The Federal Energy Regulatory Commission (FERC) on Monday approved transmission infrastructure investment rate incentives for the Green Power Express, a proposed 3,000-mile transmission superhighway designed to deliver wind-powered renewable energy from the upper Midwest to Midwestern and Eastern states.

As well as granting approval of an incentive return on common equity of 12.38%, the order authorizes deferred recovery for start-up, development and preconstruction costs through the creation of regulatory assets, inclusion of 100% of construction work in progress in the rate base, abandoned plant treatment, and use of a hypothetical capital structure comprising 60% equity and 40% debt until any portion of the project is placed in service.

Green Power Express LP, a partnership formed by Michigan-based ITC Holdings Corp., estimates that its proposed 765-kV transmission network will cost between $10 billion and $12 billion. It said the project will eventually span seven states and deliver up to 12,000 MW of wind power and stored energy from wind-abundant areas in the Dakotas, Minnesota, and Iowa to Midwestern load centers in Chicago, Minneapolis, and southeastern Wisconsin.

FERC Chairman Jon Wellinghoff highlighted the importance of new transmission infrastructure to fulfilling the promise of renewable energy and noted that getting these types of projects built will require effective transmission planning that looks beyond the needs of a single utility, a single state, or even a single region.

“Meeting our Nation’s energy goals will require developing extra-high voltage transmission infrastructure that is needed to bring clean, renewable energy from areas where it is produced most efficiently to areas where most of our Nation’s power is consumed,” Wellinghoff said.

“The Commission is examining the adequacy of transmission planning processes and is committed to working with transmission providers and state and regional entities to provide consumers with greater access to renewable resources.”

The FERC order conditionally accepted Green Power Express LP’s proposed formula rate tariff sheets, subject to refund, and set them for hearing and settlement judge procedures. The approved transmission investment incentives and return on equity were specifically excluded from any hearing process.

ITC will now seek a review of the seven-state project by the Midwest Independent Transmission System Operator and pursue a “cost allocation mechanism that factors its far reaching benefits into account.”

Sources: FERC, ITC Holdings Corp.