By Amanda Durish Cook
ALLETE won FERC approval last week for rate incentives on the Great Northern Transmission Line between Manitoba and Minnesota.
FERC’s order allows ALLETE to recover 100% of construction work in progress (CWIP) for the 220-mile, 500-kV line. It also will recover all of its “prudently incurred” costs if the project is abandoned or canceled due to factors beyond ALLETE’s control (ER16-118).
“Including 100% CWIP recovery in the rate base will provide ALLETE with steady cash flow during the construction period, protecting ALLETE’s financial metrics and relieving downward pressure on its credit rating,” FERC explained.
The commission said that using CWIP recovery as opposed to employing allowance for funds used during construction (AFUDC) would help “insulate” ALLETE’s ratepayers against sticker shock. FERC also said ALLETE’s proposed accounting and tracking procedures are “sufficient” to ensure that customers won’t be double-charged under the recovery and AFUDC.
According to FERC, ALLETE claims the Great Northern project “presents substantial physical risks and challenges because it is a large new cross-border transmission project that requires dozens of federal and state permits and local coordination.”
ALLETE’s Minnesota Power is building the southern portion of the line, which will run from the Minnesota-Manitoba border to the Blackberry Substation near Grand Rapids, Minn. It has yet to secure right-of-way easements and faces opposition from affected landowners.
The project has already undergone one re-siting, since the original proposed border crossing route was rejected following a review by state and federal agencies. “ALLETE argues that it may face similar siting challenges as [siting] proceedings progress,” FERC said.
The line will primarily deliver hydropower from Manitoba Hydro, which will own 49% of the project and pay $558 million to $710 million of the total cost. Minnesota Power will own the remaining 51% and estimates its cost at $158 million to $201 million.
The line is projected to go into service in 2020.
