ITC Interconnection LLC (ITCI), a subsidiary of ITC Holdings (NYSE:ITC), filed a Federal Power Act Section 203 application at FERC to acquire certain facilities in Michigan from New Covert Generating Co. LLC (New Covert) to connect the existing New Covert power plant to the PJM Interconnection grid.
ITCI sought permission to buy from New Covert various breakers, switches and related equipment at the plant switchyard and to build a short 345-kV transmission line to the existing Segreto substation, owned by an affiliate of American Electric Power (NYSE:AEP). ITCI said it would purchase the facilities at their net book value of $8.5m.
New Covert owns the 1,100 MW combined-cycle plant in Covert Township, Mich., which is currently connected to the Midcontinent ISO (MISO), and it has been in the process of switching the plant to the PJM market, ITCI explained. The expected commercial operation date for the change to PJM is June 1, according to the March 24 application (Docket No. EC16-92).
To make that change, because New Covert does not intend to own or operate transmission facilities, it has entered into a series of agreements with ITCI to build, own and operate approximately one mile of 345-kV transmission line from the New Covert plant switchyard to the Segreto substation near Covert, Mich.
ITCI said it is in the process of becoming a transmission owner within PJM, and that it will provide transmission service pursuant to PJM’s open access transmission tariff. Because the assets would be purchased at net book value and ITCI would receive revenue from a facilities reimbursement agreement between New Covert and ITCI, no transmission customers would be paying for the assets and the transaction would not have any adverse impact on rates, ITCI told FERC.
ITCI also pledged to hold harmless all transmission customers from any costs associated with the transaction for a period of five years to the extent that such costs exceed savings related to the deal.
The transaction will not involve the disposition of any generation assets, and it will not result in any change in market concentration for generation, meaning there should be no horizontal market power concerns raised as a result, ITCI said.
Similarly, the transaction would have no adverse effect on competition in transmission or on vertical market power, since transmission service would be provided under the PJM tariff, ITCI said.
The company asked FERC to approve the deal under FPA Section 203 without modification, condition or trial-type hearing by May 13.