LS Power, Hoosier Energy, and Big Rivers Electric Cooperative are the winners of a solicitation to build, own and operate a transmission project in the Midcontinent ISO region that is due online by Jan. 1, 2021.
The 345-kV Duff-Coleman power line will run 33 miles from Vectren Energy Delivery’s Duff substation in Dubois County, Ind., to Big Rivers’ Coleman substation in Hancock County, Ky., and cost an estimated $49.8 million to build.
- The project award was the first conducted by MISO pursuant to the Federal Energy Regulatory Commission's Order No. 1000, which was designed to foster competition in transmission.
Despite trimmed returns, MISO is looking to expand its transmission network with plans for up to 394 projects totaling $2.8 billion. About half of the total expected layouts would be for new or upgraded transmission projects with about 45% for substation improvements.
FERC in October cut return on equity (ROE) for transmission owners in MISO by about two percentage points, bringing it down to 10.3%. The federal agency was acting in response to a 2013 challenge by industrial customers in MISO who argued that the prevailing 12.38% ROE was too high.
The lower returns were still are attractive enough to attract bidders to MISO transmission solicitation.
MISO said one of the key features in the winning bid from Republic Transmission, as the consortium is known, was a $58.1 million firm ratebase cap, which puts a limit on potential costs to ratepayers.
"The binding cost containment provisions we offered, including a cap on costs, demonstrate the benefits that competition for transmission provides consumers," Paul Thessen, LS Power president, said in a statement.