If Egyptology suddenly came into fashion in Oregon, and enthusiasts convinced the state to use its ratemaking powers to advance the cause, utilities would gladly build a pyramid in Portland, and they would make money doing so.

The BPW has explored the option of either solely buying power, or a share in the power substation that would be built in Ralls County. Stevenson said the guaranteed return on such an infrastructure investment would be 10 percent a year. He noted such an investment would not be “speculative” since the substation, once completed, would be a Midwest Independent Transmission System Operator asset.

We’re sometimes called air traffic controllers of the power grid. PJM monitors and coordinates more than 1,304 electric generators and 72,075 miles of high-voltage transmission lines. Just like air traffic controllers, we don’t own the equipment we direct. Others own the power lines and power plants. Power generators, utilities and power marketers coordinate their operations through PJM. Doing so makes major electric outages less likely to occur and reduces power costs.

The Hannibal Board of Public Works has suspended talks with Houston-based Clean Line Energy Partners about investing in or using its proposed Grain Belt Express transmission line to bring wind-generated electricity to the city.

BPW General Manager Bob Stevenson told the utility's board of directors Tuesday that the BPW has decided to step back and observe developments between the company and other municipalities before moving forward.

"We just decided to sit back, take it easy for a while, and just study what's going, keep asking questions, keep researching," Stevenson said. "We've got nothing to put forward. There is no pending contract."

BPW board members also accepted an average $36.86 per megawatt-hour bid from Florida-based NextEra Energy Resources for energy to be used in summer 2017, 2018 and 2019. Four bidders, including NextEra, submitted quotes for supplying 20 megawatts in June, 25 megawatts in July and 25 megawatts in August each year.

Stevenson said those energy blocks, which make up about one-twelfth of the BPW's demand, will cover peaks during hot summer days. He said the BPW and Chris Dawson, a representative from consulting firm GDS Associates, had discussed locking down prices now while they remain low.

The Public Service Commission denied Clean Line a certificate of convenience and necessity in July on grounds that the 4,000-megawatt, direct-current line would not benefit the state's consumers and landowners. Clean Line has since approached municipal utilities, including the BPW, about participating in the project in hopes of showing regulators it has a customer base in Missouri.

Stevenson said the BPW has no deadline for making decisions related to the project despite Clean Line's goal of appearing before the commission again this year.

"Without us, they've got nothing," he said. "Just because they're in a hurry doesn't mean we have to be."

For wind facilities commencing construction in 2017, the PTC amount is reduced by 20%

For wind facilities commencing construction in 2018, the PTC amount is reduced by 40%

For wind facilities commencing construction in 2019, the PTC amount is reduced by 60%

Lawlor said the line can at current prices deliver wind energy to Missouri at between 4 and 4.5 cents per kilowatt-hour.

The cost of delivered energy is equal to the cost to generate wind energy in western Kansas (2.0-2.5 cents) plus the cost to move power on the Grain Belt Express Project, which we estimate at 1.5-2.0 cents per kWh.

Even when a transmission charge of $20/MWh to $25/MWh (based on Clean Line estimates for a 500 mile to 700 mile HVDC facility) is included, the delivered cost of heartland-region wind would be below both in-state wind and in-state solar PV price estimates in the Eastern U.S.

"We believe that a project like Prairie State is the best way for us to secure a substantial portion of our members' needs for an affordable, long-term source of electricity. The project offers us cleaner energy from a convenient source located just across the river," said Duncan Kincheloe, general manager and chief executive officer of MJMEUC, in a press release.

“We’re in almost a million and a half bucks, and we don’t have a dime of revenue,” said Bob Stevenson, director of Hannibal’s Board of Public Works. “All I can say is, I had other plans for that money.”

Hannibal is raising rates for residential customers by 3 percent next month to offset the effect of construction delays.

“The only reason we’re having to do this is this problem we’re having with Prairie State,” Stevenson said.

The “take or pay” contracts, standard for large-scale power projects such as Prairie State, are favored by lenders and credit rating agencies because they provide assurance that the borrower pays its debts. They also require end users, in this case municipal utility customers, to make debt payments regardless of whether the plant is operational. And if any of the cities default, a “step-up provision” in the contract requires remaining cities to pick up that city’s share of the payments.

Skelly said that Clean Line is prepared to make a power proposal that would represent a “fantastic deal for the city of Hannibal.”

Lawlor suggested that the Grain Belt Express could potentially offer power to Hannibal for as little as 2 cents per kilowatt hour (kwh).

...the possibility that Hannibal could buy “capacity rights,” which the BPW could utilize or sell on the open market.

Lawlor said a $12.5 million investment in Grain Belt could equate to a 25 megawatt stake in the Ralls County converter station and a portion of the project's capacity, noting the utility could buy as much or as little as it wanted.

Critics of the investment need only look at the audit’s bottom line regarding Prairie State to find areas where revenues from the sale of power generated at the plant continued to not equal the BPW’s expenses associated with the facility.

What Clean Line will be seeking initially from the city is a letter of participation that the company would include in its next application for a Certificate of Public Convenience and Necessity from the Missouri Public Service Commission. The PSC denied Clean Line such a certificate in July 2015.

In a renewed effort to illustrate Grain Belt's merits to the PSC, Clean Line has approached municipal utilities about participating in the project.

"It's not the size of the dog in the fight, it's the size of the fight in the dog."

To approve negotiated rates for a transmission project, the Commission must find that the rates are just and reasonable. To do so, the Commission must determine that the merchant transmission owner has assumed the full market risk for the cost of constructing its proposed transmission project.

Rock Island meets the definition of a merchant transmission owner because it assumes all market risk associated with the Project and has no captive customers. Rock Island has agreed to bear all the risk that the Project will succeed or fail based on whether a market exists for its services.

Rock Island also argues that wind generators, whose energy the Project will likely transmit, present numerous risks that transmission project developers and investors must overcome. For example, Rock Island states that wind energy projects are typically constructed with shorter lead times than other generators and are less willing to commit to large transmission projects well in advance of generator construction. Rock Island argues that pre-subscription of capacity with creditworthy anchor customers can reduce financing obstacles because lenders demand to see a secure source of revenue as a predicate to project financing.

Opponents used some of those arguments to successfully derail the Potomac-Appalachian Transmission Highline, a 290-mile line from Putnam County, W.Va., to Frederick County, Md., proposed by Allegheny Energy in 2008. The Greensburg company, acquired by FirstEnergy in 2011, suspended the project after it could not convince regulators the line was necessary.

PJM staff reviewed results of analyses showing reliability drivers no longer exist for the project throughout the 15-year planning cycle. The analyses incorporated the continued trends of decreasing customer load growth, increasing participation in demand response programs and the recent commitment of new generating capacity in eastern PJM.

While citizen groups have fought transmission projects — often successfully — by attacking the developer’s need to build them, the environmental regulations could usher in more projects and complicate opposition.

Changing drivers of transmission

Transmission companies see big potential for new projects, particularly from sparsely populated areas that generate wind energy to urban areas. “Just as trains carried cattle and other goods from the rural areas to urban centers, the Plains & Eastern Clean Line will carry renewable energy from the Plains of the Southwest,” states the website of one developer, Clean Line Energy of Houston, Texas.

Clean Line expects federal approval for its 700-mile Plains & Eastern Clean Line, designed to carry 4,000 megawatts of power from wind farms in the panhandle of Oklahoma. The line will terminate near Memphis, Tenn. Clean Line has four other projects in the pipeline.

“We anticipate a very busy 2016,” said company president Michael Skelly. 

...some wind mills and solar farms in areas with constant breeze and abundant sunshine

It appears that notices could be prepared based upon this language that would be sufficient to satisfy the applicable legal requirements and give all interested persons adequate notice of which issues would be considered at which time. Accordingly, the Board finds that setting a procedural schedule with two phases, divided as proposed by Clean Line, would not necessarily impair the constitutional rights of any party because adequate notice could be given.

As noted above, it appears that the issues for each hearing have been defined with sufficient specificity that clear notice could be given to all interested persons. This factor does not weigh against the use of separate phases in the manner proposed by Clean Line.

The Board finds that the considerations of administrative efficiency and convenience do not support establishment of a procedural schedule with two separate phases in the manner proposed by Clean Line. The efficiencies and benefits accrue primarily to Clean Line and its supporters, which the inefficiencies and inconveniences fall to the affected landowners. There is no basis in this record to justify such an inequitable result.

The Board would first determine whether to approve the proposed line, then determine whether to grant the power of eminent domain, and then Clean Line would be permitted to proceed to condemnation. The situations are not parallel; Clean Line proposes to add an additional step to the process.

The Board’s concern is with following and implementing Iowa law.