Back during PATH's heyday, our opposition group's fearless leader often likened transmission opposition to peeling an onion. As each layer came off, we found another underneath. Similarly, I see transmission opposition as a virtual jigsaw puzzle without a box, without any pictures of what it's supposed to look like put together, or even edge pieces to get you started. Instead you've got a pile of random pieces that you keep trying to fit together, and if you're successful, eventually a picture will begin to emerge, and start growing outward. Of course, this puzzle never gets finished... as Robert Frost said "...way leads on to way...".
I get excited when I find new pieces for my transmission puzzle, and when I hear a couple of random pieces "click" to reveal a new picture. So it was when this article recently surfaced from the depths of Google. The picture isn't necessarily in the article, just a random piece of the puzzle, but in what is revealed when joined with other random pieces already sitting on my puzzle table.
Traditional investor owned utilities make their money by owning things used to provide a public service. They're the middle man, paid for their ownership, plus a guaranteed generous return on their investment. It's an easy way to make money, and they want it all to themselves. But, being powerful and owning much of the electric grid also means these entities favor new projects that complement the rest of their business. Utilities aren't interested in providing supplemental transmission that increases the profits of other generators, so that kind of transmission gets put on the back burner. It's also more difficult for incumbent utilities to build transmission that has no public purpose. These companies are used to having the public pay their costs through rates. If they can't get transmission cost recovery in rates, they're not interested in building it.
For a brief moment in time, other companies backed by private investors tried to horn into this neat little profit center and claim a piece of it for themselves. Independent merchant transmission wanted to own the infrastructure and charge investor owned utilities to use it. Except Clean Line Energy Partners failed at its task. It tried to claim the deep, institutional power of incumbent IOU's for itself in order to force damaging infrastructure on the public for the express purpose of making money. Independent transmission owners building transmission for sheer profit (instead of reliability, or economics) aren't public utilities, therefore they cannot jump the public use hurdle easily scaled by incumbent utilities. Independent transmission needs to look elsewhere to build projects that aren't dependent upon eminent domain for their success.
The companies who want to change this whole scenario to increase their own profits are renewable energy generators. They've built so much generation, fueled by outrageous federal tax credits, that they've filled the available transmission lines. Now this industry needs new transmission in order to build more and increase their profits. They can't get IOU's to build more transmission for the express purpose of providing a path for new generation because the cost cannot be recovered from ratepayers. AEP tried this with its Wind Catcher project and failed. They can't get independent transmission companies to build more transmission for the express purpose of providing a path for new generation because such use is not a public utility. So, what's a renewable energy generation company to do?
Take matters into their own hands. Put up the money and build new transmission themselves with the idea of selling the completed transmission project to IOU's, who will then attempt to get ratepayers to pay for it. There's no real risk for the IOU -- if regulators fail to approve the transmission cost recovery, the IOU isn't on the hook for it. In this scenario, everyone wins (well, except the independent transmission owner, who was only in it to make money, extracting value by charging both the generator and utility to use something it owned). The independent transmission owner tried to be an "open access" transmission provider, thinking that would magically deem it a public utility, however this failed. Generation companies don't even have to pretend, they can build any generation tie line they want and prevent others from using it. However, they cannot use eminent domain to do so.
This would explain the sudden interest of NextEra and Invenergy in transmission. Both of these companies have purchased failed Clean Line projects. While NextEra has sat on the failed Plains & Eastern project without much interest, Invenergy has made state approvals for Grain Belt Express part of its deal.
How might NextEra and Invenergy plan to use their Clean Line projects?
This.
In the wake of Wind Catcher's failure, AEP has issued an RFP for owning new wind generation that almost exactly matches Wind Catcher. However the difference is that AEP is not assuming any risk this time. AEP wants the generation delivered to the same transmission hub at Tulsa that it was planning to use for Wind Catcher. No transmission risk. And if you look into the fine print of the actual RFP, AEP says that it will consider purchasing completed transmission to Tulsa as part of the deal with the winning company. In other words, if someone else builds it, AEP may buy it from them.
Let's travel to the land of imagination, where random puzzle pieces click soundly into place. NextEra owns a permitted transmission project that gets near Tulsa on a different route than the hotly opposed one AEP was using for Wind Catcher. Invenergy owns a partially built wind farm that could supply the requested generation and qualifies for the production tax credit (another AEP RFP requirement). It's highly unlikely that these two competitors can or will work together to join these two pieces. What does Invenergy do? It buys a different failed Clean Line that is proposed to begin just a stone's throw from its Wind Catcher wind farm, and run east along a different path. Would it be possible to re-route this project, or add to it, to make a new connection to Tulsa? Absolutely. Look at a map. I don't have to draw an imaginary line here.
When I tried to fit the pieces of Wind Catcher, failed clean lines, renewable generators, and the opportunity of AEP's RFP together, I heard a distinct "click." Wanna bet that both NextEra and Invenergy have submitted bids using failed clean lines in response to AEP's RFP?
Of course, we won't know for certain for quite some time, but these pieces fit together seamlessly to produce a picture of a giant green dollar sign.
Renewable generation companies are tired of waiting for someone else to build the transmission they need to build more generators. The federal production tax credit is fading fast and time is of the essence. These companies have taken matters (and risk) into their own hands.
In the long run, though, I don't think it stands a chance of actually working, but it seems like it could be a risk big wind companies are willing to take for the time being.
I get excited when I find new pieces for my transmission puzzle, and when I hear a couple of random pieces "click" to reveal a new picture. So it was when this article recently surfaced from the depths of Google. The picture isn't necessarily in the article, just a random piece of the puzzle, but in what is revealed when joined with other random pieces already sitting on my puzzle table.
Traditional investor owned utilities make their money by owning things used to provide a public service. They're the middle man, paid for their ownership, plus a guaranteed generous return on their investment. It's an easy way to make money, and they want it all to themselves. But, being powerful and owning much of the electric grid also means these entities favor new projects that complement the rest of their business. Utilities aren't interested in providing supplemental transmission that increases the profits of other generators, so that kind of transmission gets put on the back burner. It's also more difficult for incumbent utilities to build transmission that has no public purpose. These companies are used to having the public pay their costs through rates. If they can't get transmission cost recovery in rates, they're not interested in building it.
For a brief moment in time, other companies backed by private investors tried to horn into this neat little profit center and claim a piece of it for themselves. Independent merchant transmission wanted to own the infrastructure and charge investor owned utilities to use it. Except Clean Line Energy Partners failed at its task. It tried to claim the deep, institutional power of incumbent IOU's for itself in order to force damaging infrastructure on the public for the express purpose of making money. Independent transmission owners building transmission for sheer profit (instead of reliability, or economics) aren't public utilities, therefore they cannot jump the public use hurdle easily scaled by incumbent utilities. Independent transmission needs to look elsewhere to build projects that aren't dependent upon eminent domain for their success.
The companies who want to change this whole scenario to increase their own profits are renewable energy generators. They've built so much generation, fueled by outrageous federal tax credits, that they've filled the available transmission lines. Now this industry needs new transmission in order to build more and increase their profits. They can't get IOU's to build more transmission for the express purpose of providing a path for new generation because the cost cannot be recovered from ratepayers. AEP tried this with its Wind Catcher project and failed. They can't get independent transmission companies to build more transmission for the express purpose of providing a path for new generation because such use is not a public utility. So, what's a renewable energy generation company to do?
Take matters into their own hands. Put up the money and build new transmission themselves with the idea of selling the completed transmission project to IOU's, who will then attempt to get ratepayers to pay for it. There's no real risk for the IOU -- if regulators fail to approve the transmission cost recovery, the IOU isn't on the hook for it. In this scenario, everyone wins (well, except the independent transmission owner, who was only in it to make money, extracting value by charging both the generator and utility to use something it owned). The independent transmission owner tried to be an "open access" transmission provider, thinking that would magically deem it a public utility, however this failed. Generation companies don't even have to pretend, they can build any generation tie line they want and prevent others from using it. However, they cannot use eminent domain to do so.
This would explain the sudden interest of NextEra and Invenergy in transmission. Both of these companies have purchased failed Clean Line projects. While NextEra has sat on the failed Plains & Eastern project without much interest, Invenergy has made state approvals for Grain Belt Express part of its deal.
How might NextEra and Invenergy plan to use their Clean Line projects?
This.
In the wake of Wind Catcher's failure, AEP has issued an RFP for owning new wind generation that almost exactly matches Wind Catcher. However the difference is that AEP is not assuming any risk this time. AEP wants the generation delivered to the same transmission hub at Tulsa that it was planning to use for Wind Catcher. No transmission risk. And if you look into the fine print of the actual RFP, AEP says that it will consider purchasing completed transmission to Tulsa as part of the deal with the winning company. In other words, if someone else builds it, AEP may buy it from them.
Let's travel to the land of imagination, where random puzzle pieces click soundly into place. NextEra owns a permitted transmission project that gets near Tulsa on a different route than the hotly opposed one AEP was using for Wind Catcher. Invenergy owns a partially built wind farm that could supply the requested generation and qualifies for the production tax credit (another AEP RFP requirement). It's highly unlikely that these two competitors can or will work together to join these two pieces. What does Invenergy do? It buys a different failed Clean Line that is proposed to begin just a stone's throw from its Wind Catcher wind farm, and run east along a different path. Would it be possible to re-route this project, or add to it, to make a new connection to Tulsa? Absolutely. Look at a map. I don't have to draw an imaginary line here.
When I tried to fit the pieces of Wind Catcher, failed clean lines, renewable generators, and the opportunity of AEP's RFP together, I heard a distinct "click." Wanna bet that both NextEra and Invenergy have submitted bids using failed clean lines in response to AEP's RFP?
Of course, we won't know for certain for quite some time, but these pieces fit together seamlessly to produce a picture of a giant green dollar sign.
Renewable generation companies are tired of waiting for someone else to build the transmission they need to build more generators. The federal production tax credit is fading fast and time is of the essence. These companies have taken matters (and risk) into their own hands.
In the long run, though, I don't think it stands a chance of actually working, but it seems like it could be a risk big wind companies are willing to take for the time being.
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