Controversial $2.5 billion Clean Line project stalled; will evaluate options, officials say

Only days after a federal judge struck down a complaint to halt Houston-based Plains and Eastern Clean Line’s 720-mile, $2.5 billion development across Arkansas, the controversial wind energy project is faced with a long delay or shutdown altogether if regulators or investors back out, Talk Business & Politics has learned.

In response to several queries from Talk Business & Politics, Clean Line on Wednesday (Jan. 3) issued a statement saying a recent decision by the Tennessee Valley Authority (TVA) to drop its six-year-old interconnection agreement with the Texas partnership has put the project on hiatus.

“The need for low-cost renewable energy in Arkansas remains and the benefits the Plains & Eastern Clean Line will deliver to the state have not changed. Clean Line Energy is retaining all permits and acquired rights-of-way in Arkansas while we continue to evaluate energy markets and will respond accordingly,” said Clean Line Founder & President Michael Skelly. “Unfortunately, TVA’s reluctance to enter into an agreement with Clean Line … at this time has delayed our ability to deliver low-cost, renewable energy to the Southeast U.S. and jobs and investment to Arkansas.”

Skelly’s statement comes less than two weeks after Clean Line’s pre-Christmas announcement concerning the surprise sale of the Oklahoma leg of the multistate project to Juno, Beach, Fla.-based NextEra Energy Resources.

In past statements and court filings, Clean Line officials have indicated that the project that was expected to begin construction in late 2017 or early 2018. But on Dec. 22, Clean Line announced that NextEra had acquired the company’s Oklahoma-based partnership and all the assets for the first leg of the multistate wind-power project from the Oklahoma Panhandle to the Arkansas in Pope County.

No terms of the deal were disclosed, but regulatory and court filings show that Clean Line appraised the value of its Oklahoma assets north of $1 billion. Clean Line would only say it will retain assets for the project east of the Oklahoma state-line. NextEra, which is also involved in Arkansas’ largest solar project with Entergy Arkansas, will only acquire the project assets in Oklahoma, it said.

In addition, Clean Line said it completed an environmental review with substantial stakeholder input and received the regulatory approvals and major environmental permits necessary for construction. The Texas company said it has also acquired a “significant portion” of the right-of-way necessary to construct the project, although many property owners along the proposed route in Arkansas and Oklahoma.

Despite Clean Line’s statement and support in Oklahoma that goes all the way up to the governor’s mansion in Oklahoma City, grid operators, partners, utilities and other stakeholders that have a direct or indirect interest in the Arkansas and Tennessee side of the deal are noncommittal about the future of the project.

MISSED TIMELINE
TVA spokesman Scott Brooks told Talk Business & Politics that after the NextEra deal was announced, TVA was informed that the Clean Line project would not be able to meet the timeline for their interconnection agreement.

“Therefore they were removed from the interconnection queue. They can reapply at any time,” Brooks said of the Clean Line pact that goes back to a 2011 memorandum of understanding.

But it was exactly two years ago Clean Line cleared its biggest regulatory hurdle in Tennessee when the TVA board unanimously voted to approve the Texas partnerships’ application for a Certificate of Public Convenience and Necessity to operate as a wholesale transmission-only public utility in Tennessee. At the time, TVA said there was a need to connect the supply of thousands of megawatts of new wind energy in the Oklahoma Panhandle with the increasing demand of utilities in the Mid-South and Southeast.

Following an open solicitation for transmission capacity on the Clean Line project 2014, Clean, the Houston-based renewable energy partnership said 15 potential customers submitted more than 17,000 megawatts of requests for transmission service, more than four times the capacity of the line. In addition, Clean Line has often touted TVA’s “letter of interest” stating that the project presented a valuable option for affordable energy for the Tennessee utility conglomerate, whose largest customer is the city of Memphis.

However, last month, TVA officials decided to pull out of an earlier agreement with Clean Line to ship wind power across Arkansas to a substation that terminates in Memphis. Knoxville, Tenn.-based TVA operates one of the nation’s largest grid transmission systems with a network of 154 local power providers that serve 9 million people across 80,000 square miles in seven states.

Brooks said Clean Line’s stalled interconnection agreement does not impact the memorandum of understanding for the purchase of power, however.

“And again TVA did not have any formal agreement with the company or the project. We had stated previously in documents that we do not need any additional power for at least a decade. However we would consider the project as we would any other,” Brooks said.

SOUTHWEST POWER POOL RESPONSE
Southwest Power Pool’s (SPP) Transmission working group also approved a similar pact six year ago with Clean Line to interconnect on SPP’s grid in the north-central Texas Panhandle at a substation owned by Xcel Energy, the utility giant that operates across eight states in the Southwest U.S.

Now that NextEra owns the right to the Clean Line’s transmission lines in Oklahoma, the Texas venture group will need to find a new partner to connect 4,000 megawatts of clean energy generation from the Oklahoma panhandle with utilities and customers in Arkansas, Tennessee and other markets in the Mid-South and Southeast.

Recent data also shows SPP may be getting full on wind power. In early 2017, the Little Rock grid operator was the first regional transmission organization in North America to serve more than 50% of its load at a given time with wind energy. In an internal study two years ago, SPP said its transmission system could “reliably handle” wind representing up to 60% of internal load. Wind is now the third most prevalent fuel source in the SPP region, accounting for about 15% of the organization’s generating capacity in 2016, behind natural gas and coal. In 2017, the Arkansas grid operator’s installed wind-generation capacity rose more than 30% to 16 gigawatts, from 12 gigawatts in the previous year.

Concerning the Clean Line project, SPP spokesman Derek Wingfield said the operator will take a wait-and-see attitude.

“It’s honestly too early for us to assess any impact to SPP of the NextEra-Clean Line deal, but it’s safe to say we’re prepared to work with both parties within the parameters of our standard study and stakeholder processes,” Wingfield said.

On Dec. 21,  U.S. District Judge D. Price Marshall Jr. opened the door for Clean Line to begin construction on the three-state project after striking down a complaint by Arkansas landowners that the high-voltage transmission across the state went beyond legal authority of federal law and deprived them of due process.

In March 2015, then-Department of Energy (DOE) Secretary Ernest Moniz used “Section 1222” of the 2005 Energy Policy Act to green light the project to deliver 4,000 megawatts of low-cost wind power from Oklahoma’s Panhandle region to utilities and customers in Tennessee, Arkansas and other markets in the Mid-South and Southeast.