The Virginia State Corporation Commission (SCC) on Jan. 24 authorized, with conditions, Appalachian Power Company (APCo) to build and operate the Cloverdale Expansion Project, which includes building four new extra high voltage transmission lines, the estimated lengths of which range from about 1,000 feet to 3,500 feet.
The SCC added in its final order that the public convenience and necessity require that APCo build, own and operate the project, which also generally consists of:
- The installation of a new 765/500-kV transformer bank and two new 500/345-kV transformer banks.
- The construction of a new 500-kV yard.
- The partial relocation of four existing transmission lines, the estimated lengths of which range from about 1,000 feet to 3,500 feet.
- Associated new substation improvements, including buswork, switches and related equipment.
In May 2013, APCo and its affiliate AEP Appalachian Transmission Company jointly filed with the SCC an application for approval and certification of electric transmission facilities in or around the existing Cloverdale substation located in Botetourt County, Va.
APCo is a wholly owned subsidiary of American Electric Power (NYSE:AEP). Virginia Transco, a wholly owned subsidiary of AEP Transmission Holding Company, was formed to serve solely as a transmission owner and would not provide retail electric service in Virginia. AEP Transmission Holding is a wholly owned subsidiary of AEP.
APCo and AEP Appalachian Transmission previously requested SCC approval to enter into certain affiliate agreements, including a proposed service agreement between APCo and Virginia Transco, the SCC added.
The SCC authorized limited affiliate services from APCo to Virginia Transco and did “not find that it [was] in the public interest … for Virginia Transco to supplant APCo in the construction or ownership of any transmission facilities, or the provision of any transmission service, in Virginia.”
In their application, the SCC added, the companies propose to build several projects, all of which would be located at or adjacent to the Cloverdale substation. APCo owns and operates two yards at that substation.
The companies proposed building the project to address identified NERC reliability criteria violations; address significant economic congestion on the bulk transmission system in the area, particularly on the 500-kV line between the Cloverdale substation and Dominion’s Lexington substation; and replace and upgrade obsolete equipment, including two existing 500/345-kV transformers at the substation that are approaching the end of their useful lives and are experiencing maintenance issues.
The companies’ desired in-service date for the project is Dec. 31, 2016, and the total estimated cost of building the project is about $237m.
The SCC also noted that the companies proposed that Virginia Transco would build, own and operate most of the project, with Virginia Transco’s portion of the project estimated at $222m of the $237m total estimated cost. The companies proposed that APCo would build, own and operate the rest of the project, at an estimated cost of about $15m.
In an order issued last June, the SCC, among other things, directed its staff to investigate and file testimony on the application. Staff requested that the state Department of Environmental Quality (DEQ) coordinate an environmental review of the application by the appropriate state and local agencies and provide a report on the review. The DEQ filed its report last July with the SCC clerk providing several recommendations, including that the companies reduce solid waste at the source, reuse it and recycle it to the maximum extent practicable and follow DEQ’s recommendation to manage waste, and limit the use of pesticides and herbicides to the extent practicable.
The SCC convened a public hearing last October.
The SCC also said that it found that the project is needed to ensure reliability, noting that staff verified the load flow studies, contingency analyses and projected load growth filed in support of the application and recommended that the project be approved.
Additionally, the SCC found that the proposed project will support economic development within the state, and is essential to support ongoing economic development within the Roanoke, Va., area.
The project, compared to other electric and routing alternatives considered in the proceeding, is the best alternative for meeting reliability and operational needs. Furthermore, the companies have adequately considered existing rights-of-way (ROWs), the SCC added, noting that the project will make extensive use of existing ROWs, with almost all of the new and relocated lines that are part of the project proposed for construction using or paralleling existing ROWs.
The routes chosen for the new and relocated lines associated with the project, as well as the use of an existing transmission corridor to expand the substation, reasonably minimize adverse impact on the scenic assets, historic districts and environment in the project area.
The SCC further noted that it conditions the approval granted on the conditions recommended in the DEQ report, with some exceptions. For instance, the SCC does not require APCo to use, for this project, a vegetated buffer for on-site wetlands and streams different than the company’s established practice.
The companies and staff have offered evidence and argument on the issue whether Virginia Transco should be allowed to supplant APCo in the construction or ownership of any transmission facilities, or the provision of any transmission service in the state, the SCC said.
The SCC found that the public convenience and necessity require construction, ownership and operation of the entire project by APCo and the evidence does not support a finding that the public convenience and necessity require Virginia Transco to build, own or operate – or to supplant APCo in any aspect of – the project.
APCo has the expertise and ability to finance, build, own and operate the project, and the record shows that the company is capable of expanding in order to maintain reliable electric service in Virginia.
The SCC is concerned about the potential effects, on APCo and its customers, of shifting credit-supportive investment away from APCo, the SCC added, noting that the project will strengthen the diversity and balance of public utility assets used by APCo to serve its customers.
The SCC said it denied the proposal to “offload almost all of the relatively low-risk project to another affiliate,” adding that expanding the limited affiliate arrangement between Virginia Transco and APCo would not “protect or promote the public interest.”
Among other things, the SCC said that construction must be completed and in service by Dec. 31, 2016, provided, however, that APCo is granted leave to apply for an extension for good cause shown.