PPL Electric Utilities to seek partners for 725-mile, 500-kV transmission line

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PPL Electric Utilities has proposed to PJM Interconnection, as part of the competitive solicitation process under FERC Order 1000, building a 500-kV transmission line that would run about 725 miles from western Pennsylvania into New York and New Jersey as well as south into Maryland, PPL Chairman, President and CEO William Spence said on July 31.

Speaking during the company’s 2Q14 earnings call, Spence noted that the project is in the preliminary planning stages. The transmission line would improve electric service reliability, enhance grid security and enable the development of new gas-fired power plants in the shale gas regions of northern Pennsylvania, according to TransmissionHub.

Spence also said that the proposal would create savings for millions of electric customers by delivering lower cost electricity into the region and reducing grid congestion cost.

“According to preliminary estimates, the cost of the project, which is not yet included in our CapEx projections, would be between $4 billion and $6 billion,” he said. “Because of the magnitude of this proposal, there’s a good chance we may enter into partnerships to develop and build the project. The preliminary timeline envisions completion of the project by 2023 to 2025, assuming all necessary approvals are received and construction begins in 2017.”

Approvals are needed from various regulatory and regional planning entities.

“[W]e’ll continue to work with all the stakeholders to make sure that we do everything in our power to make sure that we get this approved on a as timely basis as we can,” he said.

Also speaking during the call, Gregory Dudkin, president of PPL Electric Utilities, noted that as the project is not only part of PJM but goes into the New York ISO, it will need approvals from both entities, as well as state approvals and utility commission approvals.

The compelling nature of the project increases its probability of success, he said.

Citing this year’s polar vortex as well as such big issues as substation security and coal retirements, Dudkin said, “[T]his project really pulls all those issues together and provides significant benefits to the consumers” and the region.

The company is putting together an outreach plan and has begun efforts to get those involved in the project up to speed, he said.

Discussing economic benefits, he noted that the cost for potential generators to connect to the company’s transmission system would be reduced and, “with potential coal retirements, we think there is economic advantage for that.”

A company executive noted during the call that at the moment, PPL is not aware of any competing projects.

PJM has requested smaller projects to address some relatively small reliability concerns, and “four or five” have been proposed, the executive said. PPL’s proposal “goes well beyond that, again, with something that is very unique and compelling from a stakeholder” perspective.

Dudkin noted with a nearly 725-mile line, siting is going to be a big issue, adding that the Susquehanna-Roseland line is “a great example” of the company’s success.

“It took us a while but we were building through a national park and … [we have] been very successful,” he said. “I think the folks there appreciate the care we took of the park and so … our reputation is good in that and that’s why I think we’ll be successful.”

The current proposal does not run through any national parks, the company said.

In a July 31 statement, the company said it has begun a comprehensive regional planning effort to determine the best route and final details of the proposed line. The company would have an inclusive public outreach process and consider public input when making a final route selection.

In a separate July 31 statement, PPL announced 2Q14 reported earnings of $229 million, or 34 cents per share, a decrease from $405 million, or 63 cents per share, a year ago. For the first six months of 2014, PPL's reported earnings were $545 million, or 83 cents per share, compared with $818 million, or $1.28 per share, in the first six months of 2013.

Adjusting for special items, the company added, its earnings from ongoing operations for the quarter were $357 million, or 53 cents per share, an increase from $311 million, or 49 cents per share, a year ago. Earnings from ongoing operations for the first half of the year were $880 million, or $1.33 per share, compared with $765 million, or $1.20 per share, for the first half of 2013, the company said.

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