They're not alone!  Although Clean Line Energy Partners keeps touting some "desperate need" for its transmission projects by unnamed "states farther east," the company has yet to produce any evidence of any future customers for its transmission projects.

In the case of its Plains & Eastern Clean Line, a
recent article tells us "TVA still has no deal to buy Clean Line's wind energy."  The article makes an important distinction that Clean Line hopes everyone will ignore:
TVA is in final negotiations to allow a proposed $2 billion transmission line carrying wind power 700 miles from Oklahoma to connect to TVA's grid near Millington.

However, it will be another issue entirely whether Texas-based Plains & Eastern Clean Line LLC can send its wind-generated electricity into the TVA system, TVA spokesman Chris Stanley said Tuesday.

TVA policy requires the federal utility, which supplies electricity to MLGW in Memphis, only buy power priced competitively with other energy sources.

No consumer prices have been disclosed by the Houston firm.

"Inter-connectivity just allows Clean Line, in this case, to connect to our grid," Stanley said. "They do not, however, have the ability to inject any power into our system."

TVA is now waiting on Clean Line to request a "transmission study," he said.

"We had to do studies and make sure we have system reliability. That's all happened and we're in final negotiations with them about what that looks like going forward,'' Stanley said.

After the interconnection study is completed, a the transmission-service study will look at sending wind power into the electric grid.
Looks like Clean Line's much ballyhooed Memorandum of Understanding with TVA isn't proof that the TVA is willing to buy power from the project after all.

Clean Line has been pulling this same scheme with all of its transmission projects by pretending that there are some potential customers in "desperate need" of power supplied by the project, or that a regional grid operator, or federal entity like the TVA, has "approved" its project or contracts to purchase the electricity.  Nothing could be further from the truth!  The interconnection studies simply determine whether or not Clean Line would compromise system reliability if they interconnected, and also determine what alterations need to be made to the system to accommodate Clean Line's interconnection.  Clean Line is responsible for the costs of the studies and any system upgrades determined to be needed in the studies.

Clean Line is in a catch-22.  They can't negotiate prices for their transmission capacity until they have completed all permitting, siting, land acquisition, engineering, contracting, etc., and know exactly how much their project will cost to build.  The cost of the project will inform the amount of the capacity charge.  The capacity charge will be added to the price of the wind (or other) generation and then a power purchase agreement will be negotiated between the generator and the utility buying the power.  The generators don't exist.  The customers don't exist.  The transmission project doesn't exist.  Clean Line is nothing more than an overly-ambitious and fantastical business plan.  I don't believe it will ever happen.

But as long as Clean Line's "patient" investors want to continue to dump money down this rat hole, entities like TVA will continue to take their money and produce "studies".... because they have to.  State utility commissions also have to entertain Clean Line's permit applications, but they don't have to approve them.  And they certainly don't have to grant such a speculative venture utility status and its attendant power of eminent domain.

The TVA is currently working on its integrated resource plan (IRP).  An IRP is a long-range plan by a utility to determine the proper mix of resources that will serve its customers reliably and economically in the future.  The IRP will determine whether TVA will purchase huge quantities of wind from Oklahoma.  TVA's IRP won't be completed until 2015.  Although one of the stakeholder participants in the process recently asked the question, "Would it be appropriate to consider a scenario around grid/transmission expansion - for example, an HVDC line is built from the Midwest making lower cost wind energy available to the TVA?" it looks like this question was batted aside by the group think of the TVA's IRP process. 

Maybe Clean Line needs to do a little reading on the Delphi Technique?

It looks like Clean Line's business plan is nothing but a house of cards, and a big wind is starting to blow.
 


Comments

02/24/2014 12:09am

Oh, but we have power points directly from the "Clean" Line that puts the power prices at about TWICE our cost today. Is it no wonder they won't disclose the real cost?

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Suze
02/24/2014 8:57am

Because they keep hoping for a miracle... or the largesse of big Daddy government to contract to buy at an outrageous price? You know. stranger things have happened... Some people think the government is a gigantic public treasure chest, free for the taking...

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Patience
02/24/2014 9:10am

Suze, I don't want the gubmint meddling in this - bad enough that Congress guaranteed an "incentive" ROE for regulated utilities, which turned transmission into profit centers for them (and basically eliminated risk, which is a crucial element of "free markets").

I can accept the concept of "merchant lines," but what Clean Line hopes to do is start as a merchant project, then morph somehow into a regulated project that locks in high returns - i.e., get the "best" of both world. And in neither world do landowners or ratepayers count for anything ...

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02/24/2014 12:35pm

But a PRIVATE company getting eminent domain for a PRIVATE venture is a breach of constitutional rights and a very, very scary path to start down.

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Keryn
02/24/2014 12:58pm

You are so right, Block! Eminent domain for utilities has always been based on the premise that the project was needed for reliability purposes and has been verified by a formal planning process. However, new drivers such as economic or public policy goals have muddied the process. Clean Line takes it to a whole new level with their "merchant" projects that serve only Clean Line's financial purposes. And, now, utilities doing traditional business are finding it much, much harder to acquire ROW and build projects. That's what happens when you cheapen the process and let the hoodlums in.

Keryn
02/24/2014 9:27am

Which is precisely why I question TVA's willingness to get involved here as Clean Line's patsy. Yes, I get that they have to do the interconnection studies, but what's up with that MOU? It basically does nothing but give Clean Line the cover of saying "we've signed a MOU with TVA to purchase this electricity." (which isn't even the truth!)

After poking through their IRP powerpoint, I have faith that the TVA can rise from the ashes here.

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02/24/2014 12:38pm

Well, it's either rise from the ashes, or be named in a major, Midwest-wide class action suit for the improper, unconstitutional use of eminent domain.... obtained with a whole whopper-laden, list of buzz-word filled sales pitches that have not stood up to scrutiny UNDER OATH. (Illinois Commerce Commission Docket 12-0560.)

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Scott Thorsen
02/24/2014 12:36pm

Interesting read. Looks to me like Clean Line Energy Partners want to build P&ECL and follow the same capacity charge model they are claiming for RICL.

TVA would be P&ECL only customer, accepting 100% the risk and 0% of the reward.

It amazes me the TVA buys wind energy all the up in my neighborhood. I see the windmills 5 days a week in Northern Illinois. With the TVA buying a good percentage of Illinois' wind energy, (a third of Illinois wind energy going to the TVA wouldn't surprise me) and over 1500 mw of wind, I can understand why Oklahoma wind plus transmission costs Could be non competitive in the TVA.

It sure looks like the TVA is going out of their way with the IRP to demonstrate a companding knowledge of all the options and variables. If P&ECL makes it, CLEP will have to demostrate they are the most economical option for adding 3,500 MW to the region.

Can the TVA demostrate they will need 3,500 MW's? The final IRP will be very interesting. It appears the TVA is taking this seriously.

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Doesn't the wind blow, or the sun shine, or the tide turn in the South?

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TVA OUTSIDER
02/24/2014 5:22pm

With the TVA closing 18 coal generation stations, it would seam to be difficult for the TVA to explain outsourcing those jobs to Oklahoma. If it can be shown that energy can be generated within the region at a competitive price with natural gas and unemployment is high enough, the people won't care about greenhouse gas emissions or "clean" energy created in Oklahoma.

That's a tough sell for Clean Line. If this was 2008, employment was high and trending upward, it would be easier for the TVA to justify this deal and explain to people why they are paying for this project outside their territory. This is not 2008. Unemployment is high. Energy demand is leveling off.

If the TVA even acknowledged this option at the IRPWG, how fast would it be shot down?

It will be interesting where this leads, but the TVA cannot complete this study, not mention wind for outside it's region or a Merchant Transmission Line, and sign on to pay for Clean Line's project.

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