Tres Amigas Transmission Superstation Sees November Groundbreaking

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Tres Amigas Super Substation, a $1.5 billion transmission interconnection project in Clovis, New Mexico, is now expected to break ground in November 2012, David Stidham, the project's senior vice president and chief operating officer, told Industrial Info. The project has selected three engineering, procurement and construction (EPC) firms to build the project's buildings, transmission lines and converter stations, but Stidham will not release their names right now. He said he hopes to disclose the names of the EPC firms in a few weeks, once negotiations with them are complete. Clovis links the Eastern, Western and Texas electric Power grids.

Groundbreaking on the massive project has been delayed a few times. Stidham denied that the delays occurred because the firm was having trouble lining up financing. "Financing is the least of our worries," he said, adding that the project expects to go to Wall Street to float bonds in September 2012. "The lenders are waiting on us," Stidham said. Several financial firms have given oral commitments to Tres Amigas to float bonds, but Stidham would not disclose the names of the firms. "There is considerable global interest in our project--both technical and financial," he said.

"Tres Amigas" is Spanish for "three girlfriends." When Stidham was asked why the project was named Tres Amigas, he replied, "In Spanish, the word for grid is feminine. And we were not aware of any utility substation or power plant that was named after a woman." So the name seemed natural.

The project has been under development since 2008 by Tres Amigas LLC (Santa Fe, New Mexico). The Tres Amigas executive said "head-butting" between the Southwest Power Pool (SPP) (Little Rock, Arkansas) and Xcel Energy Incorporated (NYSE:XEL) (Minneapolis, Minnesota) is the reason the groundbreaking has been delayed. Both SPP and Xcel need to sign interconnection agreements with Tres Amigas. "A bureaucratic issue is holding up the interconnection agreements," he said, adding that the project recently signed an interconnection agreement with Public Service Company of New Mexico (PNM), the largest electric utility in New Mexico. PNM is a unit of PNM Resources Incorporated (NYSE:PNM) (Albuquerque).

Limited interconnections among the Eastern, Western and Texas grids have constrained bulk-power sales among the three regions. If Tres Amigas can connect the three separate grids, the efficiency of the U.S. wholesale electric power market should improve significantly. This could reduce the need for some generation projects, as utilities could meet a greater portion of their power requirements through wholesale transactions with other generation owners.

The 4,350-megawatt (MW) project will be constructed in three phases:

• Phase I will be a 750-MW connection of the Eastern and Western grids. Assuming groundbreaking takes place in November 2012, Phase I could be operating by March 2015.
• Phase II will be a 1,500-MW connection of the Eastern and Texas grids. Construction is scheduled to begin November 2013, and an in-service date of March 2016 is planned.
• Phase III will be a 2,100-MW connection between the Western and Texas grids. Construction is scheduled to begin in November 2014, and a March 2017 operating date is planned.

About 350 construction jobs will be created by this project, Stidham estimated. He added the project has encountered no siting or permitting problems. "Tres Amigas has a 550-acre footprint, and we have lease rights for 15,000 acres," he said. If permitting or environmental challenges were to develop, the owners have plenty of land to potentially reroute equipment or lines to mitigate potential impacts.

"The way we buy and use electricity hasn't changed from our granddad's time, but Tres Amigas will revolutionize the way we buy and use electricity," Stidham said. "Tres Amigas will increase markets for supply as well as consumption. It triples a utility's options. Our project is being driven by the inefficiencies of the existing grids. We are indifferent to the color of the electrons we plan to move. They can be green, or orange, or black. We won't be painting them."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.