Xcel bets on competitive transmission projects

OREANDA-NEWS. Utility holding company Xcel Energy is betting that competitive transmission project solicitations offered by the central US grids will translate into investment opportunities in addition to the \$4.5bn its regulated utilities plan to spend in 2015-19 on power delivery infrastructure.

Xcel last year formed transmission-only subsidiaries Xcel Energy Transmission Development and Xcel Energy Southwest Transmission to participate in the competitive transmission development process of the Midcontinent Independent System Operator and the Southwest Power Pool, respectively. The companies qualified as transmission developers in both grids and received authorization from the Federal Energy Regulatory Commission in November 2014 to provide transmission services under rates based on return-to-equity calculations.

A separate subsidiary, Xcel Energy West Transmission, this month secured registration as a developer from the WestConnect regional planning group in the southwest US.

The development subsidiaries will be able to bid on projects in the central grids starting this year. Winning any projects will be "the icing on the cake. ... I think there will be more opportunities in the years to come and I think we will be very well positioned to win in those markets," chief executive Benjamin Fowke said today on an earnings call.

Xcel's four utilities, whose service territories span both central US grids, already plans to spend \$4.5bn on transmission in 2015-19, which amounts to almost one-third of Xcel's capital investment plan. The number does not include any projects Xcel may win in the competitive solicitation process, Fowke said.

The Southwest Power Pool this week approved two sets of transmission projects to address reliability needs and congestion, at a projected cost of \$474mn. The 2014 transmission planning process of the midcontinent's primary grid concluded last month with the approval of \$2.5bn of projects.

Many of the projects that the Southwest pool approved will be awarded to Xcel-owned Southwestern Public Service, Fowke said.

Competitive investment opportunities for transmission projects stem in part from a directive by federal energy regulators known as Order 1000, which requires regional transmission planners to coordinate project needs and to abolish the right of first refusal provisions that gave owners of existing infrastructure preferential rights to bid on projects.

The majority of projects awarded by grid operators under federal jurisdiction still go to incumbent providers.