AEP’s $4.5B Wind Catcher Project Gets Louisiana’s Approval
American Electric Power's (AEP's) proposed $4.5 billion Wind Catcher Energy Connection project-the largest single-site wind project in the nation-has garnered approval from the Louisiana Public Service Commission (LPSC).
The LPSC on June 20 approved a settlement agreement related to the project, which is proposed by AEP subsidiary Southwestern Electric Power Co. (SWEPCO). Under the proposal, AEP will acquire a mammoth 2-GW wind farm that is under construction in the Oklahoma Panhandle by Invenergy and build a 350-mile dedicated power line that will carry wind power to the Tulsa area. SWEPCO will own 70% of the project, while AEP subsidiary Public Service Co. of Oklahoma (PSO) will own 30%. SWEPCO anticipates the facility, which will feature 800 GE turbines, will be completed by the fourth quarter of 2020.
SWEPCO, which filed its application with the LPSC in July 2017, says the project will save customers more than $4 billion over its 25-year life, "compared to the projected costs of buying power on the open market." To garner the LPSC's approval, the company agreed to guarantees that stipulate a cap on construction costs, qualification for 100% of the federal production tax credits, and minimum annual production from the project, among other commitments.
The project is one of AEP's largest planned investments as the company embarks on a strategy to reduce its carbon dioxide emissions by 60% from 2000 levels by 2030. While the company relies on coal for nearly half its power production, AEP has already slashed CO2 emissions by 44% since 2000, a feat that has likely been achieved by its transformed generation profile as well as a reduction in fleet size. AEP noted that though federal efforts to repeal the Clean Power Plan create uncertainty for near-term regulatory action on climate change, "some form of carbon regulations" is "likely" in the future.
The Wind Catcher project, which is key to those plans, received the Arkansas Public Service Commission's blessing on May 8, 2018. But it still requires approval in Texas and Oklahoma, and approval may be more difficult in those states. Oklahoma's attorney general and the head of the Oklahoma Corporation Commission's (OCC's) Public Utility Division have expressed opposition to the project. This February, an OCC administrative law judge issued a recommendation that said PSO "failed to prove that this project meets an economic need sufficient for pre-approval of this project." It added that the PSO's economic analysis used "unreasonable data and utilized a flawed planning process."
Meanwhile, staff at Texas' Public Utility Commission (PUC) have recommended denial of the project, citing major concerns about the unknown cost of construction. On June 12, staff noted that although PUC administrative law judges (ALJs) determined estimated cost savings to SWEPCO of about $354 million on a company-wide basis, Texas retail customers' share of the net present value of savings is "unstated."
"Athough the ALJ's estimate of projected benefits may be just as probable as SWEPCO's or Intervenors, Staff recommends that the Wind Catcher Project be denied a certificate of [convenience and necessity] as the range of probable outcomes do not justify incurring the costs that Texas customers would ultimately have to pay whether or not the net benefits actually materialize."
-Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)
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