Converter stations function as on- and off-ramps; generators connect to the on-ramp and load- serving entities receive low-cost wind power at off- ramps

Clean Line will sell transmission service to shippers via long term transmission contracts - Those who use the line, pay for it

Clean Line Energy has lined up firm commitments for about 100 MW thus far, but it has term sheets for more than 3,500 MW that outline key terms for negotiating with customers following DOE’s decision, Kottler told TransmissionHub.

Although the project has a couple agreements with utilities to take wind power through the transmission line if it is built, many utilities and interested companies have been waiting for DOE’s ruling before making such commitments, Michael Skelly, president of Clean Line Energy said during the March 25 conference call.

“We’re seeing vast and strong indications of interest” and Clean Line Energy will firm up commercial support for the project in the coming days and weeks, with the DOE decision an essential part of moving those discussions along, Kottler said.

Many parties in the Southeast have been waiting for DOE’s decision to reach a deal with wind project developers, Skelly said during the conference call. During a 2014 solicitation, more than 15,000 MW of wind projects expressed an interest in using the Plains & Eastern project to move energy to markets in the South and Southeast, he said.

Plains & Eastern can transport market power when the wind is not blowing
Average line utilization from wind power will be around 60%
Remaining capacity available for SPP market power delivery to MISO or PJM
Possible use of unused capacity:
• Solar
• Arbitrage opportunities

the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

Arbitrage opportunities exist between RTOs that are connected through P&E even when including additional transmission service

Utilizing unused capacity to take advantage of these arbitrage opportunities create additional value to the owner of the transmission capacity

Market power arbitrage could yield up to $60 million a year, assuming perfect execution on unused capacity up to 1000 MW of OK-TN service and 500 MW of OK-AR service over the entire project

Positive market power price differentials are valuable when delivering SPP power to PJM or MISO, whichever is higher priced, including non-firm transmission costs and losses, and negative differentials are valuable when delivering PJM or MISO power, whichever is lower priced, to SPP including non-firm transmission costs and losses

8.27 Renewable Energy Transmission. At any time during which any Transmission Services Agreements are in effect, the Clean Line Entities shall use all commercially reasonable efforts to ensure that at least 75% of the total Electrical Capacity covered by all Transmission Services Agreement that are then in effect to be covered by Transmission Services Agreements used for the transmission of renewable energy resources; provided that, to the extent the transmission of energy from non-renewable resources is required by Applicable Law (including pursuant to any open access tariff rules), such events would not render the underlying Transmission Services Agreement from being disqualified toward the 75% threshold.

This will be GE’s first HVDC project in the United States since acquiring Alstom’s energy portfolio last year. This addition to our portfolio was critical.

If the Companies determine in any annual PJM Base Residual Auction (“BRA”) that their combined capacity obligations for the delivery year covered by the BRA (“Delivery Year”) exceed the Companies’ owned or contracted-for capacity resources for the Delivery Year by 100 MW or more (“Capacity Shortfall”), then not later than the end of the calendar year following the BRA, the Companies will develop an RFP for capacity resources to address the Capacity Shortfall and submit the RFP to the Commission and the Parties for their review and comment. The RFP will allow proposals from both supply-side and demand-side resources.

Mon Power’s Long Term Load Forecast indicates a capacity shortfall starting in 2016, with the shortfall exceeding 700 MW by 2020 and extending to over 850 MW by 2027.

We will continue to seek opportunities both within the competitive realm and the states to further de-risk the business and convert megawatts from competitive markets to a regulated or regulated-like construct.

We also plan to work with the West Virginia Public Service Commission when they are ready to address the generation shortfall included in Mon Power's integrated resource plan.

So we previously filed the IRP. It showed a need for generation going out a couple of years from now. But that case right now is concluded. So there is nothing that would, unless we were to file something, initiate something, that would come out of that case. So we would be looking as we go forward and continue to monitor the forecast for that company to see how we might want to present something consistent with the IRP in terms of bringing additional generation to Mon Power.

Michael Lapides - Goldman Sachs & Co.

Got it. So there's no formal like RFP process that's about to kick off or that will be undertaken in 2016 or 2017?

Leila L. Vespoli - Executive Vice President, Markets & Chief Legal Officer

Correct. There's no time line associated with that. We would initiate it when we believe it to be the appropriate time.

The decisive regulator makes decisions (1) required by the public interest, (2) when the public interest requires it, (3) regardless of discomfort felt, (4) using a logical method and an active approach.

At this time, however, we do not see any short-term solutions to the current challenging market situation. Longer-term, we do not believe competitive generation is a good fit for FirstEnergy and are focused regulated operations. And we cannot put investors and our company at risk as we wait for the country and PJM to address the issues with the current construct.

The wind farm is a construction story, involving three of Rhode Island’s major ports — in Providence, Quonset, Point Judith — and more than 300 blue- and white-collar workers.

Jen McCann, the director of United States coastal programs at University of Rhode Island’s Coastal Resources Center, says the northeast is “considered the Saudi Arabia for wind.” J. Timmons Roberts points to the fact that Rhode Island imports more than $3 billion a year in fossil fuels to meet its energy needs. “So that’s $3 billion pouring out of our economy to Pennsylvania for fracked natural gas, or to Texas or Saudi Arabia or Venezuela,” he says. “Think of how many jobs you can make for $3 billion,” he says. The United States Department of Energy is already doing some of those calculations. In a recent report, the DOE has predicted the United States will have 32,000 offshore wind-related jobs by 2020 and more than 170,000 by 2050.

A wind resource map, published by the U.S. Office of Renewable Energy, illustrates the windiest real estate in America. A vertical violet streak down the nation’s midsection indicates persistent, intense winds concentrated in places like western Kansas, Oklahoma, and Texas. And a private company, called Clean Line Energy Partners, plans to tap that for electricity it can immediately transport to utilities requiring a bolus of alternative energy in their portfolios.  

Clean Line Energy Partners, LLC — established in 2009 and headquartered in Houston —  has laid out five 600-kilovolt, direct current power transmission lines across the U.S. CLEP aims to bolster our aging national power transmission grid starting with The Plains & Eastern Clean Line that's designed to deliver 4,000 megawatts of wind energy from western Oklahoma to the Tennessee Valley Authority for distribution to southeastern markets.

...Narragansett officials resisted plans for the wind farm’s cable to run underneath its town beach. Deepwater Wind, the company building the wind farm, eventually got clearance to send the cord under Scarborough State Beach instead.

The Grain Belt Express Clean Line wind energy project has made significant steps towards getting the final green light from the Public Service Commission.

“It wouldn’t make a lot of sense to build a line around Missouri,” Lawlor said, adding that he is confident the PSC will rule fairly on the merits of the project, not the factor. “They’re going to judge the case on its merits and whether it meets the standards that Missouri has under its statutes. They will ask, ‘Is there a need for the project and is it it in the public interest?’ We have put forth a strong argument that there’s a need.“

While Indiana and Illinois signed onto the project before Missouri, Missouri was always seen as the most integral partner of the project. Lawlor says that belief can cause some to believe Missouri would not get much benefit out of the project, even though Missouri would get roughly 500 MW from wind energy as a result.

“Some folks get distracted this is something going through Missouri, the reality is that this is delivering power to Missouri,” he said. “From day one, it was just going to be a Kansas to Missouri line, but we found the Missouri grid couldn’t take that much power.

“Missouri’s key to this whole thing and we hope and expect we can bring those benefits to the state,” Lawlor said.

A reporter attempted to interview Faughn about his companies’ money troubles. The Missouri Times is headquartered at 129 East High St. in Jefferson City. A reporter found Faughn there at the top of a two-story walkup, inside a darkened room resembling a lounge.

Faughn was standing behind a bar in the room with a laptop computer in front of him. Liquor bottles stood on shelves on the wall behind him. Black and white photos of politicians covered the other walls of the room.

Faughn declined a face-to-face interview. He said he would consider written questions sent by email. Questions were emailed March 17. Faughn acknowledged receiving them March 21, but said he could not respond until next week.

Faughn, the former mayor of Poplar Bluff, launched the Missouri Times in 2013 with former Missouri House Speaker Rod Jetton. Faughn was Jetton’s former campaign manager. Jetton has since severed ties with the operation.

FERC did show some recalcitrance and at least “appeared” to “withhold” the segregable portions of requested documents “merely to avoid embarrassment or frustrate the requester,” or simply to avoid the time-consuming work of separating information that could be properly withheld from information that could not.

The D.C. Circuit has instructed this court “to consider at least four criteria in determining whether a substantially prevailing FOIA litigant is entitled to attorney’s fees: (1) the public benefit derived from the case; (2) the commercial benefit to the plaintiff; (3) the nature of the plaintiff’s interest in the records; and (4) the reasonableness of the agency’s withholding.”

The PATH project is an example of a project that faced significant public opposition.

As part of its analysis of the public interest, the PSC acknowledged the substantial opposition to the project expressed by business owners, farmers, and individual landowners across whose properties the project was proposed to cross. The Missouri PSC noted, “In this case, the evidence shows that any actual benefits to the general public from the Project are outweighed by the burdens on affected landowners.”

The National Park Service, for example, required significant and expensive mitigation measures from the developers for the Susquehanna-Roseland project in order to gain its approval for completion of the portion of the line that crossed the Delaware Water Gap National Recreation Area, which it is mandated to protect.

The development of a transmission project is a commercial venture involving investors who are prepared to incur significant, yet ultimately limited, up-front development costs in return for the opportunity to earn future profits from the sale of transmission services and/or a regulated return on invested capital. Adopting a developer’s perspective enables us to look at the factors reviewed in this report as ones that affect either the cost or time required to construct a transmission project. The extent to which these factors represent barriers to the implementation of transmission projects is thus an assessment of whether these costs or time requirements are avoidable or necessary.

There are documented examples of project developers who have sought to reduce these costs and associated time requirements through up-front information sharing and joint (and early) development of mitigation approaches (including abandonment of early proposed and development of new routing options). The success of these activities has hinged largely on the extent to which they lead to meaningful engagement and tangible commitments to address public concerns over line routing.

The state-centric public-interest issue that arises most vividly for multi-state transmission projects involves the so-called “fly-over” states. These states are situated between the states that are the starting and ending points for a long-distance transmission project. The initial decisions by the Missouri PSC to deny the CPCN application for Grain Belt Express exemplify this issue. The public-interest issue raised by states in the middle is that, at bottom, they are being asked to bear significant portions of the cost or adverse impacts of a project, yet they do not believe they are being provided with sufficient opportunities to share in the benefits of the project.

The need to satisfy a middle state’s public-interest requirements is a classic example of what economists describe as the role and importance of “side payments.” In this instance, the gains from trade must be sufficient to cover side payments to affected parties who have standing but who would not otherwise benefit from the transaction. Thus, the situation faced by developers, such as those for the Grain Belt Express project, is tangibly and fundamentally (but not solely) commercial in nature. Notably, as discussed, the developers for Grain Belt Express recently reached an agreement to sell power from the project to an association of municipal utilities in Missouri and, based on this agreement, plan to re-file their request for state regulatory approval. It remains to be seen whether the fact of a Missouri entity signing an agreement that could be seen as demonstrating the public-interest value of the project in Missouri will result in the Missouri PSC approving the project on its third attempt in the state.

Developing a transmission project involves simultaneously managing two categories of commercial risk. One is the risk associated with securing the capital necessary to build the project. Eto (2016) focused on one example of capital risk: that associated with seeking regional cost allocation. The other category encompasses risks associated with the actual construction of a project. This report is focused on a key subset of these project-construction risks: the cost of satisfying the due process requirements of state and federal agencies involved in permitting and siting lines, which is often increased when there is organized public opposition to the project. These are necessary costs associated with transmission-line construction. Some can made more manageable through proactive actions by developers. Still others can be made more manageable through the actions of federal and state agencies to enhance the efficiency and accountability of their processes. Thus, while the project review process can be slow and add costs to project development, on the whole transmission lines are being built. Moreover, there are promising signs that both groups are taking actions to improve the processes, both in terms of their duration and the quality of the decisions that get made. We found examples of merchant transmission projects successfully gaining needed approvals and being constructed. Their experiences, in particular, suggest that if the economics of potential projects are sound, someone will find a way to build them.

Hibblen:  "So, I take it the property owners don't want to sell?"
Massey:  "Well, some of them don't want to sell.  And others sort of resent being forced to sell even though they may get a good price for the use of their land."

Massey:  "Well, the delegation would say the difference is that this is the benefit of private company that is Clean Line Energy Partners of Houston and it's a little different from an interstate in that Clean Line has not been declared a utility by the PSC so the Congressional delegation is framing this as an unprecedented partnership between the Department of Energy, which is backing this project, and a private company."

Hibblen:  "What would be the benefits of this project?"
Massey:  "Well there would be a few jobs in maintaining the line, but the main benefits would be to the landowners."

"But the big number is the $147M in taxes that would flow to the 12 counties that the line crosses."

Hibblen:  "Are the landowners and Clean Line talking possible settlements?"
Massey:  "Clean Line is negotiating with individual landowners and they have commitments with a great many of them as I understand it."

"So I think a great many people find this attractive and would be happy to have the money for the line coming through their land.

Rock Island does not own, control, operate, or manage assets within the State. In testimony before the Commission, Rock Island admitted that the project was in the planning stages and that it would only pursue construction if the company determined that it would be profitable in light of future market developments and financial support. Rock Island currently does not own any transmission assets in Illinois, nor does it have any agreements for service with renewable energy generators in this state. While the potential may exist for generators to purchase service on the line, no Illinois generators have agreed to use the proposed line.

The standard of review of the Commission’s findings of fact is deferential. Orders of the Commission are deemed prima facie reasonable, and the Commission’s findings of fact are deemed prima facie true. 220 ILCS 5/10-201(d) (West 2012). The Commission’s findings of fact may only be overturned if they are against the manifest weight of the evidence. Apple Canyon Lake Property Owners’ Ass’n v. Illinois Commerce Comm’n, 2013 IL App (3d) 100832, ¶ 57.

The Commission’s interpretation of statutory standards is also entitled to deference; however, reviewing courts are not bound by its interpretation of law. Citizens Utility Board v. Illinois Commerce Comm’n, 166 Ill. 2d 111, 121 (1995). The Commission’s interpretation of a statute is reviewed de novo. Commonwealth Edison Co. v. Illinois Commerce Comm’n, 398 Ill. App. 3d 510, 522 (2009). Where governing statutory language is clear and unambiguous, it must be applied as written, and there is no need to resort to extrinsic aids. Illinois Bell Telephone Co. v. Illinois Commerce Comm’n, 362 Ill. App. 3d 652, 657 (2005). Courts will not defer to an
agency’s construction where the statute is clear because “an interpretation placed upon a statute by an administrative official cannot alter its plain language.” Burlington Northern, Inc. v. Department of Revenue, 32 Ill. App. 3d 166, 174 (1975).

In reaching our conclusion, we acknowledge the Commission’s position that public utility status is not a prerequisite to seeking a certificate of public convenience and necessity under sections 8-406(a) and (b). The Act does not require an applicant to be a public utility before it seeks certification under the appropriate provisions. A plain reading of the statute shows that an applicant may seek public utility status while, at the same time, applying for a certificate of public convenience and necessity to transact business and construct facilities. See 220 ILCS 5/8406(a), (b) (West 2012). In this case, the issue is whether jurisdiction was properly conferred
based on the Commission’s decision that Rock Island was a public utility. We conclude that it
was not.

Further, the Court ignored that it is perfectly logical for Rock Island to have no service agreements with customers before receiving its CPCN. Not only did §8-406 prohibit Rock Island from transacting utility business before receiving a CPCN, but customers will not contract for service on a transmission line that does not have regulatory approvals. Rock Island could not even establish pricing for its service before receiving its CPCN, since the ICC must approve a route for the line and could impose requirements with potentially major cost impacts – such as requiring that a
longer route, or one crossing more difficult terrain, be used, thus increasing the costs to construct the Project and provide the service.

The Appellate Court also seems to misunderstand the physics of the transmission
system. The Project will deliver all of the electricity into Illinois, where Illinois consumers will consume some portion of the electrons. The uncontested facts in the record show that Rock Island’s equipment will convert the electricity from direct current transported on the Project into alternating current in Grundy County, Illinois, where the current will be injected into a transmission network owned by Commonwealth Edison and controlled by the regional grid operator PJM Interconnection.

The best and most appropriate manner for this Commission to fully examine potential supply options would be with the use of a broad, competitively neutral RFP in which multiple suppliers could actively compete to meet the needs of West Virginia consumers. This would ensure that all available supply-side and demand-side resources are transparently reviewed in accordance with the state’s applicable rules and laws.

The first key issue for incremental resource procurements is the design of safeguards to prevent potential improper self-dealing by the utility. Because the utility may financially benefit from the selection of its own self-build offer or a proposal from an affiliate, safeguards are necessary to ensure that the process is not improperly tilted toward the selection of such offers.