Developers of the Tres Amigas superstation, planned near Clovis, N.M., as a way to permit power and ancillary service transactions to be scheduled between the three asynchronous interconnections in the continental United States, are working to obtain the construction financing needed to move the project to its next phase.
“We’re getting everything together to go out some time this month, and it’s probably going to be a two-month process to raise the $500m” needed for the first round of construction financing, Russ Stidolph, Tres Amigas’ CFO told TransmissionHub Sept. 11. “The most important thing is to have the financing in place, and we’re going to do that before year-end.”
The company will be talking to institutional investors, both on the debt and equity side, he said.
Company officials engaged two New York financial institutions in mid-June in their efforts to raise the needed financing. Since then, developers have been working on the tasks that need to be completed before the banks can raise the first round of funds.
Those tasks include the filing of interconnection agreements and arranging for industrial revenue bonds (IRB).
On Aug. 8, Public Service Company of New Mexico (PNM) filed with FERC a transmission construction and interconnection agreement it had executed with Tres Amigas. PNM asked that FERC “accept the interconnection agreement without modification or condition as of ” Oct. 7 (Docket No. ER12-2424).
The first phase of the project will include the construction of a two-way interconnection between the Tres Amigas station and PNM’s transmission system, according to an Aug. 29 FERC filing by Tres Amigas. The second interconnection will be between Tres Amigas and the system of Southwestern Public Service Company in the Eastern Interconnection, the filing said.
Tres Amigas “is in the final stages of negotiating an interconnection agreement with [Southwestern Public Service d/b/a Xcel Energy (NYSE:XEL)] and the Southwest Power Pool and expects that interconnection agreement to be filed shortly,” according to the filing.
The company is also seeking approval from the city of Clovis, N.M., for an IRB, which would exempt the project from property taxes “as one of the many incentives available,” Chase Gentry, executive director of the Clovis Industrial Development Corp., told TransmissionHub on Sept. 11.
The organization is discussing what is called a “self-funded industrial revenue bond” of $1.9bn with the city. Under the terms of an IRB, the municipality or county issuing the bond holds the title to the property for the life of the bond, and makes the property exempt from property tax for the life of the bond, Gentry explained.
According to its web site, the Tres Amigas project is estimated to cost $1.5bn. An IRB amount of $1.9bn would cover any additional expenses that may be involved, and “would potentially cover all three phases of their project,” he continued.
IRBs typically include conditions that an organization granted an IRB must meet, and failure to meet those conditions could result in the invalidation of the IRB. In that case, the property covered by the IRB would all become subject to property tax, Gentry said.
In addition Bernalillo County, where the state capital of Albuquerque is located, on Aug. 14 authorized the issuance of $20m in IRBs. Tres Amigas plans to locate its corporate headquarters and control and operations center in or around Albuquerque, Stidolph said.
PNM is owned by PNM Resources (NYSE:PNM).