MidAm forms joint venture targeting Ontario’s east-west tie line project

A Canadian subsidiary of MidAmerican Transmission and Renewable Energy Systems Canada, have entered into a joint venture (JV) with the intent of sponsoring a competitive proposal for Ontario’s proposed east-west tie line project.

The JV, which will be named RES Canada Transmission, L.P., “reflects MidAmerican’s further commitment to complete electric transmission projects in a timely and cost-effective manner, which will ultimately provide economic benefits to and improve reliability for electric end-use customers,” Greg Abel, president and CEO of MidAmerican Energy Holdings Company, said in a statement announcing the partnership.

MidAmerican Energy Holdings is the parent company of MidAmerican Transmission and the Canadian subsidiary.

“The expansion of MidAmerican Transmission will help provide important benefits to customers in Canada through this joint venture with RES Canada and in the U.S. when competition is established under … FERC Order 1000,” John Cupparo, president of MidAmerican Transmission, said in the statement. “MidAmerican Transmission will seek to develop transmission projects jointly with footprint utilities in this competitive environment but also is positioned to compete on a stand-alone basis.”

Unlike the proposed JV between NextEra Energy Canada (NYSE:NEE), Enbridge (NYSE & TSX:ENB) and Borealis Infrastructure, the RES Canada JV does not need to be approved by the Ontario Energy Board (OEB), a MidAmerican spokesperson told TransmissionHub Oct. 30.

In that case, the OEB is being asked to grant regulatory approvals that would allow Enbridge and Borealis to acquire interests in NextEra Energy Canada’s subsidiary, Upper Canada Transmission.

However, the OEB has a more limited role in the RES Canada JV.

“The OEB is the deciding entity of who wins the bid,” the spokesperson said. “Then, there’s a ‘leave to construct’ process, but the point at which it goes before the OEB is when it’s deciding who will win the bid.”

As proposed, the 400-kilometer (248.5-mile) East-West Transmission Tie would connect the township of Wawa and the city of Thunder Bay, both on the northern shore of Lake Superior in Ontario. The project could be in service by 2017.

The line, which is one of the priority transmission projects identified in Ontario’s Long-Term Energy Plan issued in 2010, is expected to “maintain system reliability, allow more renewables, [and] accommodate electricity requirements of new mineral processing plants,” according to the OEB’s plan. It will also allow for the retirement or conversion of coal-fired power plants in the northern part of the province, the OEB said in the plan.

According to the OEB plan, the project’s C$600m (US$599.5m) cost is expected to be outweighed by the savings to the ratepayers of Ontario through lower congestion resulting in decreased generation costs, lower losses and increased reliability.

In March 2011, the Ontario Minister of Energy directed the OEB to create a designation process to designate and select the most qualified and cost-effective transmission company to develop the line.

As part of that process, applications from parties interested in bidding on the project are due at the OEB by Jan. 4, 2013, an OEB spokesperson said.

Following receipt of the applications, the OEB will decide on a hearing process, which must take place before the OEB can decide which concern will be awarded the project.

MidAmerican would not speculate about the level of competition it expects for the project contract. Other companies have said they expect only a handful of companies to bid on the project.

The OEB does not have an estimated time frame for a decision, as this is the first time the OEB has gone through this kind of a process. “It’s new territory for us,” the OEB spokesperson said.

Once the hearing is concluded and a company designated, the concern will have to file a “leave to construct” application with the OEB. The OEB will then have to review and approve the plans before the line can be built, according to the OEB spokesperson. The company will also be required to get various environmental and other approvals before construction can begin.