The Midcontinent Independent System Operator selected a partnership led by private developer LS Power Associates LP to build, own and operate the Duff-Coleman 345-kV line in southern Indiana and western Kentucky, the first transmission project selected through a competitive process in compliance with FERC Order 1000.
MISO selected Republic Transmission LLC, a partnership between the LS Power Group unit and Hoosier Energy Rural Electric Cooperative Inc., out of 11 applicants, the grid operator said in a Dec. 20 press release.
MISO Executive Director for Competitive Transmission Administration Priti Patel said in the release that Republic's proposal provided the "greatest value" and the "strongest combination of attributes, including but not limited to, the highest degree of certainty and specificity, the lowest risk, and low cost."
Republic Transmission's proposal estimated the cost of the Duff-Coleman project at $49.8 million and the length at 33 miles, according to the project's final selection report. That length fell in between that of other proposals which suggested lengths between 28 and 36 miles, according to the selection report. The project is expected to be in service no later than Jan. 1, 2021, and would extend from Southern Indiana Gas and Electric Co. Inc. d/b/a Vectren Energy Delivery of Indiana's Duff substation in Dubois County, Ind., to Big Rivers Electric Corp.'s Coleman substation in Hancock County, Ky.
Big Rivers Electric, which serves three distribution cooperatives in 22 counties in Kentucky, signed up as a participant in the project. Hoosier Energy will be a part-owner, and will provide operations and maintenance for the Indiana portion of the line.
One distinguishing feature of Republic Transmission's proposal is its inclusion of a $58.1 million "firm rate-base cap," which MISO said in the selection report was one of strongest caps among the proposals to limit costs to ratepayers.
"The binding cost containment provisions we offered, including a cap on costs, demonstrate the benefits that competition for transmission provides consumers," LS Power President Paul Thessen said in a news release.
Under its binding developer agreement with MISO, Republic Transmission will have to submit quarterly status reports on the project to MISO, according to MISO's news release.
The grid operator in January issued a request for proposals to develop the transmission project, later narrowing down the initial pool of interested applicants.
FERC in July 2011 approved Order 1000, which required regional and interregional planning for new transmission projects. The order required transmission providers such as MISO to eliminate provisions of federal right-of-first refusal, which gave the right to build, own and operate new transmission to incumbent utilities. The order spurred grid operators to set up a competitive selection process to pick developers, according to MISO's website.
MISO, in its selection report, said it evaluated project proposals based on four criteria and gave a 30% weight to the costs and design, a 35% weight to project implementation, a 30% weight to operations and maintenance and the remaining 5% weight toward participation in MISO's transmission expansion planning process. The Republic Transmission proposal received a score of 95 on a 100-point scale.
"Republic Transmission had the most complete project implementation plan, demonstrating the highest probability of success," MISO said in the selection report. "Republic Transmission was better than nearly all other proposals in operations and maintenance and exhibited comprehensive capabilities and plans, and had the lowest estimated operations and maintenance cost."
The second-ranked project received a score of 80, and the lowest-ranked proposal scored 41.