Four years after approval, MISO’s first competitive transmission project last week began transporting power in Southern Indiana and Western Kentucky.
LS Power’s Republic Transmission and partner Big Rivers Electric constructed the nearly 31-mile, 345-kV Duff-Coleman transmission project after their bid was selected by MISO planners in 2016.
MISO spokesperson Allison Bermudez said the project is now estimated at a total $64.9 million, noting that it will be a few more months before there is a final tally. The total project cost includes the costs of Vectren and Big Rivers Electric to expand their substations to accommodate the project, which weren’t included in Republic’s original proposal.
Republic’s original $49.8 million proposal — in 2016 dollars — was selected over 10 other developers’ bids. (See LS Power Unit Wins MISO’s First Competitive Project.) MISO originally placed a $59 million planning-level estimate on the work.
Republic’s bid contained caps on project implementation, inflation rate, return on equity (9.8%) and capital structure (45% equity). It did not cap operations and maintenance costs or offer rate concessions.
According to MISO information, Republic experienced a nearly $4 million increase due to construction cost estimates that were more expensive than anticipated and to acquire right-of-way rights. Vectren also recorded a $700,000 cost increase for an additional 345 kV breaker and for a 138 kV line relocation necessary for the Duff Substation expansion.
Republic did not respond to a request for comment about the cost increase. The increase was less than the 25% that would have triggered a MISO variance analysis, which would have provided a public record of cost overruns.
“The culmination of this project and its transition into operations ahead of schedule and within our cost commitments demonstrates the benefits that can be realized by consumers through FERC Order 1000 competitive transmission processes,” LS Power President Paul Thessen said in a MISO press release. “We appreciate the efforts of MISO, project participants Hoosier Energy and Big Rivers, and interconnecting transmission owner, Vectren, to make this project a success.”
MISO estimates the project will provide $1 billion in benefits to its central region over the next two decades.
Originally scheduled for completion in January 2021, the line was energized six months ahead of schedule Thursday, as Republic officially became a MISO transmission owner.
“New transmission-owning members bring diversity to our footprint, and the competitive transmission process allows us to work with our members to identify projects that create value for the entire bulk electric system,” MISO Executive Director of Systems Planning and Competitive Transmission Aubrey Johnson said. “Our existing member companies collaborated with Republic and MISO to bring this project to fruition.”
