incentives requested by ITC Holdings Corp. for its massive Green Power Express transmission project, providing a solid financial underpinning for the 3,000-mile line meant to deliver wind power from the Dakotas to Chicago.

The unanimous order by the Federal Energy Regulatory Commission means ITC affiliate Green Power Express LP can earn a relatively comfortable 12.38 percent return on equity (ROE) for the high-voltage line, which has a planned capacity of 12,000 megawatts.

FERC’s action also provides other key financial protections for the proposed line, including giving Green Power the right to bill ratepayers for development costs even if it has to abandon the project for reasons beyond its control.

The Green Power rate requests are not unusual, and in fact are similar to those requested of FERC by other utilities proposing major new interstate power lines that qualify for rate incentives authorized by Congress to expand the nation’s electricity grid.

But FERC’s decision Friday is important because it significantly improves the odds that Green Power—the largest new power line planned in the country—will get built…

FERC’s order is also notable because it was unanimous. In past transmission rate cases, Commissioner Suedeen Kelly and new FERC Chairman Jon Wellinghoff frequently parted ways with the commission’s three Republicans, saying the GOP commissioners were too generous in doling out higher rates for projects that were not big or important enough to the grid to deserve them.

Wellinghoff is a key player in enabling the smart, green grid (see “Another key climate and clean energy pick by Obama: Wellinghoff for Energy Commission Chief“). Here is his comment on the decision, from Greenwire (subs. req’d):

“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.”

Even with this FERC action, the plan has a long way to go:

Even with the new rate approvals, however, Green Power has significant hurdles yet to cross. ITC itself has said that it thinks the project will not be approved under the existing U.S. system for siting interstate transmission projects because states and local utilities can block them too easily.

Instead, ITC says that larger-scope planning processes must be started to recognize the region-wide benefits of large transmission projects, and that the federal government should have more authority to trump states on siting decisions, under certain situations.

Congress is currently mulling several bills that would move in that direction in order to expand the U.S. high-voltage power grid to help deliver renewable power from remote locations to high-demand centers.

Again, it is urgent that Congress pass energy and transmission legislation this year — another reason to split the current energy and bill the House is considering into two bills.

Still, this is a big step forward — kudos to FERC!