(September 2012) Our annual financial ranking shows some remarkable shifts among the industry’s shareholder value leaders. Despite flat demand and low commodity prices, investor-owned...
The CAPX2020 Model - Part I
CapX2020 is a unique collaboration of utilities with various business models -- investor-owned utilities, distribution cooperatives, generation and transmission (G&T) cooperatives, and municipals. The group is developing an ambitious set of projects that extend from western Wisconsin across Minnesota, into the Dakotas, and potentially into Manitoba. Various projects within the initiative are designed to serve various purposes, from supporting reliability to bringing new generation resources to the Midwest ISO wholesale market -- so-called “multi-value projects” (MVP) in the MISO planning process. The first group of projects in the CapX2020 plan is expected to cost nearly $2 billion.
“We reverted to the old model of collaboration, because we’d tried everything else.”
-Will Kaul, Great River Energy
One might guess that the diverse group of utilities involved with CapX2020 would encounter irreconcilable differences in fundamental areas -- from routing to cost allocation. But as Will Kaul, Great River Energy’s v.p. of transmission explained, a collaborative approach has allowed development to proceed quickly and smoothly, with surprisingly few setbacks.
FORTNIGHTLY What’s the status of the CapX2020 project?
KAUL Everything is going just fine. We have four projects, divided into different segments. Phase 1 of the Fargo-to-Monticello project [the Monticello-St. Cloud segment] was completed on time and under budget. And we just achieved a major milestone on the $700 million Brookings County-to-Hampton project; MISO [the Midwest ISO] approved it as part of its MVP [multi-value project] portfolio. That means the costs will be spread across the entire MISO footprint. Great River Energy is leading that project as construction manager. Also the Bemidji-to-Grand Rapids project is 50-percent constructed, and the last one, the Hampton-Rochester-LaCrosse project, is still in permitting stages. We’re waiting on a judge’s recommendation for Minnesota PUC approval, which we expect to get sometime in the first quarter of 2012.
FORTNIGHTLY How did CAPX2020 get started? And what’s been Great River Energy’s role in its development?
KAUL We’re in a unique position. As a G&T cooperative with a large footprint in Minnesota, we’re partners with several other utilities in that footprint -- including Minnesota Power and Xcel Energy. We’ve been partnering with them from the beginning.
“After FERC issued Order 888, there was a primordial soup in our region and other regions, with a lot of different initiatives that came forward and failed.”
After FERC issued Order 888, there was a primordial soup in our region and other regions, with a lot of different initiatives that came forward and failed. One of the grandest was TRANSLink, led by Xcel, with MidAmerican, Alliant, a couple of G&Ts, and some utilities from Nebraska. The participants in TRANSLink embraced an asset model rather than a regulatory RTO [regional transmission organization] type of model. But TRANSLink crashed, primarily because of the crash in the wholesale market. Enron went down and NRG -- then a subsidiary of NSP [Xcel predecessor