PPL (NYSE:PPL) is more than 50% complete on the 500-kV Susquehanna-Roseland transmission project, and energized a 17-mile segment of the line earlier in the week, PPL Chairman, President and CEO William Spence said during the company’s 3Q13 earnings webcast on Oct. 31.
“We continue to estimate completion of the Pennsylvania portion by June of 2015,” he said.
The line is a joint effort between PPL’s PPL Electric Utilities and Public Service Enterprise Group’s (NYSE:PEG) Public Service Electric and Gas (PSE&G).
“We continue to estimate completion of the Pennsylvania portion by June of 2015,” Spence said of the project, which will cost PPL $630m.
According to TransmissionHub data, the project was approved by Pennsylvania and New Jersey state regulators in 2010. The route runs from Berwick, Pa., past Wilkes-Barre and Scranton in Pennsylvania, then east to Hawley and southeast to Bushkill, where it crosses the Delaware River. The route follows an existing right-of-way for more than 90% of its 101-mile distance in Pennsylvania.
In 2011, the project was added to the initial list of President Obama’s administration’s Rapid Response Team for Transmission, aimed at coordinating and expediting the federal permitting process for critical infrastructure upgrades.
Spence noted that PPL recently received good news for the $335m Northeast Pocono Reliability Project, which, according to TransmissionHub data, is a planned 58-mile, 230-kV line that will improve reliability and support future growth in northeast Pennsylvania and the Poconos.
In addition to the new line, about 11.3 miles of new 138/69-kV lines would also be built in order to connect the new West Pocono and North Pocono 230-69-kV substations with the existing 69-kV system.
An administrative law judge (ALJ) with the Pennsylvania Public Utility Commission (PUC) “issued a recommended decision concluding that PPL met its burden on all issues and recommended that the commission approve the siting application, two zoning petitions and the remaining eminent domain applications,” Spence said. “We expect the final PUC order in the first quarter of 2014.”
In Kentucky, the company recently completed an evaluation of bids for future energy supply needs, he said, adding, “Louisville Gas and Electric and Kentucky Utilities plan to file for a certificate of public convenience and necessity to build a 700 MW combined-cycle natural gas power plant and a 10 MW solar energy facility. We expect that filing to occur by the end of the year.”
Those two projects, totaling about $725m, will provide Kentucky customers with reliable, low-cost generation that meet the latest U.S. Environmental Protection Agency regulations, Spence said.
On distribution, he noted that weather normalized sales in 3Q13 were slightly down in Kentucky and Pennsylvania from a year ago. In Kentucky, weather normalized residential sales were low in the quarter but remain higher for the 12-month period ending Sept. 30.
“Although Kentucky commercial sales were up almost 1% in the quarter, the 12-month period reflects the struggles of small businesses in the Louisville area and the economic impact to the mining industry downturn in eastern Kentucky,” he said. “Kentucky industrial volumes decreased primarily reflecting planned maintenance shutdown and lower production from some of our largest customers.”
In Pennsylvania, improved economic conditions led to higher weather normalized sales in the commercial sector in the quarter, which were offset by reductions in the residential and industrial sectors due largely to customers implementing energy efficiency measures, he said.
On an actual basis, the more temperate summer weather in the quarter compared to 2012 led to lower kilowatt-hour sales in both regions, he said, adding, “We expect total electric sales for both Kentucky and Pennsylvania for 2013 to be relatively flat year over year.”
Hydro deal, court matters
Spence also noted that in September, PPL announced an agreement to sell PPL Montana’s 11 hydroelectric plants to Northwestern Energy for $900m. That agreement, which is subject to regulatory approvals including by Montana state regulators and FERC, is expected to close in the second half of 2014.
The net proceeds of about $623m will help with the company’s future capital investment in its rate regulated businesses, he said.
PPL also recently completed a turbine inspection outage on Susquehanna Unit 2 at the Susquehanna nuclear plant in Pennsylvania. “Based on our engineering analysis of the Unit 1 turbine at Susquehanna, we’re not planning any outage until its planned refueling in the spring of 2014,” he added.
Among other things, he noted that PPL is “encouraged by two recent favorable decisions from the federal courts invalidating state attempts to subsidize new generation in” PJM Interconnection, Spence said.
“In these cases, federal judges agreed with us that New Jersey and Maryland unconstitutionally infringed on FERC’s exclusive authority to regulate the wholesale power market,” he said. “These decisions, in our view, reinforce the integrity of competitive generation markets.”
As reported on Oct. 14 by PennWell’s GenerationHub, a U.S. District Court judge in New Jersey on Oct. 11 invalidated a New Jersey state law subsidizing development of new natural gas-fired generation. The law, enacted in January 2011 with the support of New Jersey state regulators, required utilities to enter into long-term capacity contracts with generators chosen by the state Board of Public Utilities. PPL generating and marketing companies joined other merchant generators in filing a lawsuit seeking to block the law.
GenerationHub reported on Oct. 1 that a federal district judge ruled on Sept. 30 that a Maryland Public Service Commission initiative to encourage in-state power plant construction violates the “Supremacy Clause” of the U.S. Constitution.
“While Maryland may retain traditional state authority to regulate the development, location, and type of power plants within its borders, the scope of Maryland’s power is necessarily limited by FERC’s exclusive authority to set wholesale energy and capacity prices,” according to the opinion from the U.S. District Court of Maryland.
The court said, “Based on this principle, Maryland cannot secure the development of a new power plant by regulating in such a manner as to intrude into the federal field of wholesale electric energy and capacity price-setting.”
PPL on Oct. 31 announced 3Q13 reported earnings of $410m, or 62 cents per share, compared with $355m, or 61 cents per share a year ago. For the first nine months of this year, PPL’s reported earnings were $1.23bn, or $1.90 per share, compared with $1.17bn, or $2 per share, for the same period last year.
Adjusting for special items, PPL said its 3Q13 earnings from ongoing operations were $432m, or 66 cents per share, compared with $419m, or 72 cents per share, a year ago. For the first nine months of 2013, earnings from ongoing operations were $1.20bn, or $1.85 per share, compared with $1.13bn, or $1.93 per share, for the same period last year. PPL also noted that reported earnings and earnings from ongoing operations for both periods of 2013 were negatively affected by a 6 cents per share non-cash adjustment of deferred tax assets.
Among other things, the company said that its increased 2013 forecast of earnings from ongoing operations is a range of $2.30 to $2.40 per share, adding that the forecast of reported earnings is $2.35 to $2.45 per share, reflecting special items recorded through 3Q13.