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Study:Transource power line project still makes economic sense

Written by Jim Hook/The Chambersburg Public Opinion | Sep 13, 2018 6:44 PM
Transource-test.jpg

A Transource Energy agent tests farmland in York County for a proposed 230 kV transmission line in March 2018. (Photo: Courtesy)

(Valley Forge) -- Constructing high voltage transmission lines through Franklin and York counties still makes economic sense.

The Transource project remains viable, according to an internal annual analysis presented on Thursday to a committee of PJM Interconnection, the power grid manager for the mid-Atlantic region. PJM originally justified the need for project and in August 2016 contracted with Transource to construct the Independent Energy Connection.

PJM's Transmission Expansion Advisory Committee learned that the project has a benefit-to-cost ratio of 1.42. A project is deemed beneficial with a ratio of at least 1.25. Earlier this year a PJM analysis pegged the Transource ratio at 1.31, down from an initial 2.48 in 2016.

The latest estimate, however, does not include updated costs for building the lines, whose metals may be subject to tariffs.

"We're waiting on actual bids from vendors," said Steve Herling, PJM vice president of planning. "We don't know what's going to happen in the next two or three months."

Transource currently is receiving bids and will forward the information to PJM, he said.

 

The Transource project is subject to continued economic analysis because it is a "market efficiency" solution to transmission congestion.

"The challenge we have is putting a stake in the ground to run a re-evaluation," Herling said. "We have to run the analysis with the latest information we have."

The increased cost of building two substations is included in the latest analysis because those bids have come in. The latest cost for the project is $366 million up from an initial estimate of $341 million.

The analysis also considers forecasts in natural gas prices, demand, load and power generation.

Transource would erect more than 200 monopoles, each 13 stories tall, from Shippensburg to Ringgold, Md., and string 29 miles of transmission line. A similar line would run 16 miles through York County and Harford County, Md.

Residents and leaders in both communities have organized to oppose the project.

The 230 kV project would save about $866 million in congestion fees over 15 years. Bringing in cheaper electricity from the west will save ratepayers in the Baltimore-Washington money on their utility bills. Dominion Energy, Baltimore Gas and Electric and PEPCO will pay for more than three-fourths of the project.

York County opponents say one side of poles on an existing transmission line are empty and could carry the wires.

"The line was not proposed as a solution during our process," Herling said. Obviously it's on the table now."

PJM considered 41 proposals submitted to solve the congestion problem in Maryland, D.C. and northern Virginia, according to a PJM spokeswoman.

If the Transource project were not to proceed, the process would start all over, Herling said.

The Maryland Office of People's Counsel had anticipated costs for the project to rise because of tariffs on steel and aluminum, a tight labor market and higher interest rates:

  • Trump administration in February announced tariffs of 25 percent on most imported steel and 10 percent on aluminum imports. Transource had no contracts for materials for cables or towers. Each mile of the transmission line requires nearly a ton of steel.
  • Inflationary pressures come from tight labor markets as well as labor shortages.
  • Recent and future interest rate hikes had not been considered in previous estimate. Transource has a $200 million line of credit.

PJM will continue to re-evaluate the project during the year for itself and for regulatory agencies in Pennsylvania and Maryland, according to Herling.

The state regulators have the authority to approve the project or stop it.

The Pennsylvania Public Utility Commission has set another round of hearings on the Transource project:

  • At 1 and 6 p.m. on Tuesday, Sept. 18, in the New Franklin Volunteer Fire Department Social Hall, 3444 Wayne Road, Chambersburg.
  • At 1 and 6 p.m. on Thursday, Sept. 20, at the Airville Volunteer Fire Department, 3576 Delta Road, Airville.

A music festival on Staturday, Sept. 15, will benefit Stop Transource Franklin County. The event will be held from 4 to 8 p.m. at the Penn National Golf Course, located at Pa. 997 and Orchard Road, south of Fayetteville. Beverage and food trucks will be available. Children under 10 are free.

This story comes to us through a partnership between WITF and The Chambersburg Public Opinion

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