By Amanda Durish Cook
LS Power’s Republic Transmission last week won FERC approval for incentives to construct MISO’s first competitively bid transmission project.
FERC granted Republic’s requests for a return on equity adder of 50 basis points for participating in an RTO for the Duff-Coleman transmission project. The commission also approved the company’s request for recovery of prudently incurred costs if the project is abandoned for reasons beyond Republic’s control and use of a hypothetical 55% debt/45% equity capital structure until commercial operation (EL17-52).
FERC noted that its approval of the adder is subject to the overall 9.8% on ROE cap Republic promised in its project proposal.
MISO selected Republic’s $49.8 million proposal for the 30-mile, 345-kV line in Southern Indiana and Western Kentucky in December. (See LS Power Unit Wins MISO’s First Competitive Project.)
FERC backdated the rate approval to May 15. While FERC was without a quorum for six months, Republic begun developing the Duff-Coleman project under the assumption that it would receive all requested incentive rates.
“Republic’s investors entered into the selected developer agreement and agreed to rate concessions with an expectation that the project would qualify for, and receive, the limited incentive rates requested prior to the expenditure of significant funds,” FERC said. The commission also found that MISO’s 2015 Transmission Expansion Plan established that the project will deliver cost benefits by relieving congestion and improving reliability, a requirement of incentivized rates under Order 679, which established incentive-based rates for transmission development over a decade ago.
For the remainder of 2017 and most of 2018, Republic will work on project design, environmental permitting and securing rights of way. Construction is slated to begin the fourth quarter of 2018.
Republic said it expects to encounter “construction risks and challenges,” most notably acquiring federal permitting to cross the Ohio River.
