FERC Approves Green Power Express Incentives

In a decision that will help to bring electricity from wind energy projects to areas where it is most needed, the Federal Energy Regulatory Commission (FERC) approved Green Power Express LP’s request for favorable transmission investment incentives. It also authorized the establishment of a regulatory asset for development and pre-construction costs.

The Green Power Express Project is a network of transmission lines that will transport 12,000 megawatts (MW) of power from wind-abundant areas of the Upper Midwest to Midwestern and Eastern states that demand clean, renewable energy.

Green Power Express LP is a limited partnership formed by ITC Holdings Corp. to develop and build the Green Power Express Project. These approvals will enable the partnership to pursue the development of its proposed, multi-state Green Power Express Project. ITC, through Green Power Express LP, will now seek Midwest ISO review of the seven-state project and pursue a cost allocation mechanism that factors its far reaching benefits into account.

“This is an exciting step in the process of connecting clean, renewable energy sources from wind-rich areas to urban locations where it is needed,” said Joseph Welch, chairman, president and CEO of ITC. “We are pleased that FERC recognizes the importance of investing in the nation’s high voltage transmission grid as a mechanism to support renewables and we look forward to working with the Midwest Independent Transmission System Operator, Inc. (Midwest ISO) and all federal and state stakeholders on the development of this project.”

FERC found that the Green Power Express Project is “not routine by any measure” and is eligible for transmission investment incentives because it will provide benefits including improved transfer capability and access to wind generation. The order grants approval of an incentive return on common equity of 12.38% deferred recovery for start-up, development and pre-construction costs through the creation of regulatory assets; inclusion of 100 percent of construction work in progress in rate base; abandoned plant treatment; and use of a hypothetical capital structure comprised of 60 percent equity and 40 percent debt until any portion of the Project is placed in service.

The FERC order conditionally accepted Green Power Express LP’s proposed formula rate tariff sheets, subject to refund, and set them for hearing and settlement judge procedures. The approved transmission investment incentives and return on equity were specifically excluded from any hearing process.

The Green Power Express Project will traverse portions of North Dakota, South Dakota, Minnesota, Iowa, Wisconsin, Illinois and Indiana and include approximately 3,000 miles of extra high-voltage (765 kilovolt) transmission. The entire project is currently estimated to cost approximately $10-12 billion and will reduce congestion, improve transmission reliability, and strengthen the nation’s aging electricity infrastructure.

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