On November 16, 2018, American Transmission Company LLC (ATC) (ER19-360) and ITC Midwest (ITC) (ER19-355) both requested from FERC, effective January 16, 2019, incentive rate treatment to recover 100 percent of all prudently-incurred costs associated with its investment in the Cardinal-Hickory Creek 345 kV Project (Project) if the Project is abandoned or cancelled for reasons beyond ATC’s control (Abandoned Plant Incentive). The Project is a MISO Multi-Value Project that will consist of approximately 102 to 120 miles of new 345 kV transmission line from Dane County, Wisconsin to Dubuque County, Iowa, with associated substation expansions. ATC and ITC Midwest LLC (ITC Midwest) each owns 45.5% of the Project, and Dairyland Power Cooperative (Dairyland) owns the remaining nine percent. ATC states that the Project is estimated to cost between $492 million and $543 million, depending on the route, and that the transmission line is expected to be in service in December 2023. FERC granted both ATC’s and ITC’s request as meeting the requirements of Order 679, namely that an applicant must show that the facilities for which it seeks incentives either ensure reliability or reduce the cost of delivered power by reducing transmission congestion. FERC previously established the process for an applicant to demonstrate that it meets this standard, including a rebuttable presumption that the standard is met if: 1) the transmission project results from a fair and open regional planning process that considers and evaluates the project for reliability or congestion and is found to be acceptable to the Commission; or 2) a project has received construction approval from an appropriate state commission or state siting authority. FERC found that since the project was reviewed and approved in the MISO planning process, it met the rebuttable presumption. It also found that the incentive request was tailored to address the demonstrable risks or challenges faced by each applicant. These risks are federal (U.S. Fish and Wildlife Service and the Army Corps of Engineers), state (Wisconsin and Iowa), and local approvals, along with the easement acquisition process which could be contentious and result in delays or increased costs (the Project must also cross the Mississippi River as well as federal wildlife refuge lands), and in order to keep the Project on schedule toward its December 2023 in-service date, capital investments must be made before the ongoing, overlapping regulatory processes and easement acquisitions are complete.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates.