Louisiana Public Service Commission staff, in a May 15 report, recommended that the commission approve Entergy Louisiana, LLC’s (ELL) Waterford to Churchill Project.
As noted in the report, ELL seeks:
- A finding that the construction of the project will serve the public convenience and necessity and be in the public interest, and therefore undertaking construction thereof will be prudent
- A finding that generalized siting of the project is appropriate and that its construction is a reasonable and cost-effective solution to congestion addressed in the application
- Approval of the generalized substation-to-substation corridor proposed by the company for the new 230-kV transmission line from the Waterford switchyard to the Churchill switchyard, as contemplated by the transmission certification order
- A finding that the actual retail revenue requirement associated with prudently incurred costs of the project is deemed eligible for recovery by the ELL through the appropriate recovery mechanism at the time that the components of the project are placed in service
Staff noted that the project is comprised of three parts:
- Construction of a new 230-kV line about 27 miles long from the Waterford switchyard to the new Churchill switchyard
- Installation of a new bay in the Waterford 230-kV switchyard
- Installation of a new bay in the Churchill 230-kV switchyard
The original project proposal included the construction of a new Churchill switchyard, which is now excluded from the Waterford to Churchill Project and is now included as part of the Jefferson Parish Area Reliability Plan-Phase 1 (JPARP), staff said.
The Waterford to Churchill Project would include about 185 new single-circuit galvanized steel structures, each consisting of one, two, or three poles, ranging in height from 70 to 125 feet, mounted on steel vibratory caisson foundations, staff said. About two miles of the line would be built on ELL-owned property and about 25 miles would require acquisition of new rights of way (ROWs). Staff added that the majority of the project would directly parallel ELL’s existing transmission lines, which is expected to reduce the width of new ROW that must be acquired to meet NERC and ELL electrical clearance standards.
Project construction is estimated to begin in 3Q20, and be completed by 2Q22, which is also when the project would be in service, staff said. The current “Class 4 estimate (-30% to +50% range)” for the project is $92.3m, staff said.
Staff noted that the project does not qualify as a Midcontinent ISO (MISO) Market Efficiency Project (MEP), which would dictate a regional cost allocation. To be an MEP, a project must have a benefit-to-cost ratio greater than 1.25:1, and is to have at least 50% of the costs associated with the electrical infrastructure operating at 345 kV or higher. Staff added that the project would operate at 230 kV, and accordingly, does not qualify as an MEP. As such, staff said, the project would be 100% cost allocated to the situs Transmission Pricing Zone (TPZ); that is, the costs would become part of ELL’s retail revenue requirement and ELL ratepayers would pay 100% of the project cost.
Staff noted that the addition of the project is expected to mitigate the contingency caused by an outage of the existing Waterford-Ninemile 230-kV transmission line, thereby helping to increase the import capability into the Downstream of Gypsy (DSG) region.
Staff said that it finds that construction of the project would serve the public convenience and necessity, as well as be in the public interest. However, staff said that it identifies several concerns with the changing nature of the project from the MISO Market Congestion Planning Study (MCPS) process through to the final request as set forth in the application.
As originally approved in the MCPS process, the project was estimated at $88m and included construction of the new Churchill switchyard, staff said, adding that MISO had calculated a benefit to cost ratio for that project of 1.96:1. Staff added that that MISO-approved MCPS project is not the current project for which the application requests certification.
Staff noted that its most notable concern with the current project is that while the Churchill switchyard has been removed and included in the JPARP, the total cost of the project has increased.
Staff said that ELL explained through responses to data requests and in discussions with staff, that through the continued exercise of due diligence subsequent to MISO’s reliance on the MCPS estimates for the original project, the project without the Churchill switchyard, i.e., the project as set forth in the application, has increased in cost. ELL’s due diligence identified a number of factors that have served to increase costs, including the necessity for expensive construction methods and wetlands mitigation due to the project’s location in marsh lands, as well as the need for the acquisition of more ROW than originally planned, staff said.
Staff noted that while it understands that costs fluctuate and change as due diligence continues, for purposes of this proceeding, it cannot attribute any value whatsoever to MISO’s calculation of a 1.96:1 benefit to cost ratio for the original project, as that is not the project that is the subject of the application. Staff said that it finds that within the consideration of a transmission certificate proceeding under the transmission certification order, the commission should not rely on the outcomes of any MISO analysis unless the applicant can support and verify that the assumptions used to generate MISO’s analysis have not materially changed and that it is reasonable to continue to rely on MISO’s projections.
Among other things, staff said that as set forth in the transmission certification order, the general purpose of its review is to make a recommendation whether the commission should reject or approve the project based on “whether the proposed transmission facility enhances reliability of service, and/or provides economic benefits, and/or promotes policy goals.” Based on that guidance, staff said that there is no requirement that a proposed project yield more economic benefits than costs if the project enhances reliability benefits and promotes policy goals.
Staff said that with that in mind, it has considered, for instance, the increased import capability and improved reliability. After consideration of those benefits and policy goals, staff said that it recommends certification of the project, subject to the recognition and agreement by all parties that staff’s recommendation is specifically limited to the unique and specific facts and circumstances of the project, and, if approved, the certification is to have no precedential value in any future requests for certification of transmission facilities.
Staff recommended that the commission issue an order providing, for instance, that approval should in no manner serve as a determination of the prudence of any cost of the project, and that ELL has an ongoing obligation to prudently manage the project, including ongoing construction and costs.
In a statement provided to TransmissionHub on May 16, Entergy Louisiana said: “We are pleased that staff agreed with us that the construction of the Waterford to Churchill transmission project is in the best interest of Entergy Louisiana’s customers. We look forward to working through the process with the Louisiana Public Service Commission to bring this project to fruition.”
Article amended at 12:19 p.m., EST, on Friday, May 17, 2019, to include Entergy Louisiana’s statement.