Companies competing to upgrade electric grid

Jul 3, 2008 - John Hanna - The Associated Press

Industry and government officials agree the U.S. needs what amounts to a new interstate highway system for electricity if it is to fully harness wind power.

They’re looking to utilities and other companies to build new transmission lines, and a fight has started in Kansas for the right to build — and profit from — the first stretches of a regional, high-voltage circuit.

Two rival projects, each expected to cost $2.2 million a mile, are in the works to link Wichita to southwest Kansas through the region’s highest-voltage lines. Their backers have competing applications before state regulators.

One project is from ITC Great Plains, a Topeka-based subsidiary of a Michigan transmission company. The other involves Westar Energy Inc., the state’s largest electric utility; an Ohio-based energy company, and another firm with ties to billionaire investor Warren Buffet.

Whoever prevails, the new lines could carry up to six times as much electricity as the biggest existing lines in the area. Those lines would allow large volumes of power to move from wind farms to consumers and help meet a growing demand for electricity.

“We need more transmission all around the country,” said Jim Owen, spokesman for the Edison Electric Institute, a trade group for investor-owned utilities. “Even the face of an economic downturn, we’ll still have growth in electricity demand.”

ITC Great Plains announced its plans first, in July 2007, and hopes to have its lines up in 2011. Westar and its partners announced in May that they had formed Prairie Wind Transmission to build high-voltage lines by 2013.

ITC Great Plains is a subsidiary of ITC Holdings Corp., based in the Detroit area. It has transmission lines mostly in Michigan but also Illinois, Iowa, Minnesota and Missouri.

In Prairie Wind, Westar is involved with subsidiaries of American Electric Power, based in Columbus, Ohio, and MidAmerican Energy Holdings Co., of Des Moines, Iowa. Buffet is a MidAmerican director; his Berkshire Hathaway Inc. is MidAmerican’s majority owner.

The Kansas Corporation Commission, which regulates utilities, must sign off on new high-voltage lines.

Also required is consent from the Southwest Power Pool, designated by federal officials to oversee the grid in Kansas and Oklahoma and parts of Arkansas, Missouri, Louisiana, New Mexico and Texas. The pool has the authority to spread construction costs to consumers across its region.

Both proposals contemplate lines of up to 765 kilovolts, larger than anything in the pool’s region — or in most places across the country.

Their backers said the new lines will be far more efficient and provide protection against blackouts.

They also said U.S. power grids haven’t seen any systematic upgrades for at least a generation. Utilities whose customers once were confined to a small area now want to sell power wholesale across state lines.

“Now we’re trying to get the transmission system to a condition where it can serve as sort of interstate highway system,” said Kelly Harrison, Westar’s vice president for transmission operations.

But wind farms also are a big reason for such lines.Both the companies and environmentalists believe new lines are needed to move wind power from sparsely populated areas to where customers live — even across the nation.

The Southwest Power Pool estimates wind farms could increase the power-generating capacity in its region by more than 80 percent. But existing lines can’t handle such a load, said Les Dillahunty, the pool’s vice president for regulatory policy.

“We’ve got to build 765 to transport this wind,” he said. “The sooner, the better.”

ITC’s V-shaped, 180-mile route would drop from the Wichita area, through Medicine Lodge to the Kansas-Oklahoma border, then run up to the Dodge City area.

The rival project would have a 230-mile, Y-shaped track. The first part would be from Wichita to Medicine Lodge; from there, separate legs would go to the border and to Dodge City.

ITC officials contend the shorter — and less expensive — route is better for consumers. Also, the Southwest Power Pool has included the project in its latest 10-year plan for upgrades.

ITC Holdings focuses only on transmission and argues that independent companies will create a more efficient grid. ITC Holdings reported $426 million in revenues in 2007.

Joseph Welch, ITC Holdings’ chairman and chief executive officer, suggested being first to announce a project is important: “If we didn’t come here, these proposals would not be on the table.”

But Harrison said Westar is working with industry leaders.

AEP reported almost $13.4 billion in revenues in 2007 and announced plans in 2006 for a 550-mile, 765-kilovolt line from West Virginia to New Jersey. It provides electricity to customers in 11 states.

MidAmerican reported $12.4 billion in revenues in 2007. It has electric and natural gas customers in 10 states and operations in Great Britain and the Philippines.

Dillahunty said the Southwest Power Pool hasn’t sorted out how to settle on one plan. Both ITC and Westar are trying to intervene in each other’s cases before the Kansas commission, and no hearings are set.

“With Kansas being in the middle of the country, particularly with our wind farms, there’s a lot of interest in activity in our state,” said KCC spokeswoman Rosemary Foreman.

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On the Net:

Kansas Corporation Commission: http://kcc.ks.gov/
Southwest Power Pool: http://www.spp.org/
ITC Holdings Corp.: http://www.itc-holdings.com/
Westar Energy: http://www.westarenergy.com/
American Electric Power: http://www.aep.com/
MidAmerican Energy Holdings Co.: http://www.midamerican.com/

By John Hanna Associated Press Writer
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