SPP bows out of Tres Amigas interconnection project
Energize Weekly, August 5, 2015
Tres Amigas, a $1.6 billion “SuperStation” project connecting three regional U.S. grids lost a key partner last week, after the Southwest Power Pool (SPP) decided to terminate an interconnection agreement between Tres Amigas and utility Southwestern Public Service Co (SPS), citing Tres Amigas’ inability to make payments or meet milestone agreements.
According to Greentech Media, the Federal Energy Regulatory Commission (FERC) issued an “instant proceeding” on July 27 approving SPP’s request to terminate the agreement. Xcel Energy, which owns SPS, told FERC that the utility had voluntarily extended deadlines for compliance with milestone agreements four times, delaying the date that the project will be operational by two years. SPS also agreed to decrease the initial payment owed by Tres Amigas from $7.6 million to $1.4 million, which has still not been paid.
The Tres Amigas “SuperStation” is a planned project to connect the Western and Eastern Interconnection with the smaller Texas Interconnection via high voltage direct current (HVDC) links, to be built on 14,400 acres in Curry County, New Mexico. The goal of the project is to enable faster adoption of large amounts of renewables, such as wind and solar, that are currently being generated in the region. SPS’s participation in the project is critical in that they would provide Tres Amigas with its link to the Eastern Interconnection.
Tres Amigas told RTO Insider that the agreement cancellation was “not significant” and that the ruling stipulated that once the parties agree to work with each other again, they can.
“It’s not the end of the world for us,” said Tres Amigas CFO Russ Stidolph, who said the company decided not to make the $1.4 million payment to SPS because it would mean having to begin spending about $500 million on milestones that it was not ready to meet.
“That was not a good use of capital for us,” he said.
The project has been slow to raise funds since raising $15 million in 2011. The company sought to raise $500 million beginning in 2013 in order to start building a 73 mile, 345 kilovolt transmission line to connect the SPS transmission system with the Public Service Company of New Mexico’s system in the Western Interconnection, however the company has repeatedly missed self-imposed deadlines to break ground on the project and raise money. In January, the commissioners in Curry County voted to relocate $350,000 intended for Tres Amigas and spend it elsewhere.