"Across the country, we are seeing clear proof of how building new efficient transmission infrastructure provides substantial benefits for consumers, through the delivery of clean renewable energy at rock bottom prices, job creation, and economic development.  We have worked to bring the Western Spirit Transmission Line and the Mesa Canyons Wind Farm to advanced stages of development in New Mexico, and are very pleased that Pattern Development will now take both projects over the finish line," said Michael Skelly, President of Clean Line Energy Partners.

Each RTO has its own system for modeling and evaluating proposed projects, and nothing is more difficult than deciding who should pay what, according to Mike Skelly, founder and president of Clean Line Energy Partners, the one company currently trying to build long-distance transmission lines in the Midwest. He offered up a restaurant analogy.

“If you go out to dinner and everybody orders different dishes, and you’ve got to figure out who’s gonna pay for what, it gets tricky,” he observed. In the inter-regional transmission world, typically a number of utilities and other customers benefit from new transmission capacity, but no one is eager to pick up the tab.

Skelly said the messy business of dividing the bill is one reason Clean Line has structured its two Midwestern long-distance transmission lines in a way that minimizes dealings with RTOs. It has proposed using DC instead of AC current, will take on power at one location and deliver it to two locations.

“We felt like the inter-regional planning processes didn’t work nine years ago, and they don’t work today,” he said.
Clean Line’s Grain Belt Express would ferry wind energy from Kansas to Indiana – and from the SPP to PJM. The Rock Island transmission line would move wind energy from northwest Iowa to the Chicago area – and from the MISO to PJM. Skelly said he knows exactly who would benefit from the project, and who, therefore, would pay for it: usually the wind farms whose electrons are moving to the east.

So, this has been a normal quarter financially, but an outstanding quarter overall from an execution standpoint that sets the tone for 2018 and beyond with several rate case outcomes and settlements regarding Wind Catcher behind us, as Rush's classic rock song, Red Barchetta, which – Red Barchetta is a car, it's a two-seater Italian car – would say it's time to strip away the old debris, fire up the shiny Red Barchetta and respond with a roar. That's what I see in the excitement, the energy of our teams of employees at this company working on projects such as Wind Catcher and other technology advancements that will change the face of AEP's interaction with our customers.
To paraphrase one of the latest Rock and Roll Hall of Fame inductees, Bon Jovi, and I know this phrase will stick with you the rest of the day, we're halfway there, living on a prayer, take our hand and we'll make it, we swear. So, enjoy the ride with American Electric Power. Brian?

Greg Gordon - Evercore ISI
Good morning, guys. Several questions for you. I'll try to make them brief. First is congrats on the Wind Catcher settlement in Oklahoma. You have a couple parties on board, but you have many more that have not officially signed on. But can you give us some color around the negotiations there? And what, on the margin, you have conceded to give up in this settlement to give customer protections versus the prior deal? And what it might take to get more parties on board?
Nicholas K. Akins - American Electric Power Co., Inc.
Yeah, Greg. Obviously, a great question. We continue to try to get other parties on board. But as we said from the beginning, it was extremely important to get the industrials on board in Oklahoma. And I think by getting them on board, it certainly sets the predicate for the opportunity for the commissioners themselves to look at this and say, okay, we've got both the industrial customers and Walmart, and the customers have spoken.
Now, there are other parties, as you mentioned. And certainly, we're trying to get the Oklahoma staff engaged in this process and, certainly, the Attorney General – probably not likely to get the Attorney General on board. But others will continue to be open to that, including the Attorney General.
But at this point, though, I think it's framed up pretty well, because a lot of work's been done in the background. Our people have been working tirelessly with all these parties around the various jurisdictions to try to drive some consistency around what the risks were being taken. And a lot of it centered on the 10-year look-backs, the performance guarantees, certainly the force majeure-related provisions as well.
And it really – as we looked at it, and as I mentioned early on in our discussion, you have to – if you're going to do regulated renewables, then certainly we'll have to meet the market on what risks are being taken relative to regulated renewable investments. And we looked at it, looked at it in a lot of detail. We have a lot of, like – as I mentioned earlier, engineering and construction. We looked that in detail, the operational characteristics of particularly the generation tie (22:16), and we've come a long way in terms of the evaluation of those risks.
We were willing to take it, and the industrials were ultimately supportive. So, I think it just sets the tone for continued discussions. But as far as I'm concerned, we've put it in a very good place, and you'll note that those provisions are pretty consistent with the settlements that have been done previously by SPS over in New Mexico and Texas. And we're having discussions with the Texas parties now. So, you're starting to see, in my opinion, a coalition around what risk parameters, what the framework of a deal looks like, and I see that momentum gaining.

Steve Fleishman - Wolfe Research LLC
So, speaking of living on a prayer, I have a few Wind Catcher question. Sorry. I couldn't help. You asked for that one.
Yeah. Thank you for the Rush references, those are great. So just if I recall back last fall, you had talked about wanting decisions by April to make sure that you would have it online to get the full PTCs.
Is May-June going to be okay to be able to capture full PTCs? Like, what is the real deadline?
Nicholas K. Akins - American Electric Power Co., Inc.
Yeah, we'll be fine. Really, we have to get to a point of getting these orders in place, and then we'll cover it with our board, obviously, in our July meeting. And then once they approve it, we're off and running. So if we get it in that June timeframe, we get the orders in the May to June timeframe, we'll be in good shape.

Julien Dumoulin-Smith - Bank of America Merrill Lynch
Got it. Excellent. And then turning back to Wind Catcher real quickly, obviously, you're working every state front. To the extent to which, let's say, Texas and those negotiations aren't necessarily as fruitful here on the prescribed timeline that you just talked about, how confident are you about signing up alternatives like munis and co-ops just to be able to continue working on the project, notwithstanding clarity in Texas, shall we say?
Nicholas K. Akins - American Electric Power Co., Inc.
Julien, I really think we are going to get a result in Texas. And I think it'd be problematic during the pendency of something that's working to go sell somewhere else. So, we're feeling pretty good about the direction this all is taking and the timing of it.

Paul T. Ridzon - KeyBanc Capital Markets, Inc.
Two questions. Is there a statutory deadline in any of the Wind Catcher states, when this has to be done by?
Nicholas K. Akins - American Electric Power Co., Inc.
I don't think there's a statutory deadline, but certainly there's a business deadline. I mean, we've been very transparent about the timing necessary and the procedural schedules have been set up consistent with getting a decision on time. So, I think it's really more driven by, I guess, one of the previous questions sort of brought out, when is our drop-dead date and that kind of thing. But I can just tell you that May and June fits.

Paul T. Ridzon - KeyBanc Capital Markets, Inc.
And then some of the concessions you've made are around cost caps. Who's wearing that risk? Is it you or the contractors?
Nicholas K. Akins - American Electric Power Co., Inc.
Yeah. It's both. We have fixed-price contracts with the appropriate contingencies. And I think that that risk is being shared. And actually, this tells you a little bit about the commitment of the suppliers that we're working with. I mean, these are established suppliers that do a lot of business that we do a lot of business with. And I can guarantee a lot of homework's been done on what these operational provisions will look like, what the construction side will look like, what the supply will look like, what risks are being borne. And also even if route changes were to occur on the generation tie (38:02) that those have been discussed and (38:05) as well. So, we feel very good about where our suppliers sit at this point.

Nicholas K. Akins - American Electric Power Co., Inc.
Yeah. So, we are in the middle of what I would call an M&A transaction without a premium. It's called the Wind Catcher. And so when we look at the strength of the balance sheet, certainly we'll be looking at the financing needs for Wind Catcher and that's a $4.5 billion transaction. So, that's where our thoughts are at this point.

Ali Agha - SunTrust Robinson Humphrey, Inc.
Thank you. Good morning. Nick, to clarify, as you're looking at the four states for approval in Wind Catcher, is it fair to say just given where we are that Oklahoma probably is the most challenged of the four? And related to that, could you theoretically complete the project if the other three states say yes and Oklahoma was to say no?
Nicholas K. Akins - American Electric Power Co., Inc.
Yes. So, on the first point, I would agree with you. Oklahoma has been the most challenging. And really, with the ALJ order there, it made even more of a challenge for the commissioners to really take a look at it from a positive standpoint. But I really believe they will at the end of the day and – because they obviously look at much broader issues. And so, with that said, I think as far as Wind Catcher is concerned, we intend on this project being for those four states and certainly the FERC customers. There's some FERC customers too that are involved. And if one were to fall out, we're really – as I said, I mean, I think we're at a good place in terms of the transition of getting this thing across the finish line. And at this point, we really aren't entertaining the notion of going forward with the project without one of the jurisdictions. I really don't see that happening.

Paul Patterson - Glenrock Associates LLC
Just sort of quickly follow up here on Wind Catcher. Why is it that the – what are the key issues, I guess, sort of maybe stopping the OCC staff and others from coming on board?
Nicholas K. Akins - American Electric Power Co., Inc.
Your guess is as good as mine. I think, obviously, the ALJ looked at it from a procedural basis it seemed like to me. But we're pretty convinced we did file under the right provisions under Oklahoma law. But obviously, we'll continue with discussions with certainly the Oklahoma staff. And I think – I really do believe we put provisions in place with the industrials that should benefit that discussion with them. Obviously, to have that kind of company of the customers certainly would help from a policy side and from a staff side to really take a hard look at this. So, the verdict's still out on that and we'll continue those discussions.

Paul Patterson - Glenrock Associates LLC
Okay. And then, in Oklahoma, there's this tax issue on Wind. I guess we expect it's intertwined with school funding and there was something that passed the House yesterday. And I was just wondering how would that work with respect to the settlement or with respect to the project, or does it have any impact. Can you give us sort of a sense about that?
Nicholas K. Akins - American Electric Power Co., Inc.
Well, it won't have any impact on the project. And it got poured out of the legislature yesterday. So, we don't see that happening.
Paul Patterson - Glenrock Associates LLC
I mean, I thought it passed the House is what I just saw.
Nicholas K. Akins - American Electric Power Co., Inc.
No.
Paul Patterson - Glenrock Associates LLC
The provision for the tax credit, I thought it was removed. But we can talk about it later. But what you're saying is you don't see any activity on that whatsoever, is what you're...?
Nicholas K. Akins - American Electric Power Co., Inc.
No.
Paul Patterson - Glenrock Associates LLC
Okay. So if something like that did happen, though, since it's been sort of debated and what have you, and the school funding issue, in terms of the settlement, how would that – would that be something that you guys would absorb or would that be something that – how would that be treated if there was subsequently some sort of impact on wind generation in Oklahoma as a result of something that the state legislature may or may not do in the future?
Nicholas K. Akins - American Electric Power Co., Inc.
Yes. So, there is that risk, but not likely. And the state tax credit wasn't assumed in the Wind Catcher economics, to begin with. So if something were to occur, it wouldn't have any effect.

“The project is not dead, but is on a much slower track,” Clean Line Energy spokeswoman Sarah Bray said in an email.

(b) The commission shall not issue a certificate of public convenience and necessity to any person or corporation that:
(1) Is not a public utility; (2) Primarily transmits electricity; and
(3) Has not been directed or designated to construct an electric transmission facility from a regional transmission organization.

Is Clean Line Energy still developing the Plains & Eastern Clean Line transmission project? The company says yes, despite the fact that selling the Oklahoma assets and ending its plan to build in Arkansas means the Tennessee portion of the line appears to be all that remains on the drawing board.

The Plains & Eastern Clean Line had been under development in Oklahoma for eight years when Clean Line sold it to NextEra. The company said the project has gone through an environmental review with "substantial stakeholder input" and received the regulatory approvals and major environmental permits necessary for construction, but it's unclear how it will move forward without the DOE support. 

The Republican Party’s current infrastructure spending bill is missing one item: a provision establishing federal siting authority for electric transmission lines. Oddly, this idea has few champions in Congress and only tepid support from environmental groups.

Problematically, the best locations for wind and solar power plants are far from population centers—in the windy central plains or the sunny southwestern deserts.

More than ever, consumers want green power.

Conservatives claim that federal transmission siting authority would threaten state sovereignty or landowner property rights, but those claims ring hollow. Why are those values worth protecting against transmission lines but not against natural gas pipelines?

Little is known about the opponents. A  consultant for Renewable Arkansas, a nonprofit offshoot of a group called  Americans for Affordable Energy, has placed an op-ed article recently opposing the SWEPCO project. The author, Grant Tennille, former director of the Arkansas Economic Development Commission, questioned the reliability of the savings estimate and also said it would provide an advantage to SWEPCO in continuing to sell excess electricity from existing coal-fired plants in Arkansas into the open market. Bringing in wind lowers the company's overall cost of power and makes the sales more profitable, he wrote. He has not responded to my email asking about his employer on the issue. He suggests, by the way, that SWEPCO should invest in solar power in Arkansas.

“A group known only as Protect Our Pocketbooks – which does not reveal the names of its backers or the sources of its substantial funding – is presenting misleading information to the public, including manipulation of statements by Arkansas Gov. Asa Hutchinson,” said Brian Bond, SWEPCO Vice President of External Affairs.

Gov. Hutchinson wrote to the Arkansas Public Service Commission on Jan. 11 asking that the benefits of federal corporate tax cuts be passed on by utilities to Arkansas families and businesses. “In its latest television ad, Protect Our Pocketbooks misleadingly associates the governor’s comments about corporate federal tax cuts with the group’s campaign against Wind Catcher,” Bond said.

“The anonymous, tax-exempt opposition group claims that Arkansas gets none of the benefits of the project, which is incorrect and misleading. Arkansas will receive the benefits of generation with no fuel costs, cost savings immediately and over the life of the project, the full value of the federal Production Tax Credits available to the project, and the economic development benefits of wind turbine components being manufactured in Arkansas,” Bond said.

Michael Skelly, the company's president, told Arkansas Business that the direct-current project, which would have transmitted 4,000 megawatts of renewable energy from Western Oklahoma to eastern Tennessee, is basically on life support.

"Everybody knows that if you can delay a project, you can hurt it or force a different outcome," Skelly said after devoting nearly nine years and some $100 million in private investor money to the project, which would have crossed 12 Arkansas counties with 200-foot-high transmission towers. "We're ending up with an outcome that's just fine for us business-wise, but not as good for Arkansas."

Clean Line Energy spokeswoman Vicki Ayres-Portman explained the impact wind energy has had on local county budgets and what it would mean to be the member of a state that divests in wind energy at Monday's get-together.
Ayres-Portman was taking the place of originally scheduled speaker Mark Yates, Oklahoma director for the Wind Coalition.
“Most of you have probably heard there are two bills running on the floor of the house today that would have a detrimental impact on the future and possibly retroactive on wind development,” she said. “So Mark felt like he really needed to stay at the capitol today and asked if I would stop by on my way to the capitol and give you guys an update on wind energy in Oklahoma.”

Ayres-Portman detailed the well publicized and still working 9-year-old Clean Line project set to run from the Oklahoma Panhandle to Tennessee. The $2.5 billion, 4,000 megawatt project that was set to provide energy to customers in Arkansas, Tennessee and other markets stalled recently. The issues hamstringing the plans come after President Trump began pushing coal and nuclear power options.
"The market has really changed since Clean Line started this effort eight, nine years ago,” Ayres-Portman said. “At that time, the bioenergy centers to the East were really looking forward to more renewables. We had a new President elected. And although I agree with a lot of great things he’s done, one of the things, pushing coal and nuclear has really dampened the power purchase agreements from big utilities that were looking at doing renewables, whether that was natural gas, wind or solar.”
So those companies that had memorandums of understanding to come onto the Clean Line transmission line, have pulled away from those agreement.

... dedicated to fostering clean energy sources that best serve the needs of local consumers.

Protect our Pocketbooks supports clean energy, but we believe that energy infrastructure investments should be made locally.

A front group is an organization that purports to represent one agenda while in reality it serves some other party or interest whose sponsorship is hidden or rarely mentioned. The front group is perhaps the most easily recognized use of the third party technique.

It is my understanding based upon public information that Clean Line requested the use of federal powers of eminent domain through an arrangement with the U.S. Department of Energy under Section 1222 of the Energy Policy Act of 2005 for the Plains and Eastern project. This request required the development of an Environmental Impact Statement under  the National Environmental Policy Act (NEPA) within which the specific purpose and need for the project, siting considerations, and specific environmental impacts for the Plains and Eastern Clean Line project were assessed and considered in order to receive final approval through a Record of Decision for the Plains and Eastern project.

Witness Hurtado has not provided any additional insight or discussion in his responses as to what potential additional permitting requirements and schedule risks may be associated with using a portion of right of way for the Plains and Eastern Clean Line project that was originally acquired for a project that was approved under a different purpose and need, under a different regulatory authority, and potentially, with different permitting requirements.