PSE&G’s Southern Reinforcement Project added overhead and underground transmission circuits in South Jersey, with the goal of  delivering increased electric capacity required by businesses and residents, increased transfer capability, better power quality, and reduced transmission system congestion. The project impacted 17 municipalities and 2 counties, and a total of 427 properties were addressed. In this case study, we will discuss:

• Overview of the project
• Team structure
• Real estate needs
• Real estate process employed by PSE&G
• Schedule and budget
• Unforeseen situations
• Effort and analysis to overcome unforeseen situations
• Lessons learned

Roger Trudeau, Manager – Corporate Real Estate Transactions, PSE&G

On July 21, 2011, the Federal Energy Regulatory Commission (“FERC”) issued a new rule that for the first time requires public utilities to plan new transmission lines specifically to integrate renewable energy projects, adopts new regional planning cost allocation principles for the new lines, and bans utilities from giving themselves a “right of first refusal” to build new transmission facilities as part of federal open access transmission tariffs (“OATTs”).

This new rule dubbed FERC 1000 removed regional constraints and opened the door to open development by utilities outside their regional service areas through Non-Incumbent Developer Reforms.  Public utility transmission providers must remove from Commission-approved tariffs and agreements a federal right of first refusal for a transmission facility selected in a regional transmission plan for purposes of cost allocation, subject to four limitations. This does not apply to a transmission facility that is not selected in a regional transmission plan for purposes of cost allocation.   This allows, but does not require, public utility transmission providers in a transmission planning region to use competitive bidding to solicit transmission projects or project developers.

Nothing in this requirement affects state or local laws or regulations regarding the construction of transmission facilities, including but not limited to authority over siting or permitting of transmission facilities.   The rule recognizes that incumbent transmission providers may rely on regional transmission facilities to satisfy their reliability needs or service obligations. The rule requires each public utility transmission provider to amend its tariff to require reevaluation of the regional transmission plan to determine if delays in the development of a transmission facility require evaluation of alternative solutions, including those proposed by the incumbent, to ensure incumbent transmission providers can meet reliability needs or service obligations.

This session will explore how the FERC 1000 competitive bidding process is currently being applied in the different regions and provide an overview and insight into successfully winning and delivering projects from a Land Rights and Right of Way perspective.

Katherine Hill, Senior Project Manager, Right of Way Services, HDR Engineering

Michael Noonan, RES Project Principal / ROW, Siting and Land Rights, HDR Engineering

It can often times be a frustrating, time-consuming, and arduous process to work with various Federal Land Management Agencies such as the Bureau of Land Management, the U.S. Forest Service, or the National Park Service, to apply for and obtain legal land and access rights including Rights-of-Way Grants, Communication Use Leases, Land Use Permits, or Special Use Authorizations. During this session, you will receive valuable insights and strategies that will enable you to effectively work with these Federal Agencies with the end-goal of obtaining the land and access rights required for your transmission projects in a timely manner. Topics that we will cover include:

• A brief overview of federal land management
• The required legal framework, procedures, and processes to apply for and obtain legal land and access rights
• Some practical and useful “do’s and don’ts”, perspectives, and insights
• Identifying potential delays and strategies to address and resolve them when working with federal land management agencies

Joey James Giustino, Land and Realty Specialist, WAPA

The energization of a new transmission line project signals the beginning of the reclamation process.  Utilities must be diligent in managing the post-construction process.  Hear how Basin Electric Power Cooperative handled the challenges of their completed 200 mile 345kV transmission line project that was routed through various landowner situations, including Federal and State interests. Attendees will hear best practices on:

• Managing and meeting the expectations of farmers and ranchers
• Planning and budgeting the reclamation process
• Fulfilling permit requirements for various infrastructure crossings, Army Corps of Engineers, USFWS, and the State of ND
• Encroachments:  restoring the surface of pipelines prior to our agreements vs. pipelines installed during or post-construction
• Managing the contractor process:  The unique situation of the reclamation contract
• Transmission line project close out procedure

Shauna Laber, Property and Right of Way Specialist, Basin Electric Power Cooperative

Across the Fence (ATF) value methodology is often found in rent negotiations for utilities to occupy excess or vacant railroad land to locate power lines, pipelines and fiber optic lines.  The ATF methodology actually produces an Assumed Minimum Value (AMV) based on extraordinary assumptions and hypothetical conditions that produces inflated values. These inflated values are then used to negotiate rents and occupancy agreements with utility companies. In the event there is a disagreement over the rental value of railroad land, the railroads simply produce other lease/license renewals based on these inflated values to argue market rent. This perpetuates the problem of inflated prices.

Hostage leases/licenses are the result of business decisions made long ago that favored expedience in getting the utility line built over sound market based valuation decisions of actual land prices at the time of construction and future occupancy costs. Once a utility line is constructed on railroad property, it becomes too expensive to move it. Therein lays the financial distress associated with the ‘hostage lease/license’ condition.  With limited options, and considering the exorbitant cost of moving, it seems the path of least resistance for the utility is to pay the inflated rents indicated by the ATF methodology. The result can be millions of dollars of rent overpayments to the railroads. In this presentation, attendees will find the solutions to both the ATF problem and the hostage lease/license problem.  While these solutions are not technically difficult, they do require a willingness to engage in difficult negations and/or litigation.  In cases where the solution to the ATF problem has been implemented, there has been a high rate of success.

John Schmick, Vice President, Director of Special Projects, Shenehon Business & Real Estate Valuations

Unmanaged vegetation growing near utility rights-of-way can damage utility facilities and cause problems with safety, reliability, access, emergency service restoration, regulatory compliance, security lines-of-sight and compromise compliance with environmental, legal, regulatory and other requirements.  Vegetation interference with transmission lines has been a major contributing factor to region-wide blackouts and catastrophic fires. As a result utilities are now faced with zero-tolerance regarding tree-transmission line interference. That’s challenging as North American utilities are confronted by hundreds of thousands of miles of line that reticulate across a vast content.  Along those lines grow many millions of trees, any one of which could potentially cause a catastrophic outage, fire or other problem. This presentation will cover the importance of managing vegetation to protect transmission facilities and offer tools for doing so efficiently and effectively.

Randall H. Miller, Director, Vegetation Management, PacifiCorp

Easements memorialize the relationship of the parties who will use the underlying property and the easement and serve as a guide for the scope and terms of the use of the easement.  Easements contemplate use of the property over many years but changes in property ownership and changes in use cannot always be anticipated and can result in post-execution disputes.  Litigation and disputes involving easements are often related to an ambiguous easement or omitted terms and can halt or delay the construction project for which the easement is needed but can be avoided with clarity in the easement terms and full contemplation of how the property will be used in all stages. This presentation will help lawyers, right of way agents, land acquisition personnel and other persons responsible for the preparation, negotiation and execution of easements better understand the principles applicable to drafting and preparing effective easements.  The speaker will guide participants through the relationship and rights of the owner of the underlying property versus the rights of the easement owner, the nature of the interest contemplated by the easement as well as important legal formalities for finalizing the easement.

Alaina King Benford, Partner, Norton Rose Fulbright

It is often not easy for a developer of a new energy project to acquire the real property rights necessary for the project. Landowners generally are unwilling to accommodate development on their property, and those who are willing to negotiate might pursue above-market demands. If the effort to acquire necessary rights through good-faith negotiation is unsuccessful, private energy developers can obtain those rights through condemnation. Federal and state statutes grant to private energy developers the ability to condemn necessary property rights when private negotiations fail.

Attendees of this presentation will learn about:

• A general outline of the condemnation process
• The critical steps developers must undertake before they can exercise their condemnation power
• Common (and not so common) appraisal issues and the importance of engaging a qualified appraiser
• How to use the right of condemnation as a last resort, so that it rarely becomes necessary
• Traps for the unwary in the negotiation process
• Techniques for handling linear projects involving multiple landowners
• Unique issues applicable to interstate projects and federal and state lands

Isaac Sutphin, Partner, Holland & Hart

Public participation in the project licensing process allows multiple opportunities for regulators and stakeholders to modify and approve the route and timing of a project.  Comprehensive environmental and permit reviews can yield hundreds of meetings and hearings.  Inevitably, the community and/or utility will have to make changes to the project and determine how they will respond to local impacts.  Emotional challenges to a project cause project sponsors to respond with facts, but those facts are often drowned out if the sides are unwilling to compromise.

Here in Southern California, a 3-mile segment of Segment 8 of the Tehachapi Renewables Transmission Project (TRTP) was required to be constructed underground after community opposition.  This small segment generated much publicity and will now be the nation’s first underground 500kV electrical transmission line.  A community opposition group managed to change this segment from overhead to underground construction – a win for the community, but a huge increase in cost for ratepayers.

We will review:

• The TRTP Project
• Existing right of way and alternate route issues,
• Underground T/L technology,
• Project opposition and claims, and
• How to respond to exaggerated or false claims
• Managing social risk

David Guder, Manager, Real Properties Title & Valuation, Southern California Edison Co.

Electric utilities must develop easements for the deployment of electric lines that are both acceptable to landowners and that will adequately serve the current and future needs of the utility. Landowners are becoming much more sophisticated in reviewing proposed easements. Overly broad or general easements are often being rejected or substantially narrowed in scope by landowners. The utility must be careful to develop an easement that will not only serve its current needs, but will serve both anticipated and unanticipated reconfigurations of the proposed facilities, along with creating clear rights to maintain and access such current and future facilities.

Thomas St. Pierre, Associate General Counsel – Real Estate, American Electric Power