Dive Brief:
- Xcel Energy is forming two subsidiaries dedicated to developing new transmission in the Midwest, with its Xcel Energy Transmission Development Co. created to compete for projects in the Midcontinent Independent System Operator (MISO) southern region and its Southwest Transmission focused on projects in the Southwest Power Pool (SPP).
- Using its incumbency status and right of first refusal throughout its eight state Midwest footprint, Xcel expects to invest $4.5 billion over the next five years on new transmission, primarily for its regulated utilities.
- Under Federal Energy Regulatory Commission (FERC) rules, transmission companies can more readily than utilities take on financial and construction company partners to build the big systems needed in expansive grid regions like MISO and SPP.
Dive Insight:
In June, FERC set a new policy on establishing returns for transmission projects which it then used to lower a New England project from a 11.14% rate of return to 10.57%, and a similar decision is pending in MISO. Such lower returns may drive out some players and slow line growth but Xcel expects to see aggressive competition from other transmission subsidiaries because of the increasing need for new lines.
SPP is expected to release a call for bids on new transmission projects in 2015.
