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Southern Cross line to spur $3.9B in economic benefits, study says

Pattern Energy Group LP's proposed Southern Cross transmission line, which will link Texas wind power to part of the Southeast, could generate $3.9 billion in direct and indirect economic benefits, according to estimates from accounting firm Moss Adams.

The study, which was released Dec. 19, said the privately funded project could produce nearly $1.5 billion in direct economic impacts from development and construction and another $1.4 billion in indirect and "induced" impacts. The project will also create more than 650 jobs during the peak phase of construction. Direct impacts include the cost incurred during development, construction and operation.

Local operations and maintenance expenditures will contribute another $633 million over 30 years, and the project will provide $441 million in property taxes across Louisiana and Mississippi, where the line will run. Moss Adams estimated the two states will each receive about $1.05 billion in direct economic impacts over 30 years from the project.

"The Southern Cross Transmission project would be the only project to connect low-cost renewable energy in Texas to the Southeast while also creating jobs and generating strong economic impact in both the southern states and Texas," said Mike Garland, CEO of Pattern Energy Group's development arm, Pattern Development. "When complete, the project will provide significant reliability and economic benefits by connecting two robust systems."

The study does not include potential additional benefits from sales and use taxes and state income taxes, or the grid impacts of increased wind energy in the Southeast. The roughly 500-kV, high-voltage, direct current, bidirectional transmission line will be capable of delivering about 2,000 MW of baseload capacity. Pattern Energy Group said construction is expected to begin in 2018, with the line projected to start delivering power in 2021.

Moss Adams said the project will cause "very limited encroachment" on Louisiana and Mississippi landowners' use of their property and only a "de minimus" reduction in agricultural productivity for both states.

The project received final FERC approval in May 2014, followed by a certificate of convenience and necessity from the Public Utility Commission of Texas in August 2016. More recently, FERC in November approved Southern Cross Transmission LLC's proposal to allocate all the line's capacity through bilateral negotiations following an open solicitation process. Southern Cross made the request after the company was unable to find an anchor tenant that would enter into a long-term capacity purchase agreement. FERC approved the proposal on the condition that Southern Cross assumes the full market risk for the project and has no captive customers.