FERC on Nov. 14 approved incentive rate treatment for the Spoon River and Mark Twain transmission projects proposed by Ameren Transmission Company of Illinois (Docket No. ER12-2216-000).
Along with the Illinois Rivers project, for which FERC approved similar regulatory treatment in May 2011, the projects are part of the $1.3bn of multi-value projects approved by the Midwest ISO (MISO) board in December 2011.
“This approval paves the way for important new investment by Ameren Transmission to deliver renewable energy in the Midwest, promote electric power reliability, lower costs for consumers by reducing transmission congestion and create jobs which are important to the economy,” Maureen Borkowski, President and CEO of Ameren Transmission, said in a statement.
In its order, FERC approved Ameren’s request to include 100% of construction work in progress (CWIP) costs in rate base for both projects, referring to the pressure of the projects’ combined $364m price tag.
“Granting the CWIP incentive will help ease this pressure by providing upfront certainty, improve cash flow, and reduced interest expense as Ameren moves forward with the projects,” the commission said in its order.
FERC also granted the Ameren companies’ request for the opportunity to recover 100% of abandoned plant recovery costs, provided they were “abandoned for reasons beyond the Ameren Companies’ control,” the commission said.
In addition, FERC also approved forward-looking formula rates for Ameren Illinois’ transmission facilities. That provision will provide timely cash flows that will enable the companies efficiently finance investments, Ameren said.
FERC also granted Ameren permission to use a hypothetical capital structure of 56% equity and 44% debt, which the commission said should “provide sufficient financial stability to attract a steady stream of outside investment during the construction period.”
Finally, FERC gave Ameren permission to assign the CWIP and abandoned plant recovery costs to its affiliates.
In total, the approved regulatory treatment supports the investments and facilitates the cost-effective financing of the projects, Ameren said.
“Growth in our transmission business is a key part of our corporate strategy,” Thomas Voss, chairman, president and CEO of Ameren Corporation (NYSE:AEE), said in a statement. “This FERC approval is an important milestone in implementing this strategy.”
The Spoon River project in Illinois is a new 345-kV project that will run approximately 70 miles from the Oak Grove substation owned by MidAmerican Energy to Ameren Illinois’ Galesburg substation, and then to the Fargo substation through central Illinois. The project is estimated to cost $209m and has an anticipated in-service date of November 2018, according to the FERC order.
The Mark Twain project in Missouri will create a 345-kV path through central and eastern Missouri by connecting the Ottumwa substation to a new substation near Adair, Mo. The project will then extend a 345-kV line from the new substation to Palmyra, Mo., near the Illinois border. Approximately 88 miles of new and rebuilt 345-kV line will be installed between Ottumwa and Adair. Approximately 63 miles of new 345-kV line will be built between the new substation near Adair and Palmyra. The preliminary cost estimated for the project is $155m, with an anticipated in-service date for both new lines of December 2018.
The largest of the three, the Illinois Rivers project, is a new 345-kV project that will span approximately 400 miles from a point near Quincy, Ill., east across Illinois to the Indiana border. The preliminary cost estimate for the project is $1.1bn, according to TransmissionHub data.
Ameren Transmission has filed a petition with the Illinois Commerce Commission (ICC) for a certificate to build the Illinois Rivers project. The company expects the ICC to issue a decision by mid-2013. The project is anticipated to be placed in service in 2016.