It also authorized the establishment of a regulatory asset for development and pre-construction costs. These approvals will enable the partnership to pursue the development of its proposed, multi-state Green Power Express Project.
Green Power Express LP is a limited partnership formed by ITC Holdings Corp. (ITC) to develop and build the Green Power Express Project. The Green Power Express Project is a network of transmission lines that will transport 12,000 megawatts of power from wind-abundant areas of the Upper Midwest to Midwestern and Eastern states that demand clean, renewable energy. The Project addresses the severe lack of electric transmission infrastructure needed to integrate wind energy onto the nation's electricity grid.
"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 L. 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."
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.
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 significant benefits like greatly improved transfer capability and access to wind generation. The order grants approval of an incentive return on common equity of 12.38 percent; 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.
As ITC continues to work with wind developers and other local utilities in the region to identify their needs and project impacts, there may be additional lines and stations identified that would effectively accumulate the available wind generation within the region.
The Green Power Express is one facet of ITC's broader efforts to develop and build a high voltage transmission grid that supports the nation's renewable energy goals, addresses growing energy demands, and eliminates costly inefficiencies. ITC is urging Congress to update the rules that govern transmission development to allow such investments to move forward in time to meet growing demand.
"The Green Power Express Project will be a crucial tool for connecting abundant wind power with the population centers that demand it," said Welch. "We are confident that the FERC will continue to work with ITC to make this historic and ambitious project a reality."