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Archive for Monday, July 25, 2011

Cost of high-voltage lines for wind in western Kansas irk utility companies

July 25, 2011

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— Executives at several utilities in nine Midwestern states are upset that they are being asked to pay millions of dollars in upgrades to high-voltage lines in western Kansas that eventually will power the wind industry, according to some members of a state organization.

The Southwest Power Pool, an association of utilities in nine states, has been roiled by disagreement as the costs of the projects climb, The Wichita Eagle reported Monday.

The projects are considered critical to the development of the wind industry in western Kansas. Construction is scheduled to begin in mid-2012, and the lines are scheduled to be in service by the end of 2014.

The tension erupted at an October meeting of the power pool, when members were told that the projected cost of the Kansas project, called the "V plan" or the "Y plan" had risen from $356 million to $456 million. The twin 345-kilovolt power lines will extend from the Wichita area to Medicine Lodge to Spearville in western Kansas.

A similar project in western Oklahoma and a new line in Nebraska and Missouri also had nearly $200 million in cost increases.

Jeff Davis, a commissioner on the Missouri Public Service Commission, said the current process, which allows individual utilities to design the projects but spread the cost across all the utilities in the pool, offers no incentive to control costs.

"It's like being able to remodel your house and assess your neighbors for the cost," he said.

Critics contend that ITC Great Plains and Prairie Wind Transmission, which includes Westar Energy, increased costs on the Kansas project by lengthening the route to avoid the habitat of the lesser prairie chicken in Barber, Comanche and Clark counties.

Kelly Harrison, vice president for transmission and environment for Westar and president of Prairie Wind Transmission, said Prairie Wind developed two routes for the line. The routes cost about the same, he said, but the one that was chosen avoided the habitat of the lesser prairie chicken.

The original estimate from power pool planning staff was based on simplistic assumptions about the lowest-cost route, he said, and those estimates changed when the utility's staff began studying the actual routes.

"I would say that there are members of the Southwest Power Pool that are disappointed in the lack of rigor used in the initial cost estimates," he said.

Some members of the pool question whether utilities that don't directly benefit from the lines should have to pay for them.

The Southwest Power Pool adopted a formula in April 2010 that assesses the cost of building the pool's largest lines, called "highway" lines, equally across all pool members because they can transfer energy between utilities.

That means Kansas ratepayers will pay about 20 percent of all the approved projects, including those in Oklahoma, Nebraska and Missouri, according to Harrison.

If Kansas ratepayers had to pay the entire costs of the "V Plan," it might have shut the project down, effectively ending the prospect of wind power in the state.

But the Omaha Public Power District was dismayed last year when, shortly after it joined the power pool, the organization adopted the policy that spread the costs to everyone in pool. In April, its board of directors said that it was considering withdrawing from the power pool over the issue. The board must make a decision by Aug. 25.

"We'll be required to pay a considerable amount of money for little benefit," said utility spokesman Jeff Hanson.

Empire Electric and Lincoln Electric System have also expressed unhappiness, the Eagle reported.

Harrison said all utilities in the power pool will benefit when wind power begins flowing through its lines. And he said Westar customers will someday pay for "highway lines" in other states.

The federal government apparently agrees that only those who benefit should pay. In a July 21 statement on new rules about to go into effect, Federal Energy Regulatory Commission chairman Jon Wellinghoff said, "Among those principles are that costs must be allocated at least roughly commensurate with estimated benefits; those that receive no benefits should not be allocated costs."

Comments

gr 3 years, 1 month ago

Speaking of expected library cost overruns, guess who also are going to pay for these costs? And it's not the utility companies.

Isn't it interesting that some tout wind energy as being cheaper. I recall one who insisted it was cheaper even though he didn't have his own wind power. He must just like paying higher costs.

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