Huge Western Transmission Build-out Turns on Winning Friends and Influencing People Locally

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Western high-voltage electric transmission grid is scheduled to draw tens of billions of dollars of in new project investments in the coming years, but the fate of those projects will continue to hinge on local concerns like land use and rights of way, speakers told a Web conference this week about the Western transmission grid build-out.

"The Western grid is about to have an extreme makeover," said Randy Rischard, vice president of data and analytics at Energy Central (Aurora, Colorado). "Over the next five years, a massive grid expansion is scheduled to add more than 25,000 miles of new transmission. The expansion has already begun. New transmission will be built in every state and sub-region in the West, each of which presents its own sets of challenges."

By Rischard's reckoning, more than $70 billion could be spent to expand and strengthen the Western interconnection. A significant portion of this spending will be to connect new, remotely sited renewable energy generation projects to an interstate network of high-voltage transmission lines that spans 14 Western states, the Canadian provinces of Alberta and British Columbia, and portions of Mexico. Speaking in the Web conference July 31, Rischard said more than 50 proposed transmission projects in the region are rated at 500 kilovolts (kV) or more. More than two dozen of these high-voltage projects exceed 200 miles. More than a dozen are longer than 400 miles.

As such, these projects will cross a lot of local, county and state boundaries, which means that a few hundred local, county and state officials will continue to exercise veto authority over multibillion-dollar projects designed to benefit tens of millions of people. "New transmission projects are planned for every state and sub-region in the West," Rischard said. "Each state and sub-region presents its own sets of challenges, such as local land use and rights-of-way decisions."

Last year, the Federal Energy Regulatory Commission (FERC) (Washington, D.C.) issued Order 1000 to expedite and standardize interstate transmission planning and cost-allocation. But in an interview subsequent to his Web conference, Rischard said, "Most of the challenges come down to local issues that are beyond federal purview. They will not be solved by FERC Order 1000." For more on FERC's Order 1000, see July 28, 2011, article - Surge in Spending Could Follow FERC's Transmission Cost-Allocation Order; September 27, 2011, article - FERC Order No. 1000 Attempts to Ease Power Transmission Construction Issues; and October 21, 2011, article -- Experts: No Quick Fix to U.S. Transmission Logjam.

For that reason, speakers in the July 31 Web conference emphasized the strategic importance of stakeholder outreach and flexibility to accommodate route changes and mitigation measures required by local planners. One proposed project, the SunZia Southwest Transmission Project, extended its project by 23%, about 100 miles, to accommodate changes from a planning authority. The 500-kV project, which will have two alternating current (AC) lines, has a total investment value (TIV) of about $850 million. Project manager Tom Wray told the July 31 Web conference that it takes about 10 years to develop a project of that size. SunZia expects to spend about $5 million to $7 million each year to permit and develop the project.

"Mitigations costs are real costs, no less than steel or cable," Wray said. SunZia expanded its length to accommodate the needs of a military base in southern New Mexico, he added. "Avoidance is the preferred form of mitigation in planning proposed and alternate routes," Wray said, referring specifically to military installations.

But avoiding military bases in the West, and mitigating the impact on federal lands in the region, is getting harder because the federal government owns so much land in the West, speakers noted. One way developers could increase their chances of avoidance is to use high-voltage direct current (HVDC) lines, which require about one-third of the rights of way for AC lines, according to Keith Sparks, director of development for Clean Line Energy Partners (Houston, Texas).

HVDC lines also are well-suited for transmitting large amounts of electricity across long distances, typically more than 400 miles, Sparks told the Web conference. Clean Line's Centennial West DC transmission project will stretch an estimated 900 miles from eastern New Mexico to southern California. The 600-kV line will carry up to 3,500 MW of electricity and has a TIV of about $2.5 billion. Fortunately, Sparks noted, the transmission developer is backed by "patient capital" that is willing to invest in long-term projects that carry potentially high long-term returns.

Centennial West, under development for about two years, expects to begin construction in 2016 and become operational in 2019, Sparks continued. The developer has already met with more than 150 local officials in 18 workshops that were held in four states and two tribal nations. Clean Line officials expect to continue seeking input from state and federal regulators, environmental groups, elected officials and potential suppliers until about 2015, he said.

"Public input can seem intimidating, but it is critical to successfully developing big transmission projects in the West," he said. "Environmental and siting concerns are inherent to building transmission infrastructure in the West. There are lengthy, multi-jurisdictional environmental and regulatory permitting processes at the state and federal levels. Political issues inject uncertainty and impact various processes and markets, particularly in California. There are a broad range of constituents with diverse interests that need to be accommodated."

To dramatize the long-term nature of stakeholder involvement for large transmission projects, Chris Jones, vice president of Duke American Transmission Company (DATC), discussed his company's $3.5 billion Zephyr Power Transmission Project, a 500-kV HVDC project of between 725 and 950 miles stretching from eastern Wyoming to southern Nevada. DATC is a joint venture between units of Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) and American Transmission Company (Pewaukee, Wisconsin). Jones told the Web conference DATC began engaging stakeholders in early 2012, and it expects its outreach will continue through the project's permitting, engineering and construction phases until the project is energized in 2020.

"You need to communicate early and often," Jones told the July 31 Web conference. "Stakeholder involvement will show you respect the community and the environment. We want to avoid, reduce, or mitigate environmental and community impacts so that our projects can be part of the solution."

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