A Minnesota Office of Administrative Hearings (OAH) administrative law judge (ALJ), in a May 22 report, recommended that the Minnesota Public Utilities Commission issue a certificate of need to Xcel Energy (NYSE:XEL) and ITC Midwest for their proposed Huntley-Wilmarth 345-kV Transmission Line.
As noted in the report, the companies in January 2018 filed an application for a certificate of need (CN) to the commission to build the approximately 50-mile, 345-kV transmission line between Xcel’s existing Wilmarth substation north of Mankato and ITC’s Huntley substation south of Winnebago. The companies also submitted a route permit application for their proposed line.
The report also noted that the companies requested that the commission combine the CN and route permit proceedings. The commission referred the CN and route permit applications to the OAH. The report added that the commission in March 2018 requested that the OAH prepare a report setting forth factual findings, conclusions, and recommendations on the merits of the route permit application. An evidentiary hearing was held before an administrative law judge (ALJ) in February; public hearings were held later that month.
The ALJ concluded that it would be in conformance with the commission’s directive – and reasonable – to issue one report on the combined matters. Therefore, the report added, the report is organized as two parts, with the first relating to the project and the second to the project routes.
Noting that the companies have satisfied all relevant criteria set forth in Minnesota law for a CN for the project, the ALJ also said in the report that there is no more reasonable and prudent alternative identified to alleviate current and potential future transmission congestion in southern Minnesota. The ALJ said that the project would enhance the reliability and robustness of the transmission system, while providing Minnesota consumers with more access to low-cost energy.
The ALJ also concluded that the companies have satisfied all relevant criteria set forth in state law for a route permit for the project.
As noted in the report, according to the companies – and no party disagrees – building a 345-kV transmission line that would connect upgraded substations at Huntley and Wilmarth would reduce electrical system congestion, strengthen the resilience of the regional grid, reduce curtailments of wind generation, and allow additional wind generation to reduce thermal generation.
The companies proposed four route alternatives in their route permit application – the Purple, Green, Red and Blue routes – and included six route segment alternatives – Segment Alternatives A-F.
Discussing the project, the ALJ added that the facilities for the project include:
- The line, including steel pole structures and double-bundled, twisted pair conductors
- New substation equipment and modifications necessary to accommodate the line at the Huntley substation, including a 345-kV circuit breaker
- New substation equipment and modifications necessary to accommodate the line at the Wilmarth substation, including a dead-end structure
The ALJ said that the companies propose to principally use steel pole structures, in a single-pole design. The companies had originally proposed H-frame structures as an option for use in the project, but have withdrawn them as an option in response to public comments about their negative effect on farming, the ALJ said.
The companies intend to have the project placed in service in December 2021, immediately before the Midcontinent ISO’s planned in-service date of Jan. 1, 2022, the ALJ said. MISO regards the project as an important asset for the further development of the electrical system, the ALJ said, adding that the project is included in all the economic, reliability, and interconnection models that have been developed since MISO approved the project in 2016.
MISO initially estimated that it would cost $75.9m to build the line and $2.47m for the modifications to each substation. However, the ALJ added, the estimate for the line wrongly assumed that an existing right of way (ROW) could accommodate a 345-kV line. On being informed of that by Xcel, MISO increased the length of the line to permit alternative routing. The ALJ also said that the alternative routes ranged in cost from $83m to $103m; the costs of upgrading the substations at each of the line then added $5m for a total project cost of between $88m and $108m.
Based upon the route and segment alternatives proposed during the environmental impact statement (EIS) scoping process, which differ from the route MISO used to estimate project costs, the companies estimated the project’s costs as ranging from $105.8m (the Purple Route, using single-circuit parallel H-frame design) to $138m (the Red Route, using double-circuit monopole and single-circuit monopole design) (2016) dollars, the ALJ said, adding that those costs include all transmission line and substation upgrade costs, ROW costs, and risk contingencies, as well as allowance for funds used during construction (AFUDC).
Noting that the applicants developed cost estimates for the new route alternative, segment alternatives, and alignment alternatives proposed during scoping and included in the draft EIS, the ALJ said that of those alternatives, the lowest-cost alternative is the Purple Route, single-circuit H-frame design with Segment Alternatives F and J at $104.8m (2016 dollars). The highest-cost alternative is the Purple-E-Red Route, double-circuit design with Segment Alternatives E, Y, and Q at $160.7m (2016 dollars).
As a MISO Market Efficiency Project (MEP), the project’s costs would ultimately be shared within the region, such that Xcel’s NSP Companies’ load would pay 16.96% of the total monetary costs, the ALJ added. Customers from outside of Xcel’s service territory in Minnesota would benefit from the project and absorb, through their serving utilities, some of the project’s costs. The companies calculate that, depending on the route, segment, and design alternatives chosen, that the Minnesota jurisdiction would ultimately pay between $4.1m and $5.3m of the project’s costs, the ALJ added. However, since ITC Midwest does not have any load in the region, it would not be allocated any of the project’s costs.
The ALJ also noted that once the line is in service, Xcel would begin to receive wholesale revenues from its joint ownership of the line, with those revenues reducing the annual revenue requirement arising from the project’s costs that Xcel must recover from its end user ratepayers.
The ALJ said that in its brief filed in the proceeding, the Minnesota Department of Commerce, Division of Energy Resources (DOC-DER) urged the commission to cap the “costs included in Xcel’s TCR rider for the proposed project based on the cost estimate determined in this matter and subject to,” for instance, the range of cost estimates of $104.8m to $160.8m being the starting point for determining the cap amount. The ALJ said that the DOC-DER’s proposed conditions are reasonable and recommends the commission adopt them.
In their post-hearing brief, the companies provided their recommended route configurations and designs for five routes, the ALJ said, adding that those recommendations were based on the companies’ examination of all potential design options, analysis of all routes, including segment and alignment alternatives, evaluation of the draft EIS, and review of comments received from the public, federal and state agencies, and local government units. Those routes are Purple-BB-L, Green, Red-Q, Blue-CC-Q, and Purple-E-AA1-Red-Q.
The record evidence supports the addition of Alignment Alternative AA-3b to the Purple-BB-L Route, the ALJ added, noting that the record evidence demonstrates that the Purple-BB-L-AA3b Route built double-circuit structures minimizes impacts to the human and natural environments based on certain routing factors.
The ALJ said that the Purple-BB-L-AA3b Route has the fewest number of existing residences within 500 feet, avoids areas designated for future development by Mankato and North Mankato, follows existing transmission line corridors for more than half of its length, includes the fewest acres of forested land within its ROW, and has moderate agricultural impacts due to its double-circuit design.
The Purple-BB-L-AA3b Route is among the higher cost – $140.8m (2016 dollars) – routes and has a benefit-to-cost ratio above 1.0 – about 1.63 under the MISO Transmission Expansion Plan, or MTEP17 and 1.28 under MTEP18. Among other things, the ALJ also said that since the estimated costs for the Purple-BB-L-AA3b Route are more than 25% greater than the MISO baseline cost estimate, selection of that route would prompt the MISO variance process.
Among other things, the ALJ said that the commission should grant a route permit for the Purple-BB-L-AA3b Route, double-circuit, monopole design, and that the route permit should include a special permit condition requiring the companies to coordinate with the Minnesota Department of Natural Resources (MnDNR) and any other appropriate agencies regarding potential impacts to rare native plant communities and state-listed species.