AESO: Fort McMurray West competitive solicitation attracts 70 companies

The Alberta Electric System Operator’s (AESO) request for expressions of interest (REOI) – initiating the first competitive process the AESO has held – to construct the Fort McMurray West transmission line yielded 30 submissions by the June 19 deadline.

The Alberta government mandated the AESO to develop a competitive process for transmission projects and submit it for approval to the Alberta Utilities Commission (AUC); the AUC approved the competitive process on Feb. 14.

“The feedback [and] the interest we had during the REOI was beyond what I had hoped for,” Elizabeth Moore, director of the competitive process for the AESO, told TransmissionHub on July 3. “So far it’s been very successful and we have the government … backing us on this, and AESO senior management and board are firmly behind us on this as well, so there’s really nothing to get in our way here except for a lot of hard work.”

Though only 30 companies formally submitted REOIs, about 70 companies and 120 people attended the AESO’s informational meeting last month on the project. The significantly higher number of companies that attended likely indicates that they will team up in consortia to bid on the project, according to Moore.

The AESO hopes to open the next phase in the competitive solicitation process, the request for qualifications (RFQ), by the end of July. The AESO is waiting for a decision from the AUC regarding one of the 10 conditions it required the AESO to comply with in order to begin the RFQ.

“Nine of the conditions we were fine with but one of the conditions, condition nine, requires the AESO to allow the short-listed proponents [to] bid on different contracts,” Moore said. “If the AESO [were] to do that, it would make it very difficult for us to evaluate pricing associated with five different contracts, because it would compare apples to oranges … We couldn’t figure out who the lowest-price party was because it [would be] associated with a different contract.”

She continued: “We’ve asked that they rely on the AESO to get feedback from the five short-listed proponents about contractual terms and who’s going to take on what risk. After we have those discussions, the AESO would make a determination [as to] who was going to take what risk and then everyone would bid on the same risk allocation, [or] the same contract.”

The RFQ process takes about five months, including three months for proponents to submit applications, and a two-month review process.

Three panels, each with three independent experts on finance, technical requirements and environmental and stakeholder issues, will evaluate the RFQ submissions and choose up to five applications to proceed to the request for proposals (RFP) stage. The RFP is scheduled to open in December, with a final decision expected in December 2014.

The RFP phase consists of two main components – the technical and financial plans of the proponents, Moore said.

Once the RFP process concludes for Fort McMurray West, the AESO will open the competitive solicitation process for the Fort McMurray East project, Moore said.

“The competition for that line is expected to start either late 2014 or early 2015,” she said. 

The winning bidder for the Fort McMurray West project will submit an application to the AUC for a permit to construct and a license to operate the line. That process is expected to take three years, with construction anticipated to begin in 2017.

The project is scheduled to enter service in 2019.

Though a first for transmission, AESO didn’t reinvent the wheel

In formulating the first competitive process for electric transmission, the AESO followed some precedent for Alberta’s infrastructure development processes.

“We haven’t created a new wheel here,” Moore said. “We’ve just refined what the Alberta government currently does when they build major infrastructure in the province, so … we’ve got a lot of copying of the competitive processes for the roads in Alberta, in terms of how the tendering works. We pulled a lot of contractual provisions from existing contracts for roads in Alberta.”

The Fort McMurray West project is a 500-kV single-circuit transmission line that will run approximately 62 miles from the proposed Thickwood Hills substation, west of Fort McMurray, to the existing Livock substation in the Wabasca area. From there it will run about 248 miles to the approved Sunnybrook substation in the Wabamun area.

Altogether, the line is estimated to be 310 miles long.

It will meet power demand in the Fort McMurray area, driven by oilsands development, according to an AESO flyer on the project.

Over the last 10 years, peak load in the Fort McMurray area has grown from 855 MW in 2003, to 1,735 MW in 2013, the AESO said.

“This means that the amount of power consumed in the Fort McMurray area is now about the same as the amount of power used in either Calgary or Edmonton,” the AESO said in the flyer.

Load in the Fort McMurray area is expected to more than double again over the next 10 years, rising from 1,735 MW in 2013 to 3,905 MW in 2022, according to the flyer. Then, between 2022 and 2032, load in the Fort McMurray area is expected to grow another 765 MW, to 4,670 MW.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.