High Plains Express progressing slowly but still alive

Progress on the proposed 1,300-mile High Plains Express (HPX) project has slowed to a crawl, but project participants say the project is still very much alive.

“Right now, we’re in stage three of the project plan,” Lawrence Willick, senior vice president of project participant LS Power and co-chair project’s leadership committee, told TransmissionHub on June 21.

Stage three involves evaluation of the project in light of the technical and economic feasibility studies conducted in stage two. Stakeholders were presented with the results of stage two more than a year ago, in April 2011, and the results were not positive.

The stage two report concluded there was significant uncertainty around the base-case assumptions, that the project risk in terms of both development capital and construction capital was very large, and that it was not reasonable to risk significant development capital based on the benefit-cost ratio for the entire project in light of the uncertainties.

“At that time, it didn’t make sense to begin permitting or development work on the project,” Willick said. “At the same time, it didn’t make sense to cancel the project, so we’re continuing to evaluate and see if changes in market conditions would change that conclusion and make sense to move ahead.”

The project was envisioned as a proactive plan for the expansion and reinforcement of the transmission grid in the states of Wyoming, Colorado, New Mexico and Arizona, with the goal of developing a high-voltage backbone transmission system that will enhance reliability and increase access to renewable and other generation resources within regional energy resource zones.

The 500-kV transmission line would originate at Laramie Station, Wyo., and terminate at the Palo Verde nuclear generating station outside Phoenix, Ariz. It is estimated to cost between $3.4bn and $8.3bn, depending on whether a single- or double-circuit line is chosen, and whether the project ultimately follows a single or two separate corridors.

But changes in the economy since the first stakeholder presentation in March 2007 changed the financial dynamics of the project, a spokesperson for participant Xcel Energy (NYSE:XEL) told TransmissionHub.

While several of the original project participants have backed out, those that remain are hoping that an economic turnaround will enhance the project’s financial feasibility.

In addition, some participants are hopeful that regulatory changes will work to the project’s benefit.

“Progress has slowed pending [compliance filings] for Order 1000,” Loyd Drain, executive director of project participant Wyoming Infrastructure Authority, told TransmissionHub on June 21. “Hopefully as Order 1000 gets compliance, that could help the project a lot relative to cost recovery. We’re looking forward to seeing how that evolves.”

With regional planning requirements due to FERC by Oct. 11 and interregional compliance filings due April 11, 2013, it could still be many months before participants will be able to gauge the effects of the order on the HPX project.

In the meantime, project leaders will continue to evaluate market conditions and the regulatory environment, and reevaluate the project as conditions change.