The PJM Interconnection board in August selected Transource to develop the competitive portions of the Southern Pennsylvania Project, and Transource’s portion of the project is valued at $225m, Terry Bassham, chairman, president and CEO of Great Plains Energy (NYSE:GXP) and KCP&L, noted on Nov. 4 during Great Plains Energy’s 3Q16 earnings call.
As noted on its website, Transource, a partnership between American Electric Power (NYSE:AEP) and Great Plains Energy, is focused on the development and investment in competitive electric transmission projects across the United States. AEP owns 86.5% of Transource, while Great Plains Energy owns 13.5% of Transource, according to the site.
“Construction on the project’s two 230-kV lines is expected to begin in 2019, with an in-service date in late 2020,” Bassham said during the call. “Transource remains well positioned to deliver innovative transmission solutions to the grid.”
According to an August PJM staff whitepaper, the “Market Efficiency project 9A: IROL Market Efficiency Baseline Project B2743 and B2752 – Southern Pennsylvania Project,” includes:
- The West Line: About 27 miles of new double-circuit 230-kV alternating current overhead transmission line configured in a six-wired arrangement between the existing Ringgold substation to a new Rice substation that will tie into the existing Conemaugh-Hunterstown 500-kV line
- The East Line: About 14.5 miles of new double-circuit 230-kV alternating current overhead transmission line configured in a six-wired arrangement between the existing Conastone substation to a new Furnace Run substation that taps the existing Three Mile Island-Peach Bottom 500-kV line
Great Plains Energy’s pending acquisition of Westar Energy (NYSE:WR) remains on track to close in spring 2017, Bassham said during the call.
“We’re pleased with the support we’ve received for the transaction, which we believe will drive long-term shareholder value and cost savings for customers,” he said.
As reported, when Great Plains Energy acquires neighboring Westar Energy, pending the necessary approvals, the combined company will still lean heavily on coal-fired generation, but also will be a major wind energy player as well.
During a May 31 conference call, the CEOs of the two companies called the proposed deal a natural combination of two neighboring utility-holding companies that each have a long history in Kansas.
Both companies operate in the Southwest Power Pool and their respective headquarters are located about 60 miles apart.
Where Great Plains Energy has an energy mix that is 54% coal-fired (and only 1% renewable), the acquisition of Westar will create a company that is 51% coal-fired and 5% renewable, according to slides that accompanied the May 31 announcement.
While the current Great Plains Energy is 27% natural gas-fueled, the expanded company will be 31% natural gas-fired.
Where Great Plains Energy currently has 72% of its holdings in Missouri and 28% in Kansas, Westar has all of its operations in Kansas. As a result, the combined company will be 60% Kanas and 40% Missouri.
Once the transaction is complete, Great Plains Energy will have more than 1.5 million customers in Kansas and Missouri, nearly 13,000 MW of generation capacity, almost 10,000 miles of transmission lines and over 51,000 miles of distribution lines. In addition, more than 45% of the combined utility’s retail customer demand can be met with emission-free energy, the companies said in a statement.
Great Plains Energy and Westar Energy on Sept. 26 announced that their respective shareholders approved all proposals necessary for Great Plains Energy’s acquisition of Westar Energy at each company’s respective shareholder meeting.
Bassham noted during the call that a few weeks ago, the Federal Trade Commission granted early termination of the Hart-Scott-Rodino waiting period and the Department of Justice closed its investigation.
“Also, last month, we entered into separate stipulations and agreements with the Missouri Public Service Commission [(PSC)] staff and the Office of [the] Public Counsel, or OPC, that allowed us to move forward in Missouri in a way that balances the interests of our shareholders and provides protections and safeguards to our over 600,000 customers in Missouri,” he said. “We believe the agreements are responsive to the commission’s desire to address this transaction in an efficient and timely manner. We, along with the staff and the OPC, have asked the commission [for] approval by the end of November.”
During the Nov. 4 earnings call, Bassham noted that the Midwest Energy Consumers Group (MECG) last month filed a complaint in Missouri over the pending acquisition.
“As we have said, the law and past precedent is clear on the issue,” he said. “We believe the [PSC] does not have jurisdiction or authority to approve the transaction. To expedite a ruling in the complaint, the [PSC] has asked its staff to file a procedural schedule by Nov. 22, with an evidentiary hearing, oral argument, or both, on jurisdiction no later than Dec. 15. While we do not believe the MECG complaint will impact the closing of [the] transaction, we appreciate the commission’s desire to not unnecessarily delay the consummation of the transaction.”
Bassham also noted that the company continues to make progress on other regulatory initiatives, and that its efforts to modernize the Missouri regulatory environment remain a top priority.
The PSC last summer opened a docket to consider policies to improve electric utility regulation and procedurally, the commission is expected to file a report on the matter by Dec. 1, ahead of the 2017 legislative session, he said.
Last month, staff, in a report to the commission on the docket, demonstrated a willingness to consider changes to improve the electric utility regulatory framework and while the company is encouraged by that report, it seeks “pragmatic regulatory reform that provides clear regulatory treatment that can be relied upon by both investors and our customers,” he said.
Great Plains Energy on Nov. 3 announced 3Q16 earnings of $132.7m, or 86 cents per share of average common stock outstanding, compared with 3Q15 earnings of $126.4m, or 82 cents per share. For the first nine months of 2016, earnings were $190.3m, or $1.23 per share, compared to $188.9m, or $1.22 per share, for the same period in 2015, the company said.
Great Plains Energy said that its adjusted earnings (non-GAAP), which excludes certain costs, expenses, and losses resulting from the anticipated acquisition of Westar, were $154.2m, or $1 per share in 3Q16, compared with 3Q15 earnings of $126.4m, or 82 cents per share.
For the first nine months of 2016, Great Plains Energy said that its adjusted earnings (non-GAAP) were $265.8m, or $1.72 per share, compared with earnings of $188.9m, or $1.22 per share, for the same period in 2015.