Global Transmission Report

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Global Transmission ReportOCTOBER 2008

VOLUME 1, ISSUE 1

INSIDE THIS ISSUE

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Features• China Seeks New Sourcing of Financing ........................................ 1• Securing Europe's Electric Energy Future ...................................... 1• Modest Success in Merchant Transmission .................................... 1

News• North America ..................................................................................... 7• Latin America .................................................................................... 14• Asia-Pacific ......................................................................................... 16• Europe ................................................................................................. 19• Middle East & Africa ........................................................................ 22

TSO Focus• Power Grid Corporation of India ................................................... 24

Policy Review• Transmission Pricing Initiative in South-Western USA .............. 27

Spotlight• The Southern African Power Pool experience ................................ 28

Data & Statistics• Electric Energy Balance in Europe ................................................. 30• Expected Load Growth in Europe .................................................. 30• Planned Transmission Lines in United States .............................. 31• Leading Transmission Operators in Latin America .................... 31

Deal Watch ............................................................................................. 32

Project Update ....................................................................................... 34

Company News ..................................................................................... 37Tenders & Contracts ............................................................................. 39

Information and analysis on the global electricity transmission industry

China Seeks New Sources of FinancingPrice reforms essential for investor interest

As one of the world’s fastest growing economies, Chinahas seen rapid expansion in its power sector in recent

years. After being hit by acute shortages in 2005, the Chinesegovernment approved a massive capacity expansion plan. Sincethen, the country has added more than 200 GW. At the end of2007, the total installed power capacity in the country was over700 GW. China reportedly plans to increase capacity to more than850 GW by 2010.

The benefits of this capacity addition are, however, not quitetangible yet. While most of the capacity is being built in thewestern region, the demand is mostly in the east. The new plantswere approved with the view that the related transmission linkswould be developed quickly enough to get the electricity to keyconsumer regions. But grid construction did not keep pace withgeneration expansion.

Hence, periodic shortages continue to exist in many regions.The ratio of transmission and distribution assets to generationassets is 40:60 in China while in most developed countries it is

Securing Europe’s Electric Energy FutureNorNed to achieve lower prices and increasesecurity of supply

Europe has been experiencing a huge change in the wayits electricity markets are operated. With the old model

of cooperation between integrated utilities being replaced bycompetitive market rules, commercial electricity flows throughEuropean states have risen sharply. The transmission networksare, in turn, stressed to their technical limits, thereby threateningthe security of supply.

At the same time, environmental targets set by the EuropeanUnion are creating new infrastructure challenges. Grid operatorsare faced with the tough task of accommodating more renewablepower, especially wind, and distributed generation.

These developments underscore the need to reinforce andintegrate networks across the continent to ensure commercialcapacity and security on the one hand, and to meet renewableenergy goals on the other. Of particular importance is theinvestment in new trans-border electricity interconnectors.

Modest Success in Merchant TransmissionRegulatory and funding constraints present keychallenges

The long-neglected US electric transmission system isattracting renewed investor interest. With network control

shifting away from traditional utilities, remote generationresources on the rise, increasing attention to grid reliability andsome rate incentives in place, the spotlight is on transmissioninvestment.

At the same time, non-conventional sources of capital suchas private equity, infrastructure funds and hedge funds are nowtargeting transmission line projects. Together, thesedevelopments have created opportunities for a new mode ofinvestment called merchant transmission.

In the past, utilities have shown little interest in transmissionnetwork expansion. With tough political and communityconcerns, sensitive environmental and tariff issues, and financialconsiderations, transmission development has been a slow andcomplex process that could take up to a decade. What is more,low, regulated rates of return have been a major deterrent. Forrate-based utilities, transmission has not meant providingshareholder value.

Global Transmission Report | October 20082

Features

the reverse. This year has been particularly rough on the country’sgrid. Heavy snowstorms in January and the earthquake inSichuan province in May severely damaged the powertransmission network, causing blackouts in many parts.

Clearly, the sector suffers from under-investment in gridinfrastructure. To benefit from the addition in generation capacityand maintain its breakneck economic growth, China needsmassive investment in power grid expansion and improvement.

China’s two state-owned companies – the State GridCorporation of China (SGCC) and China Southern Power Grid(CSPG) – are responsible for power network investment. SGCC,the larger of the two, controls and operates five regional grids.CSPG is responsible for five provinces in the southern region –Guangdong, Guangxi, Yunnon, Guizhou and Hainan.

For the period 2006-10, the government has set investmenttargets of CNY850 billion for SGCC and of CNY230 billion forCSPG. With this investment, it expects the 330 kV and abovegrid network to cross 75,000 km by 2010.

However, the two corporations are finding it difficult to raiseresources to meet these investment targets. Slim earnings havesqueezed profit margins. High debt ratios of over 60 per centhave made it difficult for them to obtain more bank loans.

Moreover, the two corporations are bearing heavy losses as aresult of the natural disasters this year. The winter stormsparalysed the transmission system, leading to huge losses forthe grid operators. SGCC claims to have suffered direct losses ofCNY10 billion (USD1.4 billion) and CSPG, in excess of CNY3billion (USD425 million).

The government is now looking at different options to bailout these corporations. One of the strategic measures it is takingto generate funds is the sale of the corporations’ generation plants.It has been auctioning off these assets since 2006. This is also inline with the government’s reform agenda to separate theownership of the generation and transmission assets.

At the same time, recognising that plant sales alone will notyield enough cash to meet the investment needs, the governmentplans to diversify ownership of the transmission companiesthrough public listings or by selling stake to foreign investors.

Faced with a liquidity crunch, both the corporations haveexpressed keen interest in visiting the stock markets. CSPG hasalready submitted a proposal for stock market listing to thegovernment. It is planning to initially list on the mainland andmay consider listing on the Hong Kong Stock Exchange later.SGCC has also filed a listing application with the regulators, butits initial public offering (IPO) is expected to come after SouthernGrid’s as it needs to first simplify its corporate structure.

Last December, the government also opened grid constructionand management to foreign investment. However, to maintainstate control, the new policy forbids foreign investors fromowning controlling stakes. Foreign investors can invest in thesector only through joint ventures with Chinese partners.

A senior director at Fitch Ratings in China clarifies this: “Thepolicy aims at attracting foreign capital to invest in gridconstruction as minority shareholders. Foreign investors have

little chance of controlling the construction and operation of gridsin the near to medium term.”

To ensure sufficiently attractive long-term returns for gridoperators, the State Electricity Regulatory Commission (SERC)has devised a new rate of return formula. However, when andhow this will be put into practice is not known.

While these measures may be in the right direction, significantconcerns remain. China’s power sector is still highly regulatedwith the state involved in all the key matters of tariff setting,grid planning, capacity management and resource allocation.

A critical issue is the pricing mechanism. Electricity pricesare state regulated and controlled. Under the capped pricingregime, grid operators are squeezed harder than generators astransmission fees make up a relatively small proportion of thefinal electricity prices.

This tariff system has negatively impacted the returns of thetwo grid operators. Over the past few years, SGCC and CSPGhave reported a 3 to 5 per cent return on equity. Grid operatorsin other countries earn much higher returns. Power GridCorporation of India, for instance, earns about 14 per cent. Mostelectric utilities in developed countries earn over 10 per centreturn on equity for transmission facilities.

Adding to the two corporations’ woes, the governmentincreased the on-grid tariffs for coal-based generators by about5 per cent twice in the past two months. The new tariffs areexpected to increase the cost of power purchase to the gridoperators by about CNY15 billion (USD2.1 billion).

While giving a boost to the generators, the tariff increase isexpected to severely hurt the grid operators’ margins. They willhave to absorb the increase as they are prevented from passingon the costs to consumers because of capped prices.

China Seeks New Sources of Financing(Contd..)

Until price reforms take place, there isconsiderable risk of inefficient investment. Theonly compelling reality for investor interest willbe double-digit growth in power demand and

substantial capacity addition.

Squeezing the grid operators to boost generation capacity maynot be a long-term solution to the power crisis in the country. Itcould lead to overcapacity in the transmission grid. Retail pricesneed to move closer to market rates if the government wants tocreate incentives to increase generation, while protecting gridoperators and removing distortions throughout the sector.

However, with inflation at the forefront of the government’seconomic agenda, there is not much room for retail tariffincreases. Analysts believe that it is only when the pricingmechanism improves that grid operators can earn realistic returnsand attract investors. Only then can the government send theright indicators for successful listing of the two grid operators.

Given the current state of price reforms, industry observersdoubt the level of interest foreign investors would show. “Thereturn on transmission investment may be uncertain,” notes Fitch.

Until price reforms take place, there is considerable risk ofinefficient investment. The only compelling reality for investorinterest will be double-digit growth in power demand andsubstantial capacity addition.

Global Transmission Report | October 2008 3

Features

Securing Europe’s Electric Energy Future(Contd..)

The recently opened NorNed interconnector between Norwayand the Netherlands is based on a similar raison d’être. A jointproject between the Norwegian transmission system operator(TSO) Statnett and its Dutch counterpart TenneT, NorNed aimsto enhance the security of electricity supply in the two countriesand achieve a lower price for consumers.

The 700 MW, 450 kV NorNed link is the longest underseahigh-voltage cable in the world, stretching from Eemshaven inthe Netherlands to Feda in Norway. It has a total length of 580km, about 420 km of which lies in shallow waters (less than 50metres in depth) and 160 km in deeper waters (up to 410 metresin depth).

NorNed is a high-voltage direct current (HVDC) project thatpermits electricity to be transferred in both directions. With aDC link, the two operators will benefit from better control overpower flows and lower transmission losses, estimated at 3.7 percent in NorNed’s case.

Swedish equipment giant ABB has supplied and installedthe two HVDC converters and the shallow water section of theundersea cable. French cable manufacturer Nexans has suppliedthe deep water section of the cable as well as a shorter length ofcable to bring the link ashore in Norway. It has also installed allthe submarine cables, including the ABB elements.

Although the project was first conceived in 1994 for mutualexchange of electricity, it was finally approved in 2004 by thetwo TSOs operating in a liberalised market regime. Twenty fourpermits were required from four different countries. Work onthe cable began in January 2005 and installation began in 2006. Itwas completed in December 2007. The project started a trial runin May 2008 and began official commercial operations onSeptember 11, 2008.

NorNed has been built at an estimated cost of EUR600 million.The European Investment Bank has provided a loan of EUR140million each to the two operators. The rest of the cost has beenshared equally by the partners.

The interconnetor is a regulated project with the costs coveredthrough main grid tariffs.

NorNed: Beyond an electric interconnectionThe NorNed cable is not just a physical power

interconnection; it represents a diversified alternative source ofsupply for the two countries.

Norway and the Netherlands complement each other inproduction and consumption of electricity. Norwegian generationcomprises hydro power almost entirely while the Netherlands’electricity production is predominantly thermal based.

Electricity consumption in the Netherlands fluctuates muchmore than in Norway. The Netherlands needs large capacityduring the day as consumption is high. Norway, which haselectrical heating, consumes more power during winter thansummer.

This difference in production and consumption patterns givesrise to a mutually beneficial trade opportunity. The Netherlands

can benefit from import of power in peak hours when the demandis high while Norway can gain from flows at off-peak hours andin dry season.

This will enable the Dutch to run their fossil fuel-fired plantsmore efficiently because of reduced variation in output, whilegiving the Norwegians access to thermal power when water levelsare low.

The link also brings “green” hydro power to the Dutch marketand from there to larger European markets. The quick regulatingability of hydro power plants would also benefit Dutch windgeneration.

Moreover, lower thermal production will reduce CO2 emissionsfrom Dutch generators, thus contributing to EU renewable energyand emissions targets. TenneT expects CO2 emissions in the countryto be reduced by about 1.7 million tonnes per year.

The two countries have also agreed to couple their powerexchanges – the Nordic NordPool and the Dutch APX – and useNorNed as an open interconnection. This model of electricityexchange is expected to reduce price volatility and improveliquidity in both markets.

Increased supply would intensify competition among existinggenerators and thus reduce peak prices. At the same time, lowerfrequency of price spikes would mean lower risk exposures fortraders and a higher level of liquidity.

Although the cable can transmit power in both directions, sofar it has been used for flows from Norway to the Netherlands.During the four-month trial period, about 1.8 million MWh ofelectricity has been transported over the link – about 1.7 millionMWh of hydro power from Norway to the Netherlands and 0.1million MWh of electricity in the other direction.

During this period, the transport capacity of the cable forimport was auctioned at an average price of EUR39.29 per MW,and for export at an average price of EUR1.42 per MW. Theseflows have generated revenues of EUR70 million. The four-monthincome has already exceeded the one-year forecast of EUR64million.

The Norwegian operator claims that it would pass on theprofits from NorNed in the form of lower tariffs to the consumers.Statnett expects that the link would achieve a net reduction intariff of about EUR10 million a year.

Buoyed by the initial success of NorNed, TenneT hasannounced another link with the Nordic markets, a DCconnection with Denmark, called Cobra, to benefit from wind-generated electricity. TenneT and Energinet.dk, the Danish TSO,will carry out technical and economic investigations over the nextfew months. A business case for the proposed link is expected tobe released in the first half of 2009.

The development of cross-border interconnections such asNorNed is a step forward to achieve the EU’s vision of anintegrated and sustainable European energy market.

NorNed Cable: Key Facts- Total length: 580 km- 420 km up to 50 m deep, 160 km up to 410 m deep- Total weight: 47,000 tonnes- Maximum voltage: ± 450 kV- Capacity: 700 MW, enough to power half of Amsterdam- Estimated cost: EUR600 million


Features

FERC’s criteria of approval for merchant transmissionThe Federal Energy Regulatory Commission (FERC) evaluates merchant transmission proposals based on 10 criteria.

These are:

1. The merchant facility assumes full market risk;

2. That service is provided under the open-access transmission tariff of an Independent System Operator or RegionalTransmission Organization (RTO);

3. The project should create tradable firm secondary transmission rights;

4. An open season process is used to initially allocate transmission rights;

5. The results of the open season should be posted on an open-access same-time information system;

6. Affiliate concerns are adequately addressed;

7. The merchant transmission facility does not preclude access to essential facilities by competitors;

8. The facility is subject to market monitoring;

9. The physical energy flows on the facility should be coordinated with, and be subject to, reliability requirements;

10. The facility should not impair pre-existing property rights to use transmission grids of interconnected RTOs or utilities.

Modest Success in Merchant Transmission(Contd..)

Merchant transmission facilities, on the other hand, are notin a utility’s rate base. The project developers assume theinvestment risk and earn an unregulated rate of return. With amajor regulatory concern thus dealt with and with strong investorintent in place, such projects could be developed in half the timetaken by utility-promoted projects. Moreover, merchanttransmission is expected to create competitive options for low-cost and efficient network expansion and thus play a definitiverole in accelerating transmission investment and improving gridreliability.

The recent Federal Energy Regulatory Commission (FERC)incentives were intended to provide a greater momentum tomerchant transmission investment. Although a number ofprojects have been announced, the record of success has beenmodest so far.

The first merchant transmission project to come online in theUS was the Cross-Sound Cable (CSC) project, developed byTransEnergie, a subsidiary of Hydro-Quebec. The undersea high-voltage direct current (HVDC) transmission project moves 330MW of power from Connecticut to Long Island. It was completedin June 2004. Hydro-Quebec later sold the project to Babcock &Brown Infrastructure.

Another project began commercial operation in July 2007. The660 MW undersea HVDC line connects Long Island to NewJersey. The project has been developed by Neptune RegionalTransmission Systems, LLC.

Long Island had been facing severe power shortages overthe past many years. These two projects have given Long IslandPower Authority (LIPA) direct access to low-cost power in thestates of Pennsylvania and New England, and are estimated toresult in savings of billions of dollars in energy supply costs overthe contract period of 20 years.

Many other projects are at various stages of development.Prominent among these are the Juan de Fuca Cable, TransBayCable and Montana Alberta Tie.

Sea Breeze’s 550 MW Juan de Fuca project, which will linkVancouver Island with Washington State’s Olympic Peninsula,is nearing completion of the permitting process. The 330 MWundersea TransBay cable, which proposes to link San Franciscowith Pittsburg in California, is also undergoing permitting. It isbeing developed by Babcock & Brown.

Montana Alberta Tie Limited (MATL), a wholly ownedsubsidiary of Toronto-based Tonbridge Power Inc., has receivedmost of the regulatory approvals and is now in the process ofselling transmission rights on its 346 km line. The project wouldbe the first merchant transmission interconnection betweenCanada and the US.

Elsewhere in the world too, merchant transmission has realisedpartial success. Two of the earliest such projects, the MurrayLinkand DirectLink interconnectors in Australia, were designed toserve as a role model. However, within a few years of operations,the developers applied for a regulated rate. Three other merchantinterconnectors are still facing operational challenges.

The situation is much the same in Europe. Only a handful ofmerchant transmission projects have started operations so far.These are all trans-border connections such as EstLink betweenEstonia and Finland, the SwePol link between Sweden andPoland, and BalticCable between Sweden and Germany.

Merchant transmission projects in Europe qualify forexemptions of regulated third-party access under the EuropeanUnion (EU) Law. With a favourable regulatory regime, numerousmerchant transmission interconnections have been proposedbetween neighbouring European countries. These include ImeraPower’s East-West interconnector between Ireland and the UK,the BritNed interconnector between the UK and the Netherlands,and Azienda Elettrica Ticinese (AET), an underground linkbetween Italy and Switzerland.


Features

Interview with Robert van Beers“The biggest difficulty is in getting regulatory approvals”

Tonbridge Power is a Toronto-based merchanttransmission company. Through its wholly ownedsubsidiary, Montana Alberta Tie Limited (MATL), it isdeveloping a 300 MW interconnection between the US andCanada. Here is a brief interview with its COO, Robert vanBeers.

GTR: What is the motive behind developing merchanttransmission projects?

van Beers: Merchant transmission should becommercially lucrative for a variety of reasons. The pace ofutility-driven transmission investment has been very slowin recent decades, creating shortages (expressed often assystem congestion). While this capital-intensive businesscan be financed on the basis of committed annuity-likerevenues, merchant revenues can substantially enhanceincome through short-term arbitrage opportunities.

GTR: What challenges and risks are faced bydevelopers of such projects?

van Beers: The biggest difficulty is in getting regulatoryapprovals. For MATL, these have been very slow to come.Not because of any inherent problem with the project, ratherbecause the regulators have simply built processes designedfor delay. The problem is particularly intractable becauseboth politicians and the regulated utilities prefer suchregulation. It serves as a barrier to entry. Such a systemprovides considerable political protection against iratelandowners. It also protects the utilities as full costs(including those of delays) are recoverable from captive rate-payers. The power consumer does not see the costs directlysince they are buried in the rates. And politicians do nothave the courage to confront the general population andeducate them on this. As MATL is an inter-countryconnection, we had to deal with twice as many regulators.

GTR: What, according to you, are the key features of asuccessful merchant transmission project?

van Beers: A solid, long-term, bankable contract forcapacity that permits the project to be financed; a strongteam able to navigate through the many regulatory,technical, right-of-way and operational difficulties; and,most importantly, a competitive power market whereinarbitrage and/or congestion costs are expressed explicitly.

GTR: What regulatory incentives can support thedevelopment of such projects?

van Beers: Clearer regulation, accountable regulatorsand defined timelines for approvals would be useful.

GTR: What other projects have been proposed orplanned by Tonbridge?

van Beers: We have not yet announced anythingpublicly. But we are keen to consider medium-sizedmerchant transmission projects that take advantage ofexisting bottlenecks and greenfield opportunities in theNorth American transmission system.

As merchant transmission is a pure investor initiative, thereare many risks involved. All too often, the development of suchprojects has fallen victim to vested interests that stand to losefrom increased competition. The history of these projects servesas a cautionary note for prospective merchant transmission lines.

A key risk is the regulatory regime. Merchant transmissionprojects are conceived to take advantage of the price differentialsin two power markets and are, therefore, inter-state or inter-country connections. In the US, these projects are subject to bothstate and FERC approvals. Getting these regulatory approvals isa lengthy and expensive process.

In general, developers of such projects are discouraged byregulatory hurdles. Siting and permitting present constantproblems. Says Robert van Beers, chief operating officer,Tonbridge Power: “Our biggest difficulty has been in gettingregulatory approvals. The regulators have simply built processesdesigned for delays, leading to project cost overruns.”

David Yaffe, member with the Washington-based law firm,Van Ness Feldman, agrees with this. “Regulation is an importantinput in the success of any transmission project. Today’s powermarkets are very complex. The developer needs to constantlyparticipate in and monitor the regulatory regime, which isexpensive. They need to properly think through how to deal withthe authorities,” he observes.

Yaffe helped LIPA and CSC resolve various regulatory issues.“In CSC’s case, even though the project’s full capacity wascontracted by LIPA, the authorities asked for an open season toestablish non-discriminatory access. This caused unnecessarydelays,” notes Yaffe.

Furthermore, lack of political will in a particular project cancause a big setback. Politicians, typically, are opposed to privateinvestment. In the case of CSC, Connecticut’s attorney-generalwas against the project. It took the intervention of the USDepartment of Energy to energise the transmission line.

Difficult financial and credit markets pose additional risks.Merchant transmission projects are financed on the basis of thepotential returns they can earn. With very few operating projects,analysis of their expected returns is scarce. Returns on suchprojects have been loosely compared with that of merchantgeneration or with other capital-intensive projects such aspipelines and toll roads.

Merchant transmission is expected to createcompetitive options for low-cost and efficientnetwork expansion and thus play a definitiverole in accelerating transmission investment

and improving grid reliability

In the absence of a strong developer, merchant transmissionprojects may find it difficult to raise the required funds. Also, itis difficult for such projects to compete when the alternativetransmission lines are subsidised by the utilities. However,analysts observe that sound non-cyclical long-life merchanttransmission projects could still attract considerable investorinterest.

Persistent credit downgrades for the developer or the off-takercan also lead to a financial crisis. The Neptune RTS project


Features

reportedly faced a significant setback when one of the developerswas hit with a credit downgrade. Analysts insist that lenderswill not finance projects without a long-term agreement with acreditworthy off-taker. Both the operational projects, CSC andNeptune, have sold full capacity under 20-year contracts to LIPA.

In addition, transmission expansion along the project routemay influence the market price differential. Therefore, fixed long-term contracts can reduce the price risk for the developer. Saysvan Beers: “A long-term bankable off-take agreement that permitsthe project to be financed is one of the key elements of a successfulmerchant transmission project.”

With the financial capital in place, a merchant transmissionproject requires the right human capital. Given the longdevelopment periods of such projects, constant interaction withthe regulatory authorities and financiers is required. A team withdiverse expertise and experience is therefore a plus.

Technology also has a role to play in the wider adoption ofmerchant transmission. As evident, most of the merchanttransmission lines are HVDC undersea cables. DC technologyallows for precise control of power flows and eliminates the “freerider” problem which is inherent in an alternating current (AC)line. This is necessary for the project to obtain long-termcontractual commitments. The underwater routes, on the otherhand, are indicative of difficulties in obtaining rights of way overland.

Only MATL uses advanced AC technology. Says van Beers:“From Tonbridge’s perspective, economics determine technology.

We are, however, keen to select technologies that are aslandowner-friendly as possible and minimise environmentalimpacts.”

Not only does the developer of a merchant transmission facilityface risks but so does the off-taker. Construction delays cannegatively impact the off-taker’s ability to supply power to itscustomers. Says Yaffe: “The off-taker should ensure enforceablemilestones in the contract. It should closely monitor the costoverruns as they could come back. It needs to think through theliquidated damage clause. To safeguard its position, it should alsounderstand the needs and rights that the merchant transmissionproject has to participate in organised power markets.”

Power price variability poses another major risk to the off-taker. Explains Yaffe: “The capacity on a merchant line iscontracted to get access to low-cost sources of energy. With pricechanges, the off-taker might be stuck with high-cost power undera long-term contract.”

The role of merchant transmission in strengthening thecountry’s electric transmission infrastructure is yet to be fullyrealised. The US experience shows that regulatory issues andfinancing difficulties pose key challenges to such projects. If theseconcerns are addressed, merchant transmission could acceleratethe much-needed expansion in this segment.

Nonetheless, the success of projects such as CSC and Neptuneis an encouraging sign. While merchant transmission may stillbe in its infancy, the time is approaching when it becomes a globalreality.

Global Transmission ReportInformation and analysis on the global electricity transmission industry

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News

NORTH AMERICA

Allegheny Energy to reroute TrAIL projectin Pennsylvania

Bowing to intense pressure in south-western Pennsylvania, Allegheny Energyhas agreed to reroute the portion of itsproposed high voltage power line projectpassing through the state. The project isbeing developed by Allegheny’s whollyowned subsidiary, Trans-AlleghenyInterstate Line Company (TrAILCo).

Allegheny has announced asettlement agreement on thePennsylvania portion of its 500 kV multi-state project. It will now reroute the lineso that only 1 mile of it passes throughthe state.

The project was originally planned tobegin in Washington County, continue for37 miles in the south-western corner ofPennsylvania and then cross into WestVirginia and end at Loudoun County inVirginia.

Allegheny has now agreed toabandon the 36 mile (58 km) stretchpassing through the state. In exchange,Greene County would agree to supportthe associated project, called 502 JunctionFacilities, which includes a new electricsubstation and a 1.2 mile transmissionline from Greene County to West Virginia.

In August, two administrative lawjudges for the state Public UtilityCommission recommended that theagency deny a request to build the line.That recommendation is not binding onstate utility regulators, but it forced thedevelopers to talk to the locals.

TrAILCo then filed a motion with thestate regulators earlier in September,asking the commission to defer a decisionon the 36 mile segment of thePennsylvania portion of the line so that itcould pursue a more collaborativeprocess. The motion also asked for timelycommission approval for the 1.2 milesegment which the company says is acritical part of the interstate project.

As a part of the settlement agreement,TrAILCo would relinquish the title torights-of-way to property owners inGreene and Washington counties. Itwould also contribute USD750,000 toGreene County to support educational,environmental, public health andcommunity infrastructure plans.

The rerouting proposal seems likely

to move things for the project. WestVirginia’s Public Utility Commission hasalready approved the line, while aVirginia State Corporation Commissionhearing examiner has recommended thatthe state’s regulators approve it too.

ATC to spend USD2.7 billion ontransmission network over 10-yearperiod

The American TransmissionCompany (ATC) has estimated that it willneed to spend USD2.7 billion over thenext 10 years to ensure the reliability ofits transmission network across most ofWisconsin and Michigan’s UpperPeninsula. The company says that this isin addition to the USD1.9 billion it hasinvested on transmission systems sinceits inception in 2001.

Of the total USD2.7 billion, aboutUSD1.3 billion would be spent on adding210 miles (338 km) of new lines;upgrading more than 540 miles (869 km)of existing lines; and installing more than23 new transformers and 39 capacitorbanks. The remaining USD1.4 billionwould be spent on maintenance projectsand connections to power plants.

This is the third straight year that thecompany’s 10-year assessment calls forspending slightly less than the previousyear’s estimate.

In 2007, the company projected aninvestment of USD2.8 billion for the next10 years. ATC explains that this is due tothe shift in strategy “from building newfacilities” to “maintaining existingassets”.

Unlike in the previous years, thecurrent 10-year plan does not announceany new major high voltage lines. Thebiggest pending project in the plan is alsothe most controversial – a proposal tobuild a 345 kV line across Dane Countyat an estimated cost of USD215-250million. The line is under regulatoryreview, and the Wisconsin Public ServiceCommission is expected to rule on thisproject in 2009.

Among the projects completed thisyear is the 220 mile (354 km) Arrowhead-Weston 345 kV transmission line, whichwas energised in January 2008 at anestimated cost of USD439 million.

ATC currently owns about 9,350 miles(15,047 km) of transmission lines and is amember of the Midwest RegionalTransmission Organization.

Plans for wind energy transmissioninfrastructure in Texas

Six transmission service providers inTexas have jointly filed a detailed planwith the Public Utility Commission ofTexas (PUCT) for setting up electricitytransmission infrastructure under thestate’s Competitive Renewable EnergyZone (CREZ) programme. The newtransmission infrastructure wouldtransport wind power from generatingstations in West Texas to the more denselypopulated regions of the state.

The PUCT approved the CREZprogramme in July 2008. CREZ involvesconstructing about 2,400 miles (3,840 km)of new transmission lines and facilitiesat a total projected cost of USD4.9 billion.It could more than triple Texas’ currentcapacity for wind power, from about5,500 MW to 18,456 MW.

The group of companies that has filedthe plan comprises both public andprivate transmission service providers –Electric Transmission Texas (ETT), LCRATransmission Services Corporation(LCRA TSC), Oncor Electric Delivery,Sharyland Utilities, South Texas ElectricCooperative (STEC) and Texas-NewMexico Power Company (TNMP). Thegroup had filed its statement of intentwith the PUCT on July 24, 2008. At thattime, only four companies – ETT, LCRATSC, Oncor and Sharyland – were partof the joint effort. STEC and TNMPsubsequently joined the group, whichintends to continue discussions withother companies seeking to become partof the joint proposal.

The plan envisages building about3,840 km of 345 kV transmission lines andthe associated electrical substations. Thegroup has proposed to establishrelationships with key equipmentvendors for cost-effective implementationof the CREZ programme.

The plan also outlines thetransmission facilities that the groupmembers will develop. While eachcompany will take the responsibility forpermits, construction, operation andmaintenance of its facility, the group willclosely coordinate on all aspects of theCREZ project and work with the state’sgrid operator, Electric Reliability Councilof Texas (ERCOT).

ETT proposes to build and own CREZtransmission facilities in and around theAEP Texas North Company’s distributionservice area; LCRA TSC and Oncor, in


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and around their service areas;Sharyland, in the Texas Panhandle thatis not currently in the ERCOTtransmission footprint; STEC, in Crockett,Pecos and Schleicher counties; and TNMPin Montague County.

Midwest transmission initiative to focuson wind energy

Another wind transmission initiativeis taking shape in the US. Five states inthe Midwest – Iowa, Wisconsin,Minnesota, North Dakota and SouthDakota – have formed the UpperMidwest Transmission DevelopmentInitiative to set up a regional electrictransmission system for wind energydevelopment. The coalition will identifythe region’s wind energy resources andthe transmission infrastructure needed todevelop them in a cost-effective manner.It would also seek financing options fornew transmission lines.

The initiative plans to submit aproposal to the region’s grid operator,Midwest Independent TransmissionSystem Operator (MISO), next year. MISOis conducting transmission planningstudies, the results of which are expectedin 2009.

The proponents of wind energy haveargued that the lack of adequate powerlines is a major impediment. More than25 states have established renewableportfolio standards, according to whicha percentage of the power purchased byenergy utilities has to be from renewableresources, including wind.

In some states, utilities will beexpected to source up to 20 per centelectricity from renewable sources by2020. However, the lack of transmissionlines to access the often remote renewableresources is causing many providers toquestion the attainability of such goals.

As Midwest states increase the use ofwind energy, planning on how to bestlocate wind farms and build thenecessary transmission infrastructure iscrucial.

OG&E receives approval for rate recoveryfrom wind energy transmission

Continuing on wind, the OklahomaCorporation Commission has issued anorder allowing Oklahoma Gas & Electric(OG&E) to recover the costs of theplanned wind power transmission linethat is to be built between Woodward and

Oklahoma City.

OG&E had submitted a request to thecommission in May 2008, stating that thecompany would quadruple its windenergy capacity in the state to at least 770MW. The 115 mile (184 km), 345 kVtransmission line is the key componentof the plan.

The new line will be used to transportelectricity produced by current and futurewind farms in north-western Oklahoma.Pete Delaney, OG&E’s chairman,president and CEO, calls the line “animportant step in unlocking the fullpotential of wind energy in westernOklahoma”.

The commission’s order includes thecost of building the transmission line, arider to allow recovery of costs for the line(beginning at the time it goes into service),and a tariff that will allow more OG&Ecustomers to choose up to 10 per centenergy.

The company has finalised the routefor the transmission line. According toOG&E, revenue generated fromproviding transmission capacity to othercompanies will help offset the cost forOG&E customers. The cost of the newtransmission line and wind generationfacilities is estimated to add USD1.50 permonth to the bill of an average residentialcustomer in 2010.

The new OG&E renewable energypurchase programme will beimplemented early next year, and itsscope will be expanded as new windgeneration capacity comes online.

Oklahoma is set to assume animportant role in wind powerdevelopment in the US. It is estimatedthat the state has enough wind resourcesto supply about 10 per cent of itselectricity needs. The planned windprojects have created the need to buildthe necessary infrastructure to transportthis power. OG&E’s parent company,OGE Energy, is keen to tap this potential.It has also formed a joint venture withElectric Transmission America (ETA),called Horizon Transmission, to constructhigh voltage 765 kV transmission projectsin western Oklahoma.

System changes by New York gridoperator to tap wind resources

Paving the way for greater use ofrenewable power, the New YorkIndependent System Operator (NYISO)

has introduced system and operatingchanges to better utilise the state’s windresources.

NYISO recently made improvementsto the system with a centralisedforecasting system to accommodate thevariable nature of wind-based generation.

NYISO has contracted AWS Truewindto provide wind power forecasts for eachproject, based on meteorological data andhistorical operating characteristics. Thedata is fed directly into NYISO’soperational systems that determinebalance of load and generation.

The NYISO is one of the first ISO/RTOs in the US to implement such asystem. As on September 1, 2008, over 700MW of wind-based capacity was incommercial operation in New York state.The capacity is projected to grow to morethan 1,200 MW by the summer of 2009.Proposed wind-based projects totalling6,500 MW, to be developed by 2011, areproceeding through the gridinterconnection study processadministered by the NYISO.

Experimental transmission pricing planfor western grid approved by FERC

The Federal Energy RegulatoryCommission (FERC) has approved plansby a group of transmission companies inthe West for a two-year experimentalregional transmission pricing initiativeaimed at establishing a coordinatedservice from multiple transmissionproviders at a single rate.

Under the proposal, the participatingtransmission owners would offercustomers the option of buying hourlynon-firm, point-to-point transmissionservices at a single rate, as an alternativeto the current “pancaked” service inwhich a customer is charged for eachterritory the power passes through.

In compensation, each participatingtransmission company would beallocated a pro rata share of revenues. Theshare would be based on the ratio of theceiling rate of the company to the sum ofall the ceiling rates, provided that notransmission provider collects more thanits ceiling rate.

The initiative has been proposed byeight members of the WestConnecttransmission group, six of which areunder the FERC’s jurisdiction – ArizonaPublic Service Company, El Paso ElectricCompany, Nevada Power Company/


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Sierra Pacific Power Company, PublicService Company of Colorado, PublicService Company of New Mexico andTucson Electric Power Company. Theinitiative is intended to encourage moreefficient use of the regional grid andreduce costs for customers (also see PolicyReview).

FERC accepts regional transmissionplans for Southeast region

Meanwhile, the FERC hasconditionally accepted compliance filingsfrom seven transmission providers insoutheast US on the transmissionplanning process associated with orderNo. 890. In general, the conditionsattached to each order seek more specificson how the companies and stakeholderswill coordinate with each other onplanning.

The transmission providers whosecompliance filings have been approvedare: Southwestern Power Administration;E.ON US; Cleco Power; SouthernCompany Services; South CarolinaElectric and Gas Co.; Duke EnergyCarolinas and Progress Energy Carolinas(joint filing); and Entergy Services.

The FERC had earlier accepted similarcompliance filings from entities in theNortheast, the Midwest, the West,California and Florida.

Order No. 890, issued in February2007, reformed the pro forma open accesstransmission tariff to clarify and expandthe obligations of transmission providersto ensure that transmission services areprovided on a “non-discriminatory” basis.

In particular, the order directedtransmission providers to develop atransmission planning process for newprojects that satisfies nine principles:coordination, openness, transparency,information exchange, comparability,dispute resolution, regional participation,economic planning studies and costallocation.

The FERC also directed transmissioncompanies to address the recovery ofplanning related costs.

Iberdrola finalises Energy Eastacquisition

Iberdrola, the Spanish electric utility,has accepted the terms and conditions setby the New York Public ServiceCommission (PSC) for its acquisition ofEnergy East Corporation.

This closes a year-long process underwhich Iberdrola had sought the state’sapproval on the USD4.5 billion deal forMaine-based Energy East and its upstatesubsidiaries – New York State Electric &Gas Corporation and Rochester Gas &Electric Corporation. Together, thesecompanies serve over 1.7 millionelectricity and natural gas customers.

The deal had already been approvedby regulators in Connecticut, Maine andNew Hampshire as well as by the FederalEnergy Regulatory Commission (FERC),and was only awaiting New York’sapproval.

The New York PSC has approved thedeal but with a few conditions. Iberdrolahas to set aside USD275 million in aspecial fund to offset future rate increasesfor customers. It must also sell EnergyEast’s fossil fuel-based plants in NewYork.

Iberdrola will be allowed to own windfarms and hydroelectric plants in NewYork, despite a state policy separatingenergy transmission and generation.

The company, one of the world’slargest developers of wind power, hadthreatened to bury the deal if stateregulators blocked them from owningwind energy plants. The PSC’s approvalalso requires Iberdrola to spend USD200million on wind energy development inNew York.

Hydro One receives approval to build ahigh voltage transmission line

Canadian utility major Hydro Onehas received the Ontario Energy Board’s(OEB) approval for the Bruce-Miltontransmission reinforcement project.

The largest expansion in Ontario’stransmission system in 20 years, theproject involves construction of a 180 km,double-circuit 500 kV transmission linebetween the Bruce power plant inKincardine and Hydro One’s switchingstation in Milton.

The line will transfer renewable-based power from facilities underdevelopment in the Bruce area tosouthern Ontario. The project is estimatedto cost over CAD635 million.

The OEB decision is, however,conditional upon the project receiving allthe necessary clearances, the key beingenvironmental approval.

Hydro One plans to release the draft

Environmental Assessment document forreview for a 30-day period, with the finaldocument scheduled for submission tothe environment ministry in November2008. The line is planned to becommissioned in December 2011.

FERC grants rate incentive for NYRItransmission project

The FERC has authorised incentiverates for the development of acontroversial high voltage power line inthe state of New York. The incentives arebased on the New York State PublicService Commission’s (PSC) determiningthat the power line “either ensuresreliability or reduces congestion” andapproves the siting of the project.

The New York Regional Interconnect(NYRI), owned by a consortium ofinvestors with interests in energy andother infrastructure assets, had appliedto the FERC for a guaranteed 13.5 per centrate of return to help finance its 190 mile(306 km) HVDC line project.

The developers estimate that the linewould cost USD2 billion and could be inservice by 2012.

The commission has not set thedeveloper’s final rate of return but hasapproved the company earning anadditional 2.75 per cent return on equity(RoE) on top of a reasonable base rate.The regulator recently set the baselineRoE for other transmission utilitiesbetween 11-11.5 per cent.

NYRI’s proposed power transmissionline would run from Oneida County toOrange County in the state. The projectis facing considerable opposition in theareas through which the line is expectedto run.

On its part, NYRI claims that theproject would provide significanteconomic advantages to the state – in theform of reduced electricity rates (by 6 percent by 2018), about 300 additional jobsduring the construction phase, localsourcing of goods and materials, andtaxes.

In August, NYRI’s application for thepower line was deemed “complete” bythe New York PSC, after having beenrejected twice as incomplete.

The PSC had also opposed NYRI’srequest for rate incentives. The developerwill have to apply for the incentives againafter getting the go-ahead from the PSC.


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Virginia Electric too receives rateincentives

The FERC has also approved theVirginia Electric Power Company’s(VEPCO) request for rate incentives for11 transmission projects.

VEPCO, a wholly owned indirectsubsidiary of Dominion Resources, Inc.,had requested for 125 basis point addersto its return on equity (RoE) for seventransmission projects and 150 basis pointsadders for another four projects. The newrates are effective from September 1, 2008.

In October 2007, the company hadfiled with the FERC to shift fromregulated rates to formula rates. It wasgranted the request in April 2008 with afinal RoE of 11.4 per cent.

The latest request was approved onthe grounds that VEPCO has beencontinuously investing in strengtheningits transmission network. It investedabout USD620 million in transmissionfacilities during the period 2003-07. Thecompany expects to more than triple thisinvestment to USD2.1 billion during 2008-12.

VEPCO is a member of the 13-statePJM regional transmission system. Someof its 11 proposed projects are part of thePJM’s expansion plan. The company isalso participating in the PJM’s MAPPproject, which comprises a new 500 kVtransmission line that will run fromnorthern Virginia to southern New Jersey.

New England utilities seek FERCincentive rates for transmission project

Meanwhile, another project in theNew England region is seeking incentiverates. Northeast Utilities and NationalGrid USA have requested the FERC toapprove incentive rates for their proposedNew England East-West Solution(NEEWS) transmission project.

The two utilities have specificallyasked for a 150-basis point incentive tothe 11.64 per cent base rate of return onequity established by FERC for NewEngland transmission owners in Marchthis year; inclusion of all constructionwork in progress in the rate base; andrecovery of 100 per cent of prudentlyincurred costs if the project is abandoneddue to factors beyond the projectdevelopers’ control.

NEEWS comprises four interrelated354 kV transmission projects – the Greater

Springfield Reliability Project, theInterstate Reliability Project, the CentralConnecticut Reliability Project and theRhode Island Reliability Project. These areaimed to improve the reliability of thetransmission system in southern NewEngland. All the components of NEEWSare expected to become operationalbetween 2012 and 2013.

While asking for incentive rates, thedevelopers have argued that the NEEWSproject presents “substantial risks andchallenges”. The project is estimated tocost over USD2.1 billion. NortheastUtilities’ share of the project cost has beenestimated at about USD1.49 billion, whilethat of National Grid is expected to bearound USD634 million.

PPL Electric seeks FERC approval forchange in transmission rates

PPL Electric Utilities, a regulated T&Dutility operating in eastern and centralPennsylvania, has asked the FERC for achange in the way the company’stransmission rates are calculated. Thenew rate formula would help thecompany invest in transmission systemupgrades.

PPL has asked for permission toswitch to “formula-based” rates. Underthis process, the utility would earn a fixedreturn on equity. It could then annuallyadjust its transmission rates, subject toFERC review.

Until now, transmission rates havebeen adjusted sporadically. The lastchange occurred in 1998. PPL says theswitch would more accurately reflect thecost of transmission. The new processwould also offer an opportunity for publicinput.

This request comes in advance of, andhas no relation to, the end of rate caps inDecember 2009. PPL officials predict thatelectric rates will increase by about 35 percent when rates are deregulated fromJanuary 1, 2010.

The company is requesting that thetransmission rate change take effect fromNovember 1. This request, if approved,would “marginally” increase the cost ofelectricity for PPL’s residential customers.

According to PPL, transmission ratesaccount for about 7 per cent of acustomer’s monthly bill. The companyestimates that the monthly bill of itsaverage residential customer wouldincrease by only USD0.74. This would

translate into USD20 million in annualrevenues for the utility, which would beused to build new transmissioninfrastructure or refurbish the existingsystem.

In August 2008, PPL and New Jersey-based Public Service Electric & Gasannounced the route for construction ofa 130 mile (210 km) power line fromBerwick in Pennsylvania to Roseland inNew Jersey. The utilities hope to completethe line by 2012.

ITC Great Plains to build part of KansasV-Plan transmission project

The Mid-Kansas Electric Companyand Sunflower Electric PowerCorporation have entered into anagreement with ITC Great Plainswhereby ITC will build two of the threesections of the proposed Kansas V-Plantransmission project. ITC Great Plains isa subsidiary of the independenttransmission company, ITC Holdings.

The V-Plan involves a 180 mile (290km) high-voltage transmission line inKansas. It would essentially carry energyfrom the proposed wind power plants inthe state.

Under the agreement, ITC will buildtwo sections of the project. The firstsection comprises a transmission linefrom Spearville to Comanche County inKansas. The second section is a power linefrom Comanche County to MedicineLodge.

These two sections run across theterritory served by Sunflower, an electricwholesale supplier, and Mid-Kansas, acoalition between six electric cooperativesin central and western Kansas. The V-Plan could be a 765 kV project if deemedappropriate by the Southwest Power Pool(SPP), the regional transmissionorganisation for a seven-state region thatincludes Kansas.

As part of the agreement, WestarEnergy, the biggest power company inKansas, was offered the third section ofthe project. This comprises a power linefrom Medicine Lodge to SedgwickCounty, terminating just outside Wichita.Westar’s service area covers portions ofthe third section. Should Westar choosenot to participate, ITC Great Plains iscommitted to building any portion of thethird section.

ITC was the first to propose to buildthe V-Plan, in July 2007. However, in May


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2008, Westar submitted its proposal to thestate utility regulators, proposing toexecute a plan of its own, and soughtdismissal of ITC’s project.

Westar has set up a cooperativeventure, Prairie Wind Transmission, toundertake its project, which includes aproposal to extend it to ComancheCounty to connect with Oklahoma’stransmission network. Prairie Wind hasapplied for utility status in Kansas. It isalso trying to get SPP’s approval.

Both companies have applied with theKansas Corporate Commission. It is nowup to the commission to decide whichcompany will build the high-voltagenetwork in the state.

Utility status for ITC Great Plains inOklahoma

Meanwhile, the Oklahoma CorporateCommission has granted utility status toKansas-based ITC Great Plains. Thecompany, which received similarapproval from the Kansas CorporationCommission in 2007, has high voltagetransmission lines in the developmentand planning phase in both Kansas andOklahoma.

Carl A. Huslig, president, ITC GreatPlains said that utility status would allowthe company to move forward on apreviously announced commitment tofacilitate development of wind energy inOklahoma by investing in criticalelectricity infrastructure.

ITC Great Plains is owned by ITCHoldings, which is focused entirely ontransmission. Through its subsidiaries –ITC Transmission, Michigan ElectricTransmission Company and ITCMidwest, etc. – ITC Holdings operatesregulated transmission systems inMichigan’s Lower Peninsula and parts ofIowa, Minnesota, Illinois and Missouri.ITC Holdings has also plannedtransmission projects through itssubsidiaries ITC Grid Development andITC Panhandle Transmission.

Potential upgrade of ColstripTransmission System to support windpower

The four utilities that own the ColstripTransmission System (CTS) in Montanahave agreed to study potential upgradesof the existing 500 kV system. Theupgrade is aimed to transmit future windpower to the Pacific Northwest.

NorthWestern Energy, Puget SoundEnergy, PacifiCorp and Portland GeneralElectric are the four owners of the CTS,which was built 30 years ago to carryelectricity from the companies’ jointlyowned coal-fired power plants in easternMontana.

The current focus on wind and othergreen sources of energy has spurred newinterest amongst the utilities to consideroptions to move more of this new energyfrom Montana to the Northwest.

The CTS consists primarily of two 500kV lines that stretch up to Townsend inWestern Montana, where it interconnectswith the Bonneville PowerAdministration (BPA) transmissionsystem. As part of the study agreement,the companies will begin discussionswith BPA about a corresponding upgradeof its Montana Intertie betweenTownsend and Garrison.

The cost of the study will be sharedequally by the owners of CTS. Theownership proportion of any upgradeswill be decided later.

Cape Wind transmission line gets keyenvironmental permit

The Massachusetts’s Department ofEnvironmental Protection has issued akey water quality certificate to Cape WindAssociates for the proposed wind farmoff the coast of Cape Cod, the first offshorewind energy project in the US. The projectinvolves installing nearly 8 miles (12.8km) of transmission cable through LewisBay in West Yarmouth.

The water quality certificate is one ofnearly 20 permits Cape Wind must securebefore the turbines are installed. Theproject continues to face severalregulatory hurdles. In October 2007, theCape Cod Commission deniedpermission for transmission lines. Whenthe project progresses, an additional 5miles (8 km) of cable through the waterswould be needed to link the wind farmto the US’s eastern electricity grid.

The 130-turbine wind farm of 170 MWcapacity was proposed seven years ago.The project has been facing severecriticism from some quarters on thegrounds that it will hurt the wildlife andnatural beauty of the area, and causesafety hazards for boating and air traffic.A final federal assessment of the project’senvironmental impact is expected by theend of this year.

Canada to move forward on NorthwestTransmission Line project

Canada’s provincial government ofBritish Columbia is expected to soonrestart the environmental assessmentprocess on the Northwest TransmissionLine (NTL) project, which was put onhold after the private sector partnerwalked out. The power line will connectthe north-western part of BritishColumbia to the province’s electricitygrid.

This line is being projected as animportant infrastructure project for theprovince, with a potential to generateover CAD15 billion in capital investment,create thousands of new jobs and reduceemissions by allowing access to “green”electricity. The north-western regioncurrently relies on diesel to generateelectricity.

British Columbia will spend aboutCAD10 million to immediately restart theenvironmental assessment process. Thenew 287 kV line will extend 335 km fromTerrace to Meziadin Junction and northto Bob Quinn Lake.

The NTL project is estimate to costabout CAD400 million. The new line willbe owned by BC Hydro and operated byBC Transmission Corporation, the gridoperator for the province.

A new private sector partner is beingsought to share the cost of the project.Earlier, the Galore Creek MiningCompany had promised to contribute upto CAD158 million to get the transmissionline started. The line would have ensuredsufficient supply of electricity to thecompany’s Northwest BC mining project.

Galore Creek Mining subsequentlybacked out of its commitment, as a resultof which the NTL project was put on hold.

345 kV transmission line in Connecticutnears completion

Connecticut Light & Power Company(CL&P), the largest electric utility in thestate, has completed a 45 mile (72 km)overhead section of the transmission linebetween Middletown and Norwalk.

Overall, CL&P is upgrading a 69 mile(111 km) stretch of power lines betweenMiddletown and Norwalk as part of aUSD1.05 billion project to alleviate powercongestion in the south-western part ofConnecticut. Work on this stretch beganin April 2006. The remaining 24 miles (37


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km) of the line, between Milford andNorwalk, will be underground.

The 345 kV power line will cross 18towns. The project is being jointlyexecuted by CL&P and UnitedIlluminating. The developers expect toenergise the entire line in the first quarterof 2009, nearly six months ahead ofschedule.

Tonbridge Power arranges creditfacilities for MATL project

Tonbridge Power, which isdeveloping the 214 mile (344 km)interconnection between the US andCanada, has entered into a mandate letterand term sheet agreement with a NewYork-based financial institution for aUSD90 million construction and termloan facility for the project (more in DealWatch).

Texas PUC wants new benefit analysis fordespatch system

Texas’ PUC has asked for a newanalysis of the savings and long-termbenefits of switching the state’s powergrid to a more efficient despatch system.The commission has given ERCOT, thegrid operator in most of Texas, threemonths to complete the analysis of the so-called “nodal” project.

ERCOT is currently managingelectricity despatch using “zones” tobalance supply with demand across thestate. In 2003, the PUC authorised theswitch to the nodal system, which allowsERCOT to measure demand and flowsmore precisely across the state, andmanage congestion efficiently andeffectively. It will provide clearer marketsignals for generators to know where newgeneration capacity is needed the mostto reduce costs.

The current zonal method has beenblamed for the electricity price spikes in2007 that put some small retail electricityproviders out of business. There has beengrowing criticism of the state’sderegulated power system on thegrounds that consumers are allegedlypaying more for power than in states thathave regulated power grids.

However, the transition to a nodalmarket design requires substantialinvestment and upgrades to ERCOT’sinformation technology systems.

The new system is estimated to costmore than USD300 million and is

expected to save USD6 billion in powerdespatching and related costs, when fullyimplemented.

The nodal market was scheduled tobegin operations on or before January 1,2009 but, due to several factors, ERCOThas postponed the launch date. Thedelays and cost increases havesignificantly cut into savings, and areamongst the reasons PUC wants freshestimates.

ERCOT has agreed to comply with thecommission’s request for new data andwill hold off the launch till it finishes theanalysis.

Concerns in East Mesa, Arizona overproposed transmission line

The El Paso Electric Co.’s proposal toadd 14 miles (22.5 km) of transmissionlines and build another substation in LasCruces East Mesa in the state of Arizonais continuing to generate concernamongst the locals.

The company has proposed to builda new substation and install a 115 kVpower line in areas not served by it. Thenew substation would connect to theArroyo and Jornada substations. Butresidents in the area are worried aboutthe project’s impact on their lives.

The final route of the line will bedecided once the public hearing processis over. The company is planning anotherround of meetings with residents inNovember.

SCE disputes transmission line re-routing cost estimate

Southern California Edison (SCE) hasdisputed the cost assessment for re-routing a proposed transmission linethrough California’s state park instead ofthrough the city.

The city has estimated the cost ofrerouting at USD50 million. However,utility officials claim that this is anunderestimation as the cost of buildingadditional lines and switching stations,which could amount to USD100-150million, has not been taken into account.

The cost dispute has arisen over theTehachapi Renewable Transmissionproject, which aims to tap wind-generated electricity from Tehachapi passin Kern County. The 250 mile (402 km)long project is divided into 11 segmentsand is estimated to cost USD1.8 billion.

Minnesota Power to buy interstatepower transmission line

Minnesota Power, a subsidiary ofAllete, Inc., has agreed to buy aninterstate power transmission line fromthe Square Butte Electric Cooperative forabout USD80 million. Minnesota Powerwill phase out the associated long-termcontract for coal-generated electricity.

Currently, the 465 mile (744 km) directcurrent transmission line transportspower from the 705 MW Milton R. Youngcoal-fired power plant in Center, NorthDakota to Minnesota.

As part of the deal, Minnesota Powerwill gradually phase out the contract forsourcing 300 MW from the Young stationand replace it with wind-basedgeneration. The company plans to startwind generation near the Young plant in2010.

The deal, which was first announcedin May, is subject to regulatory approvalsand is anticipated to be completed in theyear 2009.

Following a 2007 state mandate thatrequires utilities to produce 25 per centof their energy from renewable resourcesby 2025, a growing number of Minnesotautilities are planning to develop and ownwind farms. In addition to MinnesotaPower, the utilities that are investing inrenewable energy include Xcel Energy,Minnkota Power Cooperative and OtterTail Power Company.

Public hearings scheduled for Intertieproject in Montana

Three public meetings are scheduledto be held next week in Montana on aproposal to build and operate a 500 kVelectric transmission line. The MountainStates Transmission Intertie (MSTI)project would cover 390-430 miles (600-700 km) and cross south-westernMontana and south-eastern Idaho.

The project has been proposed byNorthWestern Energy, a regulatedinvestor-owned utility operating in thestates of Montana, Nebraska and SouthDakota.

The Bureau of Land Management, theUS Forest Service and the MontanaDepartment of Environmental Qualityare preparing an EIS on the proposal. Thedevelopers have contracted with PowerEngineers to identify a preferred routeand alternatives.


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Nebraska utilities to join SouthwestPower Pool

The board of the Southwest PowerPool (SPP) has begun a process to allowthree publicly-owned utilities inNebraska to join the regionaltransmission organisation (RTO).

Nebraska Public Power District,Omaha Public Power District and LincolnElectric System have asked the SPP boardto approve changes to the RTO’s bylawsbefore it makes a regulatory filing withthe FERC later this year.

When this is done, the three utilitieswill join SPP as transmission owners andwill place their transmission facilitiesunder the SPP tariff.

SPP, which currently manages powertransmission in eight states (Kansas,Oklahoma, New Mexico, Texas,Louisiana, Missouri, Mississippi andArkansas) has about 4.5 millioncustomers and has a wholesale energymarket with more than 59,000 MW ofgenerating capacity. With the inclusion ofthe Nebraskan utilities, SPP’s reach willexpand to nine states.

Delmarva Power to hold communitymeetings on MAPP project proposal

Delmarva Power, a subsidiary ofWashington-based regulated utilityPepco Holdings, Inc., has decided to holdcommunity informational meetings onthe proposed 230 mile (370 km) interstateelectric transmission project known asMid-Atlantic Power Pathway (MAPP).

The MAPP project will cover fourstates and connect Northern Virginia toMaryland, cross the Delmarva Peninsulaand link with the power grid in southernNew Jersey. It would need more thanUSD1 billion in investments.

The project is scheduled to extend toDelaware by 2012, with a 500 kVtransmission line running from Calvert’sCliffs in Maryland to a power plant inMillsboro.

About 35 miles (56 km) of the projectwould be built on Maryland’s easternshore. Approximately 8 miles (13 km) ofthe line would pass through westernWicomico County, using existing rights-of-way from the Nanticoke River throughthe Mardela Springs area to the Delawarestate line. The developers will educate theresidents on the proposed route of the linein the state.

Puget Sound Energy to invest in electricand natural gas infrastructure

Puget Sound Energy, the electric andgas utility subsidiary of Puget Energy,plans to invest about USD421 million oninfrastructure improvements in 2008.About USD247 million is earmarked forcapacity and reliability upgrades, andabout USD174 million to meet thegrowing customer needs.

The company’s electric systeminvestments in 2008 include: setting up 4miles (6.5 km) of 230 kV transmissionlines and 5 miles (8 km) of new 115 kVtransmission lines, replacing 54 miles (87km) of old power lines, replacing about70 miles (115 km) of underground cables,replacing 800 poles, constructing sixdistribution substations (two in WhatcomCounty and one each in Island, King,Jefferson, and Thurston counties), andupgrading seven distribution substationsand six transmission systems inWhatcom, Skagit, Snohomish, King,Kitsap, and Thurston counties.

Puget Sound Energy has more than 1million electricity customers and about740,000 natural gas customers, primarilylocated in western Washington.

Canada’s ATCO Electric forms alliance toupgrade transmission network

Alberta-based utility ATCO Electrichas formed an alliance with the UK’sBalfour Beatty and Australia’s UnitedGroup to upgrade its Albertatransmission system under a Canadian$700 million, five-year capital worksagreement.

The utility will undertake a largeportion of the work identified in theAlberta Electric System Operator ’s(AESO) transmission system plan for2007-17. AESO has identified thepotential need for Canadian $5 billion fortransmission development over 10 yearsto ensure reliable electricity supply tocustomers in Alberta.

ATCO Electric, a part of the ATCOGroup – which has energy assets ingeneration, transmission and distribution– said that the alliance will ensure “safeand efficient” completion of its capitalprojects. Balfour Beatty and the UnitedGroup will provide engineering,construction, procurement and projectmanagement services. ATCO has notdisclosed the details of what each partnerwill receive in return for the work or how

many workers the two companies willprovide to supplement its own workforce.

WAPA to cancel EIS for Eastern PlainsTransmission Project

The Western Area PowerAdministration (WAPA) would cancel thepreparation of the EIS on its proposal toparticipate with the Tri-State Generationand Transmission Association in theconstruction of the Eastern PlainsTransmission Project (EPTP).

WAPA has taken this decision due toanticipated changes in the EPTP's scope.The EIS would have addressed theconstruction, operation and maintenanceof approximately 1,000 miles (1,600 km)of high-voltage transmission lines andassociated substations. WAPA wouldhave obtained 275 MW of capacity rightson the proposed transmission lines.

WAPA had issued a notice of intentto prepare the EIS for the EPTP in August2006. If it decides to participate in the re-defined EPTP, a National EnvironmentalPolicy Act review will be initiated at thattime.

Meanwhile, Tri-State would continuewith the development of the project. TheEPTP will support new coal-firedgeneration in western Kansas and easternColorado.

Pike Electric completes acquisition ofShaw Energy Delivery

Pike Electric Corporation hascompleted the acquisition of ShawEnergy Delivery Services (EDS), anaffiliate of The Shaw Group, Inc. (more inCompany News).

ABB awarded USD32 million GISsubstation order by Hydro One

ABB has been awarded orders worthUSD32 million from Toronto-basedHydro One Networks to provide highvoltage power products for the expansionof two existing 550 kV/80 kV substationsin Ontario, Canada (more in CompanyNews).

Hubbell acquires three powerequipment and services companies

Hubbell, Inc., which provides a rangeof power sector equipment, includingtransmission and distribution products,has announced three acquisitions – thatof USCO Power Equipment Corporation,CDR Systems Corporation and


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ElectroComposites. Hubbell has notdisclosed the financial terms of the deals(more in Company News).

LATIN AMERICA

Brazil’s regulator to auction Rio Madeiratransmission line project on October 31,2008

Brazil’s energy regulator Aneel hasannounced that it will hold the auctionfor the transmission line connecting theRio Madeira hydro power complex to SaoPaulo on October 31, 2008.

The 6,450 MW Rio Madeira complexis located on the Madeira river in thenorthern Rondonia state and comprisesthe Jirau and Santo Antonio hydroelectricpower plants. The transmission line willbe 2,500 km long and will connect the RioMadeira complex to the NationalInterconnected System.

Works on the Madeira line will bedivided into 14 parts. The options forconnection will be alternating current(AC) and hybrid current. Under Aneel’srules, stretches of the line should startcommercial operation in 36-50 months ofthe signing of concession agreements,which is expected in January 2009.

The Madeira transmission auction iskeenly awaited by leading Braziliantransmission companies. TernaParticipações, Eletronorte and ISA CTEEPhave expressed strong interest in biddingfor the project.

The cost of building the line andlinking it to the grid could reach BRL7.2billion (USD4.41 billion).

Aneel approves Eletrosul’s transmissionsystem expansion in Brazil

Brazilian energy sector regulatorAneel has allowed Eletrosul, a T&Dsubsidiary of federal power companyCentrais Eletricas Brasileiras SA(Eletrobras), to expand its transmissionsystem. It has allowed an annual revenuelevel of BRL9.5 million (USD5.7 million)for projects that involve an investment ofBRL58.8 million (USD35.4 million).

Aneel defines the annual levels ofrevenue allowed to each transmissionfacility. These are based on the company’sexisting infrastructure and are adjustedevery year according to the marketgeneral price index and any investment

made for starting operations in theperiod.

Eletrosul’s expansion plan includesreinforcement of three substations –Xanxere, Farroupilha and Sideropolis -and expansion of the 230 kV transmissionlines Salto Osorio-Pato Branco-Xanxereand Salto Osorio-Xanxere. These projectswill be implemented during 2008-10.

Eletrosul operates transmission lineswith a total length of 9,257 km andsupplies electricity to 29.6 millionconsumers in the states of Mato Grossodo Sul, Parana, Santa Catarina and RioGrande do Sul.

Brazil’s Cemig and Alupar increase stakein transmission holding

Brazilian power companyCompanhia Energetica de Minas Geraisor Cemig has acquired 95 per cent ofBrookfield Infrastructure’s stake in eachof the five transmission companies underthe local energy holding group,Transmissoras Brasileiras de Energia(more in Deal Watch).

Cemig revises 2008 investments, plansto buy transmission assets

Meanwhile, Cemig has increased its2008 capital expenditure plan by 37 percent to BRL2.14 billion (USD1.3 billion)from BRL1.56 billion announced inDecember 2007.

Cemig has also increased plannedinvestments in the generation segment toBRL266 million from BRL210 million.However, the distribution budget hasbeen cut to BRL1.12 billion from BRL1.18billion.

Planned investments in transmissionhave been increased to BRL653 millionfrom the original BRL125 million. Cemigplans to buy more transmission assetsbefore the end of the current year. Theremaining capital expenditure is forCemig Holding.

At present, the Brazilian transmissionsector is dominated by the state-runEletrobras through its subsidiaries –Furnas, Chesf, Eletronorte and Eletrosul– which own over 57,000 km or 60 percent of the total power lines in the country.

Cemig is the second largest privateoperator with over 5,300 km oftransmission lines, behind CTEEP(belonging to the Colombian ISA Group)which has 15 per cent share. With the new

investments, Cemig plans to increase itsmarket share to 6 per cent from thecurrent 5 per cent.

Brazil’s CTEEP receives funds fortransmission system from BNDES

Brazilian development bank BNDEShas approved a BRL329 million (USD180million) loan for Sao Paulo-based energycompany CTEEP to build its transmissionsystem (more in Deal Watch).

Construction to begin on Argentina’sNortheast-Northwest project

The developers of the 500 kVNortheast-Northwest transmissionproject in Argentina are expected to beginconstruction by November 2008.Argentine firms Intesar and Limsa hadwon contracts to build and operate the1,200 km line in June this year. The projectalso includes building seven transformerstations.

The work was awarded in two parts.Intesar offered ARS987 million (USD318million) to construct the western part ofthe line and Limsa offered ARS959million (USD309 million) for the easternpart of the line.

The project is expected to be in serviceby mid-2011. Once completed, it willconnect northern Argentina to thenational grid and form interconnectionswith Chile, Bolivia, Paraguay and Brazilas well.

The Inter-American DevelopmentBank (IDB) will fund up to 80 per cent ofthe ARS3.2 billion project cost. The loanhas a 25-year term, with a five-year graceperiod at a variable interest rate. The restof the funds will be contributed by thefederal government.

Mexico’s CFE launches tender for T&Dworks in three states

Mexican state power company CFEhas launched an international tender foreight distribution substations and 39feeders with medium and high voltages,and five sub-transmission lines of 115 kVand 138 kV capacity with a total lengthof 44.8 km.

The construction works are to becarried out in the states of Coahuila,Nuevo Leon and Tamaulipas. Thebidding rules are available till January 29,2009 and the bids are scheduled to beopened on February 4, 2009.


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CFE expands T&D networkMeanwhile, CFE has constructed a

total of 11,273 km of T&D lines in the firsthalf 2008. By June-end, the total linelength was 717,929 km. Of this, 48,787 kmcomprises a high voltage (150 kV andabove) transmission network. Thecompany also increased its substationcapacity by 4.51 GVA by end June. Its totaltransformation capacity is currently 186GVA.

Mexico’s transmission tender draws sixpotential bidders

Six firms have evinced interest in thetender launched by CFE for transmissionworks in Aguascalientes state. The tenderinvolves construction of three 115 kVtransmission lines with a total length of50.3 km. It also includes two substationsand seven feeders.

The companies that have purchasedthe bidding rules are Prolec GEInternacional, Techint, SiemensInnovaciones, Cobra InstalacionesMéxico, ABB México, and AbengoaMéxico.

The last date for purchase of biddingrules is October 23 and the bids are dueon October 29. Works are scheduled tobegin on December 19 and will run for450 days.

CFE delays Oaxaca and Veracruz tenderMeanwhile, CFE has postponed the

bidding deadline for the internationaltender for transmission works in Oaxacaand Veracruz states by one month.

The tender calls for construction offour 115 kV transmission lines with a totallength of 39.4 km, four 400 kV/11.5 kVsubstations, and eight feeders. Works arescheduled to begin in November 2008 andbe completed in 2010.

Eight firms have already purchasedbidding rules for the tender: IberdrolaIngeniería y Construcción, Control yMontajes Industriales, Techint, Elecnor,Abengoa México, Prolec GEInternacional, Siemens Innovaciones andABB México.

Colombia and Panama establishinterconnection project company

Colombia and Panama haveestablished a special purpose companycalled Interconexión Eléctrica Colombia-Panamá for a planned electric

transmission interconnection between thecountries, announced in August 2008.

The new company will beheadquartered in Panama City and willhave a branch in Colombia. Panama’sstate transmission company Etesa andColombia’s equivalent ISA will undertakethe project, which will have an initialtransmission capacity of 300 MW.

The developers are preparing for thebidding process to select the consultantfor the environmental impact study (EIS).The report would be ready mid-2009,after which bids would be called toconstruct the line.

Isagen to begin electricity export toVenezuela

The Colombian government hasagreed to export electricity generatedfrom 80 MW of capacity to Venezuela,which has been facing widespread poweroutages over the past few months. Apower export agreement has been signedbetween Colombia’s state-run generatorIsagen and Venezuela-based powercompany Empresa de Electrificacion delCaroni.

Isagen will transfer electricity over thepower grid owned by Centrales Electricasde Norte de Santander. A transmissionline that connects the San Mateosubstation in Colombia to the El Corzosubstation in Venezuela will be used.

This is the second time Colombia willexport power to Venezuela. In 2002, theCuestecitas-Cuatricentenario line wasused to export a similar amount of power.

Transmantaro signs Chilca-La Planicie-Zapallal line concession contract

Peru’s energy and mines ministry hassigned a concession contract for theChilca-La Planicie-Zapallal transmissionline with the Transmantaro consortium.

In June 2008, Colombia’s ISA Groupand Transmantaro’s parent companywere awarded the 30-year contract afteroffering USD52.5 million for the line. The94 km line will be built in two phases. Thefirst phase comprises a 220 kV line thatmust be in operation over the next 20months. The second phase involves a 500kV line that must be in operation after 30months.

As new gas-fired power projects arecoming up south of capital Lima, theproject is designed to strengthen the

transmission system that connects theChilca district in Lima with the nationalgrid. The line will also transport powerfrom the Platanal hydroelectric plant.Transmantaro already operates 603 km of220 kV lines that connect Peru’s southernand central grids.

New project included in Peru’stransmission plan for 2007-08

Peru’s energy and mines ministry hasincluded a new project – the 220 kVOnocora-Tintaya-Socobaya line andexpansion of associated substations – inits 2007-08 transitory transmission plan.

The 200 km transmission line wouldtransport power from the Pucará and SanGabán hydroelectric plants. The ministrywill start the tendering process for theproject soon.

Chile’s Saesa submits EIS fortransmission line

Chilean power holding companySaesa’s subsidiary, Sistema deTransmision del Sur, has submitted an EISto environmental regulator Conama forthe third part of a transmission linelinking Chiloe Island with Puerto Montt.The 220 kV, 55 km line would connectCalbuco on mainland Chile with Ancudmunicipality in Chiloe Island. The projectcould cost up to USD11 million.

Edelnor submits EIS for newtransmission line in Chile

Chilean power company Edelnor hassubmitted the environment impact study(EIS) to environmental regulator Conamato build the 145 km Chacaya-El Cobretransmission line in region II. The line isestimated to cost about USD36 million.

The line would run from the existingChacaya substation in Mejillonesmunicipality to the planned El Cobresubstation in Sierra Gorda municipality.It is planned to move new capacity fromthe Andino thermal plant, which is underconstruction in Mejillones.

IDB approves USD28.5 million fortransmission projects in Honduras

The Inter-American DevelopmentBank (IDB) has approved an initialUSD28.5 million loan as part of a USD48.5million financing package to helpHonduras’ state power company, Enee,undertake priority transmissioninvestments (more in Deal Watch).


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Guatemala regulator calls forstrengthening of electricity network

Guatemala’s power regulatorComisión Nacional de Energía Eléctrica(CNEE) has called for adding 1,374 kmof new lines to strengthen the electricitynetwork in the transmission expansionplan for 2008-18. The country had 3,658km of transmission lines over 69 kV atthe end of 2007.

The 1,374 km expansion comprisesMetropacífico (144 km, central and southregions), Hidráulico (44 km, north-west),Atlántico (585 km, north-east), Oriental(55 km, south-east) and Occidental (146km, south-west).

The investment in these lines and theassociated 34 substations is expected atUSD422 million. A further USD82 millionwill be needed for the interconnectionwith Mexico and the Siepac grid.

ASIA-PACIFIC

Regional energy transmission planningmodel for Central Asia

The national energy companies ofKazakhstan, Kyrgyzstan, Tajikistan andUzbekistan are considering a new CentralAsian regional energy transmissionplanning model.

The transmission model has beendeveloped with support from the USAgency for International Development(USAID) and will enable better planningand management of energy flows withinas well as between the various countriesin the region.

As the first step in the process, USAIDprovided specialised software and helpedKazakhstan, Kyrgyzstan, Tajikistan andUzbekistan’s national energy companiesto develop country-specific programmesfor the respective national electricitytransmission systems.

The regional coordinative despatchcentre, Energia, as well as Afghanistanand Turkmenistan’s energy transmissioncompanies provided their inputs in thisprocess. The national models were thenjoined into a regional model.

In a meeting held on September 26,2008, the participating countriesdiscussed a number of communication aswell as information exchangemechanisms to ensure that the modelfunctions effectively.

Tajikistan and Afghanistan sign powerpurchase agreement

Meanwhile, the federal governmentsof Tajikistan and Afghanistan have signeda power purchase agreement under theRegional Power TransmissionInterconnection Project. The AsianDevelopment Bank is part financing theconstruction of this project, which isestimated to cost USD109.5 million.

The project aims to tap Tajikistan’ssummer power surplus to meet theshortfall in neighbouring Afghanistan.The project comprises a 220 kV doublecircuit transmission line that will link thehydro power stations on Tajikistan’sVakhsh River to the border towns andfrom there to Kabul, Afghanistan.

The interconnection would allowTajikistan to export up to 300 MW ofsurplus summer energy, which wouldotherwise be unused.

ADB’s loans – USD21.5 million toTajikistan and USD35 million toAfghanistan – carry a 32-year term,including a grace period of eight years.Interest on each is charged at 1 per centper annum during the grace period and1.5 per cent during the rest of the term.

The other financiers of the project arethe OPEC Fund for InternationalDevelopment, the Islamic DevelopmentBank (IsDB), the AfghanistanReconstruction Trust Fund and theAfghanistan and Tajikistan governments.

Uzbekistan to set up transmission linesup to Afghan border by February 2009

Uzbekistan will complete setting upelectricity transmission lines up to theUzbek-Afghan border by February 2009.On the Afghan side, transmission linesbetween the cities of Hayraton and Kabul,totalling 442 km, have already beencompleted. The lines traverse five Afghanprovinces and will soon be connected tothe power system in Uzbekistan.

The total project cost is estimated atUSD198 million. Once completed, thelines will transport about 150 MW ofpower to Afghanistan. In the future,supply will be increased to 300 MW.

In November 2006, Uzbekistan andAfghanistan signed a memorandum ofcooperation for energy. According to theagreement, Uzbekistan will upgrade itselectricity network to increase the volumeof supply to Afghanistan.

USD42 million credit facility approved byIsDB for transmission line project inUzbekistan

Meanwhile, the Islamic DevelopmentBank (IsDB) has approved a USD42million credit to the Government ofUzbekistan for construction of a powertransmission project which is to besituated in the southern part of thecountry (more in Deal Watch).

North Kazakhstan-Aktobe oblast line tobe completed soon

The 500 kV North Kazakhstan-Aktobeoblast transmission line project isexpected to be completed by the end of2008. The line will connect Kazakhstan’swestern region with the national grid andwill significantly reduce the region’sdependence on Russian electricityimports.

Construction of the 500 km line beganin September 2006. The project is a state-private partnership between the jointstock company Batys Transit and privatecompany MEMR RK. After the expiry ofthe concession in 2023, the ownership ofthe power transmission line will betransferred to the state.

The national grid operator,Kazakhstan Electricity Grid OperatingCompany, has participated in the projectby subscribing to 20 per cent of theauthorised capital of the concessionaire.It is also the technical consultant for theproject.

Construction on schedule for key 330 kVsubstation in Azerbaijan

Azerbaijan’s state-run powercompany Azerenerji has reported thatconstruction of a 330 kV/110 kVsubstation in the northern region ofKhachmaz is progressing as scheduled.The substation will soon be ready for thetest run.

The Khachmaz substation is intendedto increase power supply in Azerbaijan’snorthern regions and will interconnectwith the Russian power grid through thecross-border Derbent-Yashmatransmission line.

The IsDB has provided a credit lineof USD13.5 million for the project. Thecredit has a 12-year period with 6 per centper annum interest. The China NationalElectric Equipment Corporation is thegeneral contractor for the substation.


News

Indian government to separatetransmission network operations

The Indian government is planningto separate the operations of thetransmission network, the national gridand the load despatch centres (LDCs)from the ownership of the transmissionsystem.

India’s power ministry had set up acommittee in February 2008 to examinethe issues related to ringfencing LDCs togrant them greater autonomy. This wasin line with the provisions of theElectricity Act, 2003 and the NationalElectricity Policy.

The union government has reportedlydirected the state governments toestablish a separate representative boardto oversee the LDCs. It has suggested thatthe states submit capital expenditureplans for modernising the LDCs to therespective state electricity regulatorycommissions for approval before March2009.

Power Grid, India to set up transmissionlink for 4,000 MW project

India’s state-owned transmissionutility, Power Grid Corporation, hasreceived board approval to investINR48.24 billion (USD1.1 billion) toprovide transmission links for the 4,000MW Mundra power project coming upin the state of Gujarat.

The so-called “ultra mega” powerproject is being developed by privategeneration company Tata Power, and isscheduled to begin operations in fouryears.

Power Grid to buy 26 per cent in a cross-border transmission company

Meanwhile, Power Grid will buy 26per cent equity stake in Cross BorderPower Transmission Company (CBPTC),which has proposed to build the firstIndo-Nepal power transmission link.

CBPTC is a special purpose vehicle(SPV) of IL&FS InfrastructureDevelopment Corporation, a financialinstitution focused on developinginfrastructure in India. It has proposedto construct a 400 kV DC link fromMuzaffarpur in northern India toDhalkhebar in Nepal.

Power Grid Corporation’s role in theproject would be restricted to the Indianportion of the transmission link. The SPV

has already obtained approval from theNepal Electricity Authority.

The Indo-Nepal transmission line isexpected to start operations bytransferring 500 MW of power fromNepal to India. The exports may increaseas several power projects in Nepal, withIndian investments, are likely to comeonline in the coming years.

TCS, NTPC, NHPC and PFC form jointventure for setting up a power exchangein India

Tata Consultancy Services (TCS),India’s leading IT services provider, hassigned an agreement with state-runpower generators NTPC and NHPC, andthe Power Finance Corporation (PFC) toform a joint venture for setting up anational electricity exchange. The jointventure will be registered with anauthorised capital of INR500 million(USD11.2 million).

Last month, TCS partnered withIndian public sector units, includingtransmission utility Power Grid, powerequipment maker Bharat HeavyElectricals Limited and NTPC to provideelectricity demand management,equipment R&D and consultancyservices.

India’s KEC International bags twoorders worth USD48 million

RPG group company KECInternational has bagged two ordersworth INR2.17 billion (USD48 million)from NTPC Electric Supply CompanyLimited and Power Grid, India’s state-rungrid operator (more in Company News).

Philippines’ National TransmissionCorporation to be transferred toconcessionaire

Philippines’ state-owned power gridoperator, National TransmissionCorporation, is expected to be transferredto private concessionaire National GridCorporation of the Philippines inNovember 2008. The handover is subjectthe Congress’ approval expected soon.

The Philippines House ofRepresentatives had approved NationalGrid’s application for a 25-year franchisein August. Hearings and deliberations inthe senate are to follow.

National Grid is a consortiumcomprising Monte Oro Grid Resources

Corporation, Calaca High PowerCorporation and State Grid Hong KongLimited – a wholly owned company ofthe State Grid Corporation of China. Thegroup won the concession in November2007 with a bid of USD3.95 billion. Fromthen, National Grid had 12 months toconvince the Congress of its capability totake over the National TransmissionCorporation’s operations.

Meanwhile, National Grid isfinalising the financing arrangements.According to reports, about USD900million would be funded through equity.The World Bank and the AsianDevelopment Bank had earlier expressedtheir willingness to extend guarantees ofup to USD250 million to the winningbidder of the National TransmissionCorporation.

Meralco, Philippines eyes secondtranche of TransCo assets

Having obtained regulatory approvalfor purchasing USD5 million worth ofsub-transmission assets (STA) last month,the Manila Electric Company (Meralco)is now looking to purchase the secondbatch of assets from TransCo.

The next batch of STAs that would beacquired by Meralco is estimated to costPHP300-500 million (USD6.5-10.8million). The sale of the second trancheof STAs is expected to be completed nextyear.

Last month, the Energy RegulatoryCommission (ERC) had approved the saleof TransCo’s first batch of STAs worthPHP230.80 million (USD5 million) toMeralco. This includes the sale of varioussub-transmission lines and structuresrated between 34.5 kV and 69 kV. TransCoalso sold various 115 kV, 69 kV and 34.5kV lines.

TransCo’s divestment of its sub-transmission assets is mandated underthe Electric Power Industry Reform Actof 2001, which aims to spur private sectorparticipation in the once state-controlledpower sector.

Philippines’ government approves threetransmission projects

Meanwhile, the National Economicand Development Authority of thePhilippines has approved three electricitytransmission projects – two in Mindanaoprovince and one in Visayas province –aimed at ensuring reliable power supply


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to the areas. These are the PHP6.13 billion(USD131 million) Abaga-Kirahon-Maramag 230 kV line; the PHP1.63 billionGeneral Santos-Tacurong 138 kV line; andthe PHP 1.27 billion Wright-Calbayog 138kV transmission line.

The projects will be built by theNational Transmission Corporation andsubsequently transferred to a privateconcessionaire, a consortium comprisingMonte Oro Grid Resources, the State GridCorporation of China and the CalacaHigh Power Corporation. The group wonthe concession for the power grid inDecember 2007 with a bid of USD3.95billion.

Earlier this year, ahead of the transferof its operation to the consortium, theNational Transmission Corporation hadannounced a PHP15.6 billion investmentplan for improvement of the power grid.

Australia’s Powerlink expands networkin Queensland

Powerlink, the state-ownedtransmission system operator inQueensland, Australia, has completed anew 132 kV line and the associated 132kV/66 kV substation in the city ofTownsville. The project cost is estimatedat AUD36 million (USD30 million).

The new line, which runs from theTownsville South substation to the newsubstation at Townsville East, is part ofPowerlink’s AUD120 million (USD100million) investment programme toenhance power supply in the Townsvillearea in northern Queensland.

Powerlink is working on anotherproject in the region – a 275 kV powerline between the Ross and Yabulu Southsubstations. Construction is going on andis expected to be completed in the firsthalf of 2009.

The company has plannedtransmission projects in other regions ofQueensland too. Powerlink will beginconstruction at the Pandoin substation inthe next few weeks and on an associated38 km, 132 kV power line betweenBouldercombe and Pandoin later thisyear. This project will reinforce electricitysupply in the Rockhampton region incentral Queensland. All constructionwork is expected to be completed by late2009.

Meanwhile, Powerlink has receivedapproval for an electricity upgradationproject in the Bowen region in northern

Queensland, worth more than AUD80million. The project includes a new highvoltage substation near Merinda and anew 72 km, 132 kV transmission line toconnect the substation to Powerlink’sexisting Strathmore substation nearCollinsville. Construction is expected tobegin next year, with completion targetedby the summer of 2010-11.

Transend to replace networktransformers at Burnie substation,Australia

Transend, the electricity networkoperator in Tasmania, has announced thatit will invest nearly Australian $13.5million (USD11 million) to replacenetwork transformers at its Burniesubstation and purchase a new systemspare network transformer.

According to company officials, thetwo 220/110 kV transformers that arecurrently in service at the Burniesubstation are in poor condition and willbe replaced with a single higher capacitytransformer. The work is expected to becomplete by the end of 2010. Transendowns 3,650 ct. km of transmission lines,47 substations and nine switchingstations in Tasmania.

New Zealand’s Transpower receivesapproval for Cook Strait cable upgrade

The Electricity Commission of NewZealand has given final approval toTranspower to spend up to NZD672million (USD460 million) to upgrade Pole1 of the electricity link between SouthIslands and North Islands.

The link is important to New Zealandas it balances the electricity supplybetween the two islands. It allows SouthIsland access to North Island’s gas andcoal generation during the dry wintersand summers, and gives North Islandaccess to the other ’s large hydrogeneration during the peak winterperiod.

The commission had announced itsintention to approve the upgrade of thehigh voltage DC cable in late July 2008. Itthen held a public conference to invitecomment on the proposed upgrade. Afterconsidering the submissions, thecommission has now confirmed itsdecision.

The two-stage project will involveconstruction of new converter stationfacilities at Haywards Hill in Hutt Valley

and Benmore in Mackenzie Country, aswell as decommissioning of oldequipment.

The project will increase the capacityof the link to 1,000 MW by 2012 and to1,200 MW by 2014. The work does notinclude replacement of the existingtransmission line and submarine cables.

Transpower had initially asked forapproval for a project cost of NZD728million, which was reduced to NZD672million following analysis and discussionwith the commission.

Transpower explores options for 200 kVWairakei-Whakamaru line upgradationprogramme

Meanwhile, Transpower hasannounced four options for upgradingthe 220 kV Wairakei-Whakamarutransmission line. These range fromimprovement work on the existing linesto building completely new lines. Thecompany will invite public feedbackregarding these options.

The transmission upgrades areneeded to help connect 600 MW or moreof new geothermal generation (plannedor under implementation) in the Wairakeiregion. The New Zealand EnergyStrategy targets 90 per cent of electricityproduction from renewable sources bythe year 2025.

While Transpower ’s currenttransmission network is sufficient to copewith the existing generation, furtherinvestments are needed for the nationalgrid to handle the large amounts of newgeneration at peak demand.

Powerco commissions undergroundtransmission line in New Zealand

Powerco Transmission Services,owned by New Zealand’s second largestelectricity and gas utility, Powerco, hascommissioned a new undergroundtransmission line which connects the TeRere Hau wind farm in Manawatu to thenational grid. The state-run Transpowerowns and operates New Zealand’snational grid.

The Te Rere Hau wind farm is a jointventure (JV), owned 50 per cent by NZWindfarms and 50 per cent by NationalPower and Babcock & Brown. Stage I ofthe farm, comprising five wind turbines,has been operational since September2006 and supplies electricity to Powerco’slocal network in Manwatu.


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Development work on Stages II andIII is underway – a total of 60 turbineshave been ordered for the two stages. Theproject has resource consent for 97turbines and is scheduled for completionin mid-2009.

Vietnam’s EVN extends grid to CentralHighlands

The Electricity of Vietnam (EVN)Group has announced that all rural areasin the Tay Nguyen (Central Highlands)region will have electricity supply by theend of 2009. The electrificationprogramme is part of a national projectto provide power to ethnic minorities.

Under the project, 116,067 householdsin 1,200 rural areas of the five CentralHighlands provinces – Dak Lak, LamDong, Dak Nong, Gia Lai and Kon Tum– will be provided with electricityconnections. The Central Highlands’power grid will comprise 2,465 km ofmedium voltage electricity networks,2,724 km of low voltage networks and1,242 transformer stations.

Bangladesh likely to get USD350 millionfrom World Bank for power projects

The Bangladeshi government isnegotiating with the World Bank for aUSD350 million, 40-year credit line for thepower sector. The proposal is likely to beaccepted soon.

The funds will be used to set up a 300MW gas-fired power plant at Siddhirganjand construct a transmission line fromSiddhirganj to Maniknagar grid station.The credit would be disbursed throughthe World Bank’s lending arm,International Development Association.

Areva enters into partnership withShanghai Electric

Areva and Shanghai Electric, one ofthe largest mechanical and electricalequipment manufacturers in China, havesigned a new partnership agreement. Thecompanies already have a 50:50 JV formanufacturing power transformers (morein Company News).

Anhui Electric Power Company, China toinvest in power grid

China’s Anhui Electric PowerCompany has announced that it willinvest RMB2.16 billion (USD315 million)to set up a medium- and large-scalepower grid over the next three years to

help increase electricity supply inMa’anshan city, Anhui province.

The company will expand one 500 kVand two 220 kV substations and will buildfive new 220 kV substations to meet thegrowing demand created by Ma’anshan’srapid economic development. With thesetransmission projects, the city’s maximumpower consumption load is expected tohit 2.17 million kW by 2010.

Areva T&D India and GE Consumer &Industrial India form a strategic alliance

Areva T&D India and GE Consumer& Industrial India have formed astrategic alliance for providing turnkeyelectrical solutions in the power, metals,mining, minerals and material handlingmarkets (more in Company News).

PNG and Malaysia company sign USD14million power line contract

PNG Power, the sole electric powercompany in Papua New Guinea, hassigned a PGK37 million (USD14 million)contract with Malaysian company HGPower Transmission to construct a 132 kVtransmission line in the country. HGPower won the contract in a public tender.

The line will supply electricity toHarmony Gold’s Hidden Valley goldmine. The line will extend from Erap inMorobe to the mine site, a distance of 105km.

EUROPE

European Parliament supports gridpriority for renewable energy

The Energy Committee of theEuropean Parliament has almostunanimously backed European Unionlegislation that paves the way formassive investment in renewable energyto help achieve the 20 per cent target by2020.

Rapid development of all necessaryphysical connections to the grid, priorityaccess and priority during despatch forrenewable energy are the most importantaspects of the legislation.

Other important amendmentsinclude legally binding, mandatoryinterim targets. Along with the directpenalty mechanism (EUR110 per MW),these would allow the EuropeanCommission to take effective and early

action against member states that fallbehind on renewable energy targets. Thelegislation has also underlined thatelectricity from outside the EuropeanUnion must be physically imported intothe European Community before it canbe counted as a part of the member state’snational target.

The European Parliament will voteon the renewable energy directive in aplenary session in the coming months.

Longest undersea high voltage cableformally operational

The world’s longest undersea highvoltage direct current (HVDC) cable wasofficially opened on September 11, 2008.The 580 km NorNed cable links Feda inNorway to Eemshaven in theNetherlands. It was put into service onMay 6, 2008.

NorNed is a joint venture betweenTenneT, the Dutch grid operator, andNorwegian power transmission operatorStatnett. The cable has a capacity of 700MW and will transport electricity in bothdirections. ABB provided the HVDCtechnology while Nexans built the cable.The estimated cost of the project is EUR600million. The European Investment Bankprovided EUR140 million each as loan toTenneT and Statnett.

E.ON evaluates feasibility of a single gridoperator before network sale

Germany’s largest utility E.ON AG isevaluating the feasibility of a singlepower transmission grid operator, to becalled Deutsche Net AG, before thecompany formally sells its high voltageelectricity grid. E.ON’s top executiveshave said that the company is “not underpressure” to launch the sales process andmay not begin the process beforeNovember 2008.

E.ON is in continuous talks with theGerman government and grid regulatorBundesnetzagentur on the sale. InFebruary, E.ON had announced that itwill sell its German high voltage gridand some generation assets to settle twoEuropean Union anti-trust cases. Theannouncement prompted a debate on thepossible creation of a national gridoperator that would combine the fourexisting networks operated by E.ON,RWE, EnBW and Vattenfall. While RWEand EnBW publicly ruled out sellingtheir power grids, Vattenfall hasannounced that it will sell its grid.


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The European Commission,meanwhile, is accepting comments frominterested parties on E.ON’s proposal. Ifthe proposal is approved, E.ON wouldhave to sell its high voltage networkwithin two years.

German government to push for nationalpower grid company

Meanwhile, the German governmenthas announced that it will push aheadwith plans for a national power gridcompany that will combine the highvoltage transmission networks of thefour operators – E.ON, RWE, EnBW andVattenfall. The government’s decisioncomes in the wake of utilities such asE.ON and Vattenfall formulating plansto sell their transmission networks. Thegovernment is strongly opposed to suchan action.

E.ON and Vattenfall are ready to selltheir high voltage grids to appease theEuropean Union in a cartel case. E.ONis also ready to be a part of the jointholding. However, it has recently saidthat if the joint undertaking fails, it willseek to sell its grid.

The other two utilities, RWE andEnBW, have not yielded to EuropeanUnion pressures. They prefer to join theproposed national power grid company,Deutsche Netz AG.

German regulator proposes reduction ingrid access fee soon

Germany’s energy network regulator,the Bundesnetzagentur, has said that itintends to transfer the illegal profitsmade by power transmission companiesbetween November 2005 and June 2006to grid customers as soon as possible.This will be done through a reduction inthe grid access fee.

A decision on the reduction of fees isexpected to be made in the comingweeks. The reduction could then becarried out within a five-year period,starting perhaps from January 2010.

Grid access fees account for around30 per cent of retail power prices inGermany. According to the regulator, thetotal grid fee reduction could amount toa triple-figure million euro sum.

The regulator’s proposal has causeda great deal of concern among Germantransmission system operators, whoexpect profits to be severely affected asa result.

Buyer of Vattenfall’s German grid needsto invest EUR2.5 billion by 2014

The buyer of Vattenfall Europe AG’sGerman power transmission grid willhave to invest around EUR2.5 billion(USD3.6 billion) on the network by 2014,feel top officials at Vattenfall.

The German unit of the Swedishstate-controlled Vattenfall Groupannounced plans in July 2008 to sell thepower transmission grid. At the time, thecompany said it was looking for aninvestor who would make “substantial”investment on grid expansion andpromote integration of the Europeanpower market by guaranteeing freenetwork access. According to thecompany, it has received a number of“interesting” offers and would soondecide which companies will be invitedto the second round of the sales process.

Vattenfall has appointed Citigroup torun the sale of its German powertransmission grid. Some analysts haveestimated that the sale could fetchbetween EUR800 million and EUR900million. The sale process is not expectedto be concluded before mid-2009.

The company’s German powertransmission network stretches around9,500 km and is predominantly locatedin the eastern part of the country. Thebusiness generated sales of EUR3.3billion in 2007.

Of the four power transmission gridoperators in Germany, Vattenfall is thesecond to announce the sale of its grid.In February, E.ON AG had proposed tothe European Commission the sale of itsGerman transmission power grid andsome of its German power plant assets,to settle two European Union antitrustcases.

The other two transmission gridoperators, RWE and EnBW, haverepeatedly said that they intend to keeptheir power transmission grids.

British, Belgian and French gridoperators to consult on power links

French, Belgian and British powergrid operators will soon start aconsultation process to assess the needfor additional cross-border capacitybetween the UK and the rest of Europe.

The transmission system operators inFrance, Belgium and the UK – RTE, Eliaand National Grid respectively – willdiscuss the need for an additional

interconnector between the UK andFrance or Belgium.

This is against the background ofgrid investment needed across Europe inthe coming years to accommodate thegrowth in renewable and other powergeneration. To evaluate the medium- tolong-term market developments, theoperators will ask for feedback onadditional interconnection capacity andon longer term capacity products, for upto a 10-year period.

Eight European transmission operatorsto establish common capacityallocation office

Eight transmission system operatorsfrom Central-Eastern European (CEE)countries – Austria, the Czech Republic,Germany, Hungary, Poland, Slovakiaand Slovenia – have agreed to establisha common capacity allocation office(CAO) for the region. Through this, thecompanies have committed to jointcoordinated regional congestionmanagement.

The CAO will allocate yearly,monthly and daily rights for cross-border electricity transmission andprovide settlement. It will replace thecurrent multilateral and bilateral practiceof allocating cross-border capacities. TheCAO will be based at Freisingnear Munich in Germany.

French and Belgian system operators toset up technical coordination centre

Continuing the consolidation ofEuropean energy markets, French powergrid operator RTE has signed a deal withBelgian transmission operator ELIA toset up a Brussels-based joint technicalcoordination centre, which will startoperating in February 2009.

In a joint statement, the twocompanies have announced that “thecentre will develop grid forecasts andsupport real-time monitoring ofelectricity flows on the grids of central-western European region in preparationfor market coupling”. Germantransmission system operator VattenfallEurope Transmission has reportedlyexpressed its interest in the initiative.

Five West European countries –Belgium, France, Germany, Luxembourgand the Netherlands – had signed a deallast year committing to pool powercapacity from 2009 onwards to improvethe use of existing capacities.


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Finnish grid operator to invest EUR1.6billion over the next 10 years

Finland’s national electric gridoperator Fingrid has announced that itwill invest EUR1.6 billion (USD2.3billion) over the next 10 years to expandits network capacity. The investmentswill be made for the grid andsupplementary power plants.

Fingrid expects to integrate one largenuclear reactor and 2,000 MW of windpower into the national grid by 2020.Despite the extensive capital expenditureprogramme, Fingrid intends to retain itsinternationally competitive transmissiontariffs.

At the beginning of 2008, Fingrid hadraised tariffs by 4.5 per cent. It does notexpect any major increase in the nearfuture.

Dutch and Danish grid operatorsconsider power cable link

Dutch grid operator TenneT andDanish operator Energinet.dk areconsidering setting up a power cable linkbetween the countries to exchange wind-based energy. This would be the thirdundersea cable link from theNetherlands. The 580 km NorNed cablebetween the Netherlands and Norwaywas recently opened. The BritNed linkbetween the Netherlands and the UK isexpected to be operational by late 2010.

TenneT and Energinet.dk areexpected to release the results of theproject studies in the first half of 2009.

Siemens-Prysmian consortium toconnect offshore wind farm to Britishpower grid

Thanet Offshore Wind Limited hasawarded a contract worth about EUR87million to Siemens Energy andconsortium partner Prysmian Cables &Systems to connect the upcoming 300MW Thanet offshore wind power projectto Britain’s electricity grid (more inCompany News).

New rules to provide easy grid access torenewable generators in Italy

Italian energy regulator AEEG hasapproved a set of rules for settlingdisputes between renewable energyproducers and power grid operators.This is aimed at easing access to the gridfor the green energy generators.

Under the new rules, renewableenergy producers who disagree with thelink-up conditions proposed by gridoperators can turn to AEEG to settle thedispute. The regulator’s decision wouldbe binding for both parties.

Terna, Italy signs agreement forsustainable development of high voltageelectricity grid

Terna, Italy’s national grid operator,has signed a memorandum ofunderstanding with the government ofthe Puglia region to follow the “strategicenvironmental assessment” approach inplanning development activity for thehigh voltage electricity grid in the region.

Terna plans to invest over EUR370million in the high voltage grid in Pugliaover the next few years. The major worksinclude doubling and strengthening the380 kV Foggia-Villanova line; setting upa new 380 kV electricity stations in thearea between Foggia, Benevento andSalerno; strengthening the 380 kVFoggia-Benevento II line; andconstructing new 380 kV electricitystations in Bari and Brindisi.

These works are aimed atstrengthening Puglia’s electricity systemand making it more reliable.

Enel close to reaching sales deal withTerna

Italian power giant Enel is reportedlyclose to reaching a deal to sell highvoltage power lines to the country’s gridoperator, Terna.

Discussions between the twocompanies have been on for monthsregarding the sale of 19,000 km of lines,with opinions differing on the value ofthe assets. In June 2008, Enel said thatthe fair value of the assets was EUR1.6-1.7 billion.

Portugal’s REN expects rate of returndecision in October

Portuguese electricity grid operatorRedes Energeticas Nacionais (REN)expects the regulatory decision on returnon investments for electricity facilities bymid-October 2008.

In March 2008, the national gridoperator had proposed an increase inthe rate of return to 8 per cent from thecurrent 7 per cent. The energy sectorregulator, ERSE, is expected to decide onREN’s proposal.

Meanwhile, REN plans to investEUR1.43 billion (USD2.06 billion) by2014 in the power sector. This includesdevelopment of a transmission system inthe Iberian Peninsula.

AREVA T&D doubles its Aix-les-Bainsproduction site capacity, launches newGIS product

Areva T&D has expanded its Aix-les-Bains production facility in France. Thecompany has spent about EUR20 millionon the construction of two newbuildings, off ices, and assemblyworkshops for gas-insulated substations(more in Company News).

Nexans launches new range of cablesolutions for wind generation

Nexans has launched itsWINDLINK® range of cable solutions,including power and control cables andspecial cables and accessories,supporting wind turbines of all sizes(more in Company News).

Concerns over exit of Bosnia’s SerbRepublic from joint transmissioncompany

The European Commission hasexpressed its concern over thewithdrawal of Bosnia’s Serb Republicfrom the recently established state-levelpower transmission company,Elektroprenos BiH, which would servethe whole of Bosnia.

The Serb Republic is one of the twoautonomous parts of Bosnia, the otherbeing the Muslim-Croat Federation. Thetwo parts have separate power gridsserved by three power utilities –Elektroprivreda RS in the Serb Republicand Elektroprivreda BiH andElektroprivreda HZ HB in theFederation.

As part of a European Union-sponsored plan to reform Bosnia’s powersector, the two governments agreed toform a single transmission firm,Elektroprenos BiH, in 2007.

But the Serb Republic’s governmentlater decided to form its own powertransmission company. This was becausethe government failed to reach anagreement over the ownership of thesingle transmission utility.

The European Union has made itsconcern clear by saying that “such adecision would put at risk the integration


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of Bosnia in the regional and Europeanelectricity markets”.

Bosnia signed the Stabilisation andAssociation Agreement with theEuropean Union in December 2007. Theagreement is the first formal pact of theBalkan country with the alliance and isgenerally seen as the first step to EUmembership.

Serbian grid operator granted EUR20million

The European Agency forReconstruction (EAR) has granted EUR20million (USD29 million) to Serbian powergrid operator Elektromreza Srbije. Thefacility is for constructio on the secondphase of the 140.5 km transmission lineproject connecting Serbia with itssouthern neighbour, Macedonia (more inDeal Watch).

NEK, Bulgaria to call for substationupgradation tenders

Bulgaria’s national electricitycompany, NEK, has announced that it willinvite bids for rehabilitation of 10substations across the country by August2009. The project is estimated to costEUR35.5 million (USD52.3 million) andwill be co-financed by the European Bankfor Reconstruction and Development.

NEK plans to finance 70 per cent ofthe cost through grants and the remainingthrough its own resources.

NEK has already called for bids forthree 400/110 kV substations – Tzarevetz,Burgas and Metalurgichna. The deadlinefor submission of bids is November 17,2008.

CEPS to participate in Vattenfall’s eastGerman grid tender

Czech state-owned transmission gridoperator CEPS is consideringparticipating in the tender for VattenfallEurope Transmission’s high voltagetransmission network in easternGermany.

Vattenfall runs about 9,500 km ofpower lines in the region. In July, thecompany had announced that it plannedto sell its transmission grid to meet theEuropean Union’s demand of separatingthe ownership of transmission assetsfrom operations.

CEPS has reportedly started theprocess to obtain a loan of up to EUR820

million to finance the possible acquisition.The facility is expected to be a securedloan with a maturity of 15 years, withquarterly payment of interest and theprincipal.

Austrian energy group Verbund appliesfor second electricity trading licence inBulgaria

Austrian energy group Verbund hasapplied for a second electricity tradinglicence in Bulgaria. The company intendsto buy power on the Bulgarian wholesaleelectricity market and sell toneighbouring countries like Macedonia,Serbia and Greece.

Subsequently, Verbund aims to sellelectricity to large end-consumers inBulgaria as well. The company hasalready registered a trading unit inBulgaria called Verbund-Austrian PowerTrading.

The Bulgarian electricity market wasliberalised after the country joined theEuropean Union in 2007. But thewholesale electricity market is still at anascent stage, with only about two dozenindustrial consumers currently buyingelectricity on the free market.

Many companies have applied forelectricity trading licences. If theseapplications are approved, the number oftraders on the wholesale electricitymarket could cross 50.

Albania and Kosovo to begin work on keytransmission line in 2009

Albania and Kosovo will startconstruction on an important 400 kVpower transmission line, estimated to costEUR58 million (USD83.05 million), in2009.

Officials of Albanian state-owned gridoperator OST and Kosovo’s grid operatorKOSTT met last week in Pristina todiscuss the project.

The line will be 238 km long andconstruction work is expected to last for20 months. German development bankKfW will contribute part of the EUR34million which Albania will spend forconstruction on its section of thetransmission line.

KfW is reportedly also ready toextend a EUR12 million soft loan forconstruction of the 85 km Kosovo sectionof the line, which is estimated to costEUR24 million.

Germany gives EUR40 million to KosovoGermany has given Kosovo EUR40

million of the EUR100 million it hadpledged in July 2008. The funds will beused to part-finance a cross-border 400kV electricity transmission lineconnecting Tirana in Albania withPrishtina in Kosovo (more in Deal Watch).

SNC-Lavalin acquires assets of twoengineering groups in Romania andEastern Europe

The Montreal-based SNC-LavalinGroup has acquired the assets of twoengineering groups based in Bucharest,Romania, thus strengthening itspresence in Romania and EasternEurope (more in Company News).

Hungary to partially privatise state-owned TSO Mavir by March 2010

The Hungarian Government hasdecided to partially privatise the electricpower transmission system operatorMavir as part of its New OwnershipProgramme, a scheme that allows theprivate sector to purchase shares in state-owned companies.

It is expected to sell a 50-75 per centstake by March 31, 2010.

By the end of this year, thegovernment will modify legislation toensure that “nobody gains an unfairadvantage in control over Mavir.”Currently, the system operator is ownedby Hungarian Electricity Works (MVM).The government had decided that MVM’sownership in Mavir must fall to less than50 per cent plus one vote, but remainabove 25 per cent plus one vote.

MIDDLE EAST &AFRICA

Egypt to supply power to Lebanon viaJordan and Syria

Lebanon has entered into anagreement to buy electricity from Egyptvia Jordan and Syria. Under the termsof the agreement, Egypt will transferaround 450 MW of electricity to Lebanondaily for a one-year period.

Lebanon has been suffering fromelectricity shortages with its generationcapacity proving inadequate for its needs.It had earlier asked Egypt, Syria and


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Jordan, which constitute part of the jointelectricity grid project connecting Iraq,Libya and Turkey, to supply power.

Jordan has also promised to provideLebanon with 50-70 MW of electric poweron a daily basis up to the end of 2009.

Contract awarded for Qatar’s first highvoltage submarine power link

The Qatar General Electricity andWater Corporation has awarded aEUR140 million contract to Italian cablemanufacturer Prysmian for setting up thefirst submarine power cable connectionto capital Doha (more in Company News).

Technical consulting agreementbetween Tokyo Electric Power andTransco

The Tokyo Electric Power Companyhas signed a technical consultingagreement with the Abu DhabiTransmission & Despatch Company(Transco) for drawing up a master planfor transmission system development inAbu Dhabi up to 2018.

A rapid increase in power demand,fuelled by economic growth, is expectedin the region. In addition, there are plansto develop a large-scale urban areaaround Abu Dhabi Island. Transco isplanning to supply power to the areathrough an EHV cable network.

The scope of work under the technicalconsulting agreement coversdevelopment of the master plan, a studyon the impact of EHV cable installationand cable route surveys.

The Tokyo Electric Power Companyis expected to propose the optimum planfor EHV power systems in terms ofsupply reliability and cost.

It will also assess the technicalfeasibility of the new EHV undergroundcables that are scheduled to be installed.

Africa and European Union launchenergy partnership

The African Union Commission andthe European Commission have launchedan ambitious energy partnership toattract investments to develop Africa’senergy infrastructure. An agreement hasbeen signed in Addis Ababa, Ethiopiaoutlining the partnership’s strategicpriorities.

With respect to the power sector, the

two commissions will promote ruralelectrification and launch a renewableenergy cooperation programme soon .

The two sides have stressed the needto increase transparency and promoteenergy interconnections in Africa andbetween Africa and the European Union.This could help diversify Europe’s energysupplies. The commissions have alsoagreed to define the Capacity BuildingProgram as a support to the Africanpower pools.

In support of this partnership, theEuropean Commission is planning toreplenish the Energy Facility Programand provide additional contribution tothe EU-Africa Infrastructure Partnershipas well as its trust fund. The partnershipis expected to involve investments ofabout EUR600 million.

Meanwhile, massive solar powerinstallations in the Sahara desert in Africacould feed Europe’s growing energydemand via a new supergrid beingconsidered by the EU. The idea has beenbacked by France and the UK, but nofunding commitments have yet beenmade for the project.

Mozambique to approve USD2.5 billionpower line project

Mozambique, in south-eastern Africa,is expected to approve a USD2.5 billionplan to build a 2,000 km electricitytransmission line from the hydro-basedHidroelectrica de Cahora Bassa (HCB)power plant in the western Tete provinceto capital Maputo.

The country’s state-owned electricityutility EDM and other funding agencieswill start the process of getting cabinetapproval. A private consultant will soonpresent the results regarding the mostviable option.

The proposed transmission linewould help reduce the country’sdependence on South Africa, which buysthe bulk of power generated at the HCBplant and then sells it back toMozambique. In addition, the line is alsoexpected to give a boost to thedevelopment of new generation projectsin the country.

The HCB plant produces 2,075 MWof electricity. It provides 60 per cent of itspower to South Africa’s Eskom and 35 percent to Zimbabwe’s power utility Zesa.Mozambique itself only accounts for 5 percent of the total generation.

ABB signs USD75 million deal to upgradeEskom’s grid

Swedish technology major ABB haswon a USD75 million contract fromSouth Africa’s state-owned utility Eskomto supply and install circuit breakers tostrengthen the country’s electricitynetwork (more in Company News).

Sumitomo and AE Power sign contractwith Eskom

Meanwhile, Japan-based SumitomoCorporation and AE Power Systems havesigned a long-term contract with SouthAfrica’s Eskom to supply autotransformers and shunt reactors for thelatter ’s substations (more in CompanyNews).

Power projects in Zambia to be financedby World Bank, Sweden and Japan

The World Bank, along with Swedenand Japan, will jointly finance Zambia’sUSD100 million power upgrade andexpansion projects intended to improveeconomic conditions in the country. Partof the funds will go towards improvingand expanding the transmission system.

The World Bank would provide 25per cent of the loan, which has less than1 per cent interest, while Japan andSweden would give the rest in grants.Among the projects to be financed by theWorld Bank is a rural electrificationproject started a few years ago.

Uganda approves power transmissionline for Bujagali project

The National Forestry Authority ofUganda has granted a licence to theUganda Electricity TransmissionCompany Limited (UETCL) to constructa 220 kV transmission line passingthrough the central forest reserves ofMabira, Kifu and Namyoya.

The line will carry electricity from theproposed 250 MW Bujagali hydro powerplant on the Victoria Nile. UETCLexpects to commission the line in 2011.

US company wins USD350 millioncontract in Ghana

Weldy-Lamont Associates, a 13-employee engineering firm based inIllinois, has been awarded a USD350million rural electrification turnkeycontract by the Government of Ghana(more in Company News).


TSO Focus

POWER GRID CORPORATION OFINDIA

Doubling network to keep pace with generation capacityaddition

India is the fifth biggest power generator in the world. Asof March 31, 2008, it had a generation capacity of about 143

GW, with an annual output of over 700 billion units.

The Indian economy is growing by 7-8 per cent per year. Itsenergy needs are also growing strongly, by 8-10 per cent per year.Over the next four years, by March 2012, the government plansto increase the total power generation capacity to 223 GW, aCAGR of 11.7 per cent.

The power sector in India is still dominated by government-owned units, despite a move in the mid-1990s to open the sectorto private participation. The private sector accounts for only 14per cent of the generation capacity and less than 10 per cent ofdistribution. Its share of the transmission networks is even moreinsignificant, at less than 1 per cent.

India has two kinds of transmission companies – a centraltransmission utility (CTU) and about two dozen statetransmission utilities (STUs). The CTU is responsible fortransmission between states and between regions. The STUs areresponsible for transmission within states.

Power Grid Corporation of India Limited (PGCIL) is thedesignated central transmission utility. It owns and operates 80per cent of India’s inter-state transmission networks and, moreimportantly, accounts for 95 per cent of the transformationcapacity at that level.

PGCIL currently (as of September 2008) has a networkcomprising about 68,000 ct. km of transmission lines and 115associated EHVAC and HVDC substations with a totaltransformation capacity of 75,000 MVA.

Matching generation capacity additionThere are two key tasks that PGCIL faces in the short and

medium term. One, to expand transmission capacity to matchthe increase in generation capacity. Two, to complete thedevelopment of a national grid that will facilitate movement andtrading of power.

Over the next few years, the demand for transmission capacity

is expected to increase dramatically, driven primarily bysignificant increases in generation capacity (12,000-15,000 MWper year versus 4,000-8,000 MW per year in the past) andsecondarily by the new emerging requirements of open access,trading and inter-regional transfers. The transmission system hasto not only expand in capacity but also be more flexible and havegreater margin to enable integration of power sources likemerchant plants, captive plants and wind farms.

Transmission requirements are also becoming more complexin nature. An electricity market is beginning to develop in India.Bilateral trades have been taking place for almost five years. Thecountry’s first power exchange became operational in July thisyear. The regulators have mandated provisioning of open access.A large number of merchant power plants are being developed.Power from these plants will flow in multiple directions, andnot always declared months in advance. There will be widervariations in generation and demand on a daily/seasonal basis.

As a result, it has been estimated that the reliability andoperation margins would need to be close to 25-30 per cent ofthe transmission capacity, higher than in the past. The powersystem needs to have greater redundancies to maintain systemparameters.

National Grid developmentPGCIL is also responsible for developing a national grid, to

enable transfer of power from power-surplus regions to power-deficit regions; to enable optimal development and utilisation ofcoal and hydro resources that are located far from theconsumption centres; and to improve the economy, reliabilityand quality of power supply.

The national grid is being developed in phases. In the firstphase, which was completed in 2002, PGCIL created aninterregional power transmission capacity of 5,050 MW. About2,000 MW of this capacity was created using HVDC back-to-backlinks. The rest was developed using 400 kV and 220 kV A/C links.

In the second phase, which was completed in 2007, theinterregional capacity was increased to about 14,000 MW, througha combination of high capacity A/C (765 kV and 400 kV) andHVDC lines. In this phase, the North-East-West (NEW) grid wasformed through the synchronisation of all regional grids, exceptthe southern grid, in August 2006. This is one of the largestsynchronously connected grids in the world, handling a totalgeneration capacity of 88,000 MW from 250 power plants. Thesouthern region is also technically connected to this grid, but

Energy Peak Total installedYear requirement demand capacity

(BU) (MW) (MW)March 2008 (actual) 704 108,866 143,061March-2012 1,097 158,000 229,648March-2017 1,524 226,200 306,000March-2022 2,118 323,000 425,000March-2027 2,866 437,000 575,000March-2032 3,880 592,000 778,000

Long term power demand and capacity requirement

Source: Central Electricity AuthoritySource: Central Electricity Authority and Ministry of New and Renewable Energy

Capacity addition plan (2007-12)

India’s Power Sector: Demand and Generation Capacity Estimates and Projections


TSO Focus

asynchronously. In the third phase, which is to be completed by2012, the interregional power transfer capacity will be furtherraised to 37,700 MW. At the end of this phase, there will be a ringof 765 kV transmission lines interconnecting the eastern, westernand northern regions. As of September 2008, this interregionaltransfer capacity stood at about 17,000 MW.

Investment plansTo achieve these challenging tasks, PGCIL has drawn up a

very aggressive investment plan for the period 2007-12. It aimsto invest INR550 billion during this period, adding about 67,000ct. km in line length and around 90,000 MVA in transformationcapacity. In 2007-08, PGCIL invested over INR66 billion.

Technology choicesPGCIL has tried to be an early adopter of new technologies

and is moving towards higher voltage transmission systems. In2007, it commissioned India’s first 765 kV transmission line andsubstation.

It is currently focused on introducing 1,200 kV A/C voltagein the country. It is establishing a 1,200 kV ultra high voltage A/C test station at Bina for the development of 1,200 kV equipment.It has also formulated a national plan to implement a + 800 kV,6,000 MW HVDC bi-pole line that will connect the north-easternregion of the country which is rich in hydro resources to thenorthern region which has a deficit of power. PGCIL claims thatthis line would be the first of its kind and also among the largestin the world, carrying power over more than 2,000 km.

It is looking to establish five or six pooling stations across thecountry and to develop a series of high capacity corridors, using+ 800 kV 6,000 MW HVDC and 800 kV/1,200 kV AC corridors.

Changing rolePGCIL is currently also responsible for load despatch at the

national and regional levels. It operates five regional loaddespatch centres. It is also setting up a National Load DespatchCentre in New Delhi with a backup at Kolkata.

In future, however, the government does not want PGCIL toremain both the central transmission utility and the controller ofthe regional load despatch centres. The policymakers andregulators believe that such a dual role could discourage privatesector participation in transmission, which the government wantsto promote. In fact, the Indian government has already approvedthe formation of an independent system operator, similar toagencies in the US and the UK. It would operate as PGCIL’ssubsidiary for the first three years of operations andindependently thereafter.

The Government of India has, of course, been trying toincrease private participation in power transmission for quitesome time. It has asked PGCIL to enter into joint ventures withprivate players for the development of specific transmission lines.In the past, PGCIL has been accused of dragging its feet on thesejoint ventures, not wanting to give up its monopoly.

Of late however, it has made some moves by forming jointventures with companies like Reliance Infrastructure, TorrentPower and Jayprakash Hydropower. It does have one jointventure with Tata Power Company which is already operational,bringing power from Bhutan into India. The Government of India

PGCIL’s Financials (INR billion)2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Total revenue 25.33 28.06 28.31 35.54 40.82 50.82Growth rate (%) – 10.78 0.89 25.54 14.86 25.00PAT 6.43 7.48 7.85 10.09 12.29 14.48Growth rate (%) – 16.33 4.95 28.54 21.80 18.00

Source: PGCIL

PGCIL’s Transmission Network (ct. km)Voltage level 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08765/800 kV 563 563 563 563 1,297 1,667HVDC 4,368 4,368 4,368 4,368 4,368 4,448400 kV 31,974 33,306 35,944 40,178 43,776 49,464220 kV 7,255 7,357 7,710 7,734 7,743 8,124132 kV 2,048 2,125 2,125 2,241 2,241 2,24166 kV 37 37 37 37 37 37Total 46,245 47,756 50,747 55,121 59,462 65,981% Change – 3.26 6.26 8.62 7.87 10.96TransformationCapacity (MVA) 44,736 46,461 49,442 54,377 59,417 73,000% Change – 3.86 6.42 9.98 9.27 22.86Source: PGCIL and Ministry of Power

has also announced more than a dozen new projects that will bereserved for the private sector. PGCIL, therefore, can expect a bitmore competition.

FinancialsPGCIL had revenues of INR50.82 billion in the latest financial

year (ending March 2008), up 25 per cent over the previous year’sfigure of INR40.97 billion. Its profit after tax in 2007-08 wasINR14.48 billion, 18 per cent higher than the previous year’sINR12.29 billion.

PGCIL went public in September 2007, when it entered thecapital market with its IPO, offering 13.6 per cent of its equity. Theoffer was extremely successful and was oversubscribed by 65 times.The company raised about INR30 billion. The Government of Indiastill holds 86.4 per cent of equity in the company.

DiversificationOver the past few years, PGCIL has attempted to diversify

its business. It has built up a telecom network of about 20,000km on which it offers leased capacity to telecom carriers as wellas large enterprise customers.

PGCIL also offers consultancy services to other powerorganisations in India and overseas. In Afghanistan, it is involvedwith the construction of a 202 km, 220 kV D/C transmission line.It is also laying an under-sea line to transmit power from agenerating plant in Sri Lanka to load centres in India. Over 7 percent of its revenues in 2007-08 came from telecom andconsultancy.

Key challengesThe biggest challenges facing PGCIL over the next few years

are project management capability as the company seeks todouble its network in just five years, manufacturing capacityconstraints in India and availability of trained manpower. Thatsaid, company officials are confident of addressing each of thesechallenges.


TSO Focus

Power Grid’s Transmission Network Planned and Under ConstructionIndia’s state-owned transmission utility, Power Grid Corporation of India Limited, is responsible for building and upgrading the country’s nationalgrid. It is undertaking several projects to gear up the grid for future power demand across the country.

The following are some of Power Grid’s major transmission line projects.

Transmission Project Length Estimated Cost Expected(circuit km) (INR million) Completion Date

INTERREGIONAL SYSTEMSKahalgaon Stage-II (Phase-II) Transmission System (400 kV DC Ranchi-Sipat line) 816 5,498.2 Dec 2008Barh Thermal Project (3x660 MW) Transmission System (765 kV/400 kV DC lines) 2,447 37,794.6 Sep 2009North-West Transmission Corridor Strengthening Scheme (765 kV/400 kV DC lines) 600 4,831.0 Jan 2009East-West Transmission Corridor Strengthening Scheme 1,230 8,037.0 Mar 2010(400 kV Ranchi-Rourkela-Raigarh-Raipur line)NORTHERN REGIONSystem Strengthening Scheme in Uttarakhand (400 kV/220 kV lines) 50 764.2 Dec 2009RAPP 5 & 6 Transmission System (440 kV) 448 4,994.5 Dec 2008Koteswar Transmission System (400 kV) 36 2,603.4 Sep 2009Koldam HEP Transmission System (400 kV lines) 396 4,649.1 Sep 2010Parbati-II HEP 400 kV Transmission Lines (to be executed under JV) 129 3,585.0 Sep 2010System Strengthening Scheme in Roorkee (Rishikesh-Muzaffarnagar 400 kV line at Roorkee) 3 1,099.5 May 2009Northern Region System Strengthening Scheme-V (400 kV lines) 1,222 7,212.5 Jun 2009Parbati-III HEP Transmission System (400 kV lines) 543 5,572.5 Jan 2010Uri-II HEP Transmission System (400 kV) 114 2,382.5 May 2011System Strengthening in South-Western Part of Northern Grid (Part-A) Scheme 510 3,812.8 Apr 2009 (400 kV DC line)System Strengthening in South-Western Part of Northern Grid 187 1,502.6 Oct 2009(Part-B) Scheme (400 kV Kankroli-Jodhpur line)Northern Region System Strengthening Scheme-VIII (400 kV DC Kankroli-Zerda line) 68 2,206.9 Dec 2009Northern Region System Strengthening Scheme-VI (400 kV Ballabgarh-Bhiwadi line at Gurgaon) 54 1,870.0 July 2009Northern Region System Strengthening Scheme-X (400 kV DC Gorakhpur-Lucknow line) 510 4,083.6 Dec 2010Northern Region System Strengthening Scheme-XI (400 kV DC Meerut-Kaithal line) 320 4,178.0 Dec 2010Northern Region System Strengthening Scheme-XII (400 kV DC Bahadurgarh-Sonepat line) 104 2,615.0 Nov 2010Northern Region System Strengthening Scheme-IX (400 kV DC Kanpur-Ballabgarh line) 788 5,250.0 July 2011WESTERN REGIONSipat-II Supplementary Transmission System (765 kV/400 kV lines) 1,123 8,136.7 Dec 2008Western Region System Strengthening Scheme-II (765 kV/400 kV lines in a JV) 7,075 52,212.3 July 2010Gandhar-II Gas-Fired Plant Transmission System (400 kV DC lines) 850 6,532.1 NAWestern Region System Strengthening Scheme-V (400 kV/220 kV lines) 435 4,777.0 Sep 2010Western Region System Strengthening Scheme-VI (400 kV DC Dehgam-Pirana line) 112 3,407.0 Nov 2010SOUTHERN REGIONNeyveli TS-II Transmission System (400 kV lines) 830 6,918.3 Mar 2009Kundankulam-APP Transmission System 1,844 17,792.9 Dec 2008System Strengthening-VII of SR 248 2,793.0 July 2009Chennai NTPC-TNEB JV TPS Transmission System 56 902.6 July 2010EASTERN REGIONEastern Region System Strengthening Scheme-I (400 kV lines) 1,142 9,759.6 Oct 2009Eastern Region System Strengthening Scheme-II (400 kV DC Durgapur-Maithon line) 146 2,275.2 Jun 2010DVC and Maithon Right Bank Thermal Project Transmission System (400 kV lines) 320 2,904.9 April 2010

DC: Direct current; RAPP: Rawatbhata atomic power plant; JV: Joint venture; HEP: Hydroelectric plant; TPS: Thermal power stationSource: Power Grid Corporation of India Limited


Policy Review

Regional Transmission Pricing InitiativeAn experiment to enhance grid utilisationefficiency in south-western USA

Come February 2009, power customers in south westernUSA can look forward to availing of coordinated

transmission services at a regional rate that holds the promise oflowering costs to customers while encouraging more efficientuse of the grid.

On September 18, the Federal Energy Regulatory Commission(FERC), USA approved plans by a group of WestConnecttransmission providers for a two-year experimental regionaltransmission pricing initiative that intends to provide coordinatedtransmission service from multiple transmission providers at asingle rate. “This proposal reflects the kind of creativity thatcomes from transmission providers looking for a way to use thetransmission grid more eff iciently to serve the needs ofcustomers,” said FERC Chairman Joseph T. Kelliher, as per anofficial FERC release.

The proposal came from eight members of the WestConnecttransmission group, six of which are under the jurisdiction ofthe FERC: Arizona Public Service Company, El Paso ElectricCompany, Nevada Power Company/Sierra Pacific PowerCompany, Public Service Company of Colorado, Public ServiceCompany of New Mexico and Tucson Electric Power Company.The two non-jurisdictional members participating in this proposalare Tri-State Generation and Transmission Association, Inc. andWestern Area Power Administration.

WestConnect is an unincorporated, voluntary membershipassociation governed by a memorandum of understandingamong its members. Its members are transmission servicesproviders currently operating a series of point-to-pointtransmission services within the states being served by them (seemap). The customers are currently charged separate rates foreach point-to-point service across a transmission path that mightinvolve multiple transmission system operators (or “pancaked”rates in trade parlance).

Under the new voluntary initiative, customers will have theoption to reserve, schedule, and pay for hourly non-firm point-to-point transmission service across multiple participatingtransmission systems at a single rate. This service will be offeredto all eligible customers on a non-discriminatory basis and willbe an alternative to, and not a replacement for, the current“pancaked” service.

The regional transmission rate that a customer will pay underthis experimental system will be the applicable rate for the mostexpensive segment of the requested regional transmission path,instead of the combined rates for all segments of the requestedpath. All rates would be those that are posted on WestConnect’sOpen Access Same-time Information System (OASIS). Thus,customers would have to pay much less than what they wouldhave had to by purchasing transmission services for each segmentseparately. They would incur other costs as well to cover for theancillary services of scheduling, despatch, reactive supply, andvoltage control.

The transmission losses under the initiative will continue tobe pancaked, as is being currently done, and will be monetised

at the rate published in the Dow Jones Palo Verde Electricity PriceIndex related to the transaction and paid for by each customer.

An administrative charge will also be levied on customers torecover the cost of implementing this initiative. The charge iscurrently estimated to be at the rate of $0.09 per MWh for allregional transmission services sold in the first year and $0.08per MWh in the second year. The billing agent under this initiativewill also act as the administrator.

In compensation for the services they provide under theproposal, each participating transmission company would beallocated a pro rata share of revenues based on the ratio of theceiling rate of each transmission provider involved to the sum ofthose ceiling rates, provided that none of the transmissionproviders will collect more than their ceiling rates. The proposalcontends that the share of revenue of each participant in thetransaction would always be less than the revenue that theparticipant would have received for providing the same serviceat its applicable OASIS-posted ceiling OATT (open accesstransmission tariff) rate.

The underlying business premise for this proposal is thatseveral customers will enter into regional transactions that wouldnot have occurred in the absence of this experimental initiative,thus resulting in increased revenue for each member participatingin this initiative.

However, concerns that the initiative could potentiallydisplace transactions that would have happened at the OASIS-posted ceiling rate are valid. If this were to occur, it would meana net revenue decrease for the participating transmissionprovider. The objective of this experiment is therefore to learnhow the offer of a regional transmission service impactsutilisation of the available transfer capability of the transmissionsystem and the revenues of the participating members.

Several customers will enter into regionaltransactions that would not have occurred in

the absence of this experimental initiative, thusresulting in increased revenue for eachmember participating in this initiative.

One factor that might influence the outcome of thisexperiment is the number of transmission service providers thatwill participate in this initiative. The proposal as it currentlystands includes only six public utilities under the jurisdiction ofthe FERC and two service providers that are not under FERCjurisdiction. The reason cited in the proposal for the limitedparticipation of non-jurisdictional members is the fear that theinitiative would indirectly bring them under the purview of theFERC. However, the FERC’s order clarifies that, given the regionaltariff and revenue-sharing model proposed, mere participationof non- jurisdictional members would not bring their rates,revenue requirements, or costs under FERC purview. This mightencourage more non-jurisdictional members to becomeparticipants in the regional transmission initiative.

The financial impact of this initiative will greatly influencethe long-term feasibility of the regional transmission service inthe south-western states of the US. Should the experiment besuccessful, it could well set into motion the formation of a regionaltransmission operator in one of the lesser organised electricitymarkets in the US.


Spotlight

Benefits of a Regional Electricity MarketThe Southern African Power Pool experience

Cooperation in the electricity sector is not a newphenomenon in Africa. Interconnections and electricity

exchange between neighbouring countries have existed in thecontinent for over half a century now. However, a more regionalapproach to electricity trade began with the formation of theSouthern African Power Pool (SAPP) in 1995.

SAPP has 12 member countries and it aims to link them intoa single electricity grid. These members have undertaken to createa common market for electricity to enable their customers tobenefit from the advantages offered by such a market. The rulesof SAPP’s power-pool operations have helped member countriesto ensure mutual support in emergency conditions and improvereliability by sharing capacity reserves. SAPP’s coordinationcentre is located in Harare, Zimbabwe.

The national utilities participating in SAPP are Angola’sEmpresa Nacional de Electricidade (ENE), Botswana PowerCorporation, the Democratic Republic of Congo’s (DRC) SociétéNationale d’électricité (SNEL), Lesotho Electricity Corporation(LEC), Malawi’s Electricity Supply Commission (Escom),Electricidade de Mocambique (EdM), Namibia’s Nampower,South Africa’s Eskom, the Swaziland Electricity Board, TanzaniaElectricity Supply Company (Tanesco), Zambia Electricity SupplyCorporation (ZESCO) and Zimbabwe Electricity SupplyAuthority (ZESA).

As some SAPP members are not yet connected to the grid,membership is divided into operating and non-operatingmembers. ENE, Escom and Tanesco are still non-operatingmembers of SAPP.

With increasing private sector activity in the region over theyears, two independent power producers (IPPs) and twoindependent transmission companies (ITCs) are also connectedto the SAPP grid. The two IPPs are Hidroeléctrica de CahoraBassa (HCB) in Mozambique and Mulungushi Hydro powerstation (MHPS) in Zambia. HCB is 82 per cent owned by thePortuguese government, and the rest by the Mozambiquegovernment. It sells about 1,100 MW to Eskom of South Africa.Eskom is negotiating for an additional 250 MW. MHPS, on theother hand, is 50 per cent owned by Eskom and sells its entireoutput to ZESCO.

The ITCs are Motraco of Mozambique and Copperbelt EnergyCorporation (CEC) of Zambia. Motraco links South Africa toSwaziland and Mozambique, and supplies 2,000 MW to theMozal aluminum plant in Mozambique. CEC buys electricityfrom ZESCO and supplies about 700 MW to mines in Zambia.

Unlike competitive power pools in the West, regionalelectricity trading under SAPP is dominated by long-termbilateral agreements between utilities. While these fixed powerpurchase agreements have assured security of supply, they havenot been able to accommodate changing demand profiles andprices over the years. Therefore, SAPP has undertaken variousefforts to move towards a more competitive market.

As a first step, SAPP introduced the Short-Term EnergyMarket (STEM) in 2001. Under this, electric power is tradedthrough offers and bids on daily, weekly or monthly contracts,

with full obligation to pay. Says Dr Lawrence Musaba,Coordinating Centre Manager, “It is the stock exchange of aregional power supply. The primary objective is to offer attractive,economical energy through competition.”

He explains, “STEM complements the existing long-termbilateral contracts among members. The system matches offersof surplus energy capacity to bids from prospective buyers andensures that market supply and demand are optimised and costsare market driven. Unmatched bids and offers are posted on abillboard on the SAPP website.”

Under the present form of STEM, buyers and sellers negotiatedirectly. Buying surplus off-peak energy reduces costs for thecustomer. Discounted off-peak electricity is very attractive toindustries such as mines, where production shifts can be adoptedto match low-cost energy availability, rather than using expensivepeak-time power.

Five utilities began participating in STEM, which allowedthem to take advantage of the short-term surplus of otherparticipants and also to profit from their own short-termsurpluses. They also used STEM to cover temporary shortages.Within a year of its introduction, about 10 per cent of electricityvolumes were being traded through STEM. Over the past fewyears, however, STEM has registered very few transactions. Aslong-term bilateral contracts get precedence over short-term tradefor access to transmission networks, participants often facewheeling problems. This limitation has slowed down the effectivefunctioning of STEM.

At the same time, severe power shortages in the region haveled to low STEM activity. With fixed bilateral commitments andno surplus electricity to trade, short-term trade has reduced.Southern Africa is facing a crippling electricity shortage withvisible effects across the region. Many countries, including SouthAfrica, the region’s biggest economy, have been forced to resortto load-shedding for several hours a day over the past six months.This has severely impacted the region’s business and economy.

The region is facing a big challenge of diminishing “surplus”capacity. The installed capacity is about 53,000 MW, of whichabout 41,000 MW is available against a demand of 42,000 MW.Thus, there is a shortfall of about 1,000 MW without provisionfor a reserve margin (10 per cent). Although about 1,800 MW hasbeen added, supply is still not enough to meet the demand whichis growing at about 4 per cent per annum.

SAPP has developed a roadmap which seeks to address thecurrent challenges. On the generation side, the region is workingon short-term (up to 2010) and long-term projects (beyond 2013).Says Dr Musaba, “With the World Cup upon us, a number ofshort-term projects have been planned. Feasibility studies andenvironmental impact assessments on projects have beencompleted. Some of these projects have also secured funding.”

Together, these projects are expected to add about 13,000 MWby 2013 to the SAPP grid at a cost USD11 billion. Funding forsome short-term projects (USD2.5 billion) and some rehabilitationprojects (USD952 million) has been secured. There is still a hugerequirement of USD7.55 billion to be sourced. If the plannedprojects come on-stream, the region will have adequate electricityresources, including the desired 10 per cent reserve margin.

Meanwhile, SAPP is also working on expanding andstrengthening the transmission network. Smooth functioning ofthe regional pool requires adequate interconnections. SAPP’s


Spotlight

transmission priorities are three-fold:

- connect non-operating members of SAPP (Angola,Malawi and Tanzania) to the regional grid;

- undertake projects to relieve congestion on the SAPPgrid, and

- build new interconnectors to evacuate power fromgeneration stations to load centres.

The three lines that will connectthe non-operating members to thegrid are: the 220 kV Mozambique-Malawi inter-connecter, to becompleted by 2011 at an estimatedcost of USD80 million; the Zambia-Tanzania-Kenya line costing USD160million, to be completed by 2011; andthe USD8 billion Western Corridor(Westcor), to be completed 2015.

The Westcor project will connectInga Falls in the DRC to the SouthAfrican grid through Angola andNamibia. It will consist of large-scalehydroelectric power generation,HVAC and HVDC transmission linesand broadband telecom. About 3,000MW of power is scheduled to betransferred from Inga to the south, ofwhich 2,000 MW will be destined forEskom and the rest will be allocatedto ENE, BPC and Nampower.

The region is also planningtransmission line projects aimed at reducing congestion.Prominent among these are a second link between the Gautengand Western Cape provinces of South Africa, which will transferpower from the northern part of the country to the southern partand Namibia on the western border. A proposal to build a secondline between Alaska and Sherwood in Zimbabwe is also beingconsidered. A third project includes enforcement of theZimbabwe-Botswana-South Africa line.

Another long-term project aims to increase the transfercapacity of the existing transmission line from the DRC to Zambiafrom 260 MW to 500 MW. The initial phase would include therefurbishment of Inga 1 and 2 and the construction of a second220 kV line from the DRC to Zambia at an estimated cost of USD94million. Meanwhile, projects to evacuate power from newgenerating stations to load centres are also being implemented.In November 2006, a 330 kV transmission line was built to transferpower from Louano to Solwezi mines in Zimbabwe.

While most of the funds for these inter-connector projects arebeing sourced from the World Bank and other multilateralagencies, talks are also on with the private sector. Largeinvestment are needed, and capitalisation remains a keychallenge for the region. Says Musaba, “Southern Africa offersmassive opportunities for investment in the power sector. Theinvestment climate is improving as the region is undergoingliberalisation.” SAPP is also restructuring its operations.

The planned transmission interconnections would also allowincreased transactions on the STEM, thereby accelerating thetransition to a regional spot market, which is SAPP’s eventual

objective. The existing co-operative trading arrangement wouldmove towards a competitive market. Electricity despatch, whichis currently bid based, would be replaced by a cost-based system.

In its transition to a competitive market, SAPP has opted fora solution similar to that implemented in the Nordic countries. Itplans to soon introduce a day-ahead-market (DAM) which willprovide price indicators for investors and other players toparticipate in electricity trade. The new system would ensurethat offers and bids are matched a day ahead of real time and

prices are accordingly established.It would also take care of imbalancesoccurring due to changes in demandor supply. NordPool of Norway hasbeen contracted to develop thetrading platform and market trialsare in progress.

Says Musaba, “This is a betterpricing mechanism in a competitiveenvironment. We believe that thecreation of a spot market wouldoptimise the use of regionalresources, enable the determinationof the correct price of electricity inthe pool and send signals forinvestments and real-timeutilisation of existing assets.”

“Southern African powermarkets are small, and massiveinvestment in individual marketscannot easily be justified. To assurethe private sector and to provide

confidence to investors, SAPP is working hard to develop a largereconomic power market for the region. Introduction of the spotmarket would revolutionise the way electricity is traded in theregion,” he adds.

At the same time, to promote the proper functioning of acompetitive market SAPP is developing transmission pricingpolicies, implementation procedures and an ancillary servicesmarket. It has recommended the creation of a regional regulatorybody to address such challenging issues as rules for access totransmission networks, transmission pricing, and incentives forthe development of a regional grid.

Efficient operations of a power pool face many challenges.Inadequate transmission and generation capacity are physicalconstraints which can be addressed through investment andincentives. There are other major issues such as lack of trust andconfidence among pool members; diverse economic, political andregulatory regimes; and an unclear legal framework for trading.

SAPP members have successfully resolved these concerns tocreate a mutually beneficial mechanism for electricity pooling.They have over time recognised the advantages of cooperatingon electricity trade. The establishment and operation of SAPP isa major achievement for the continent and a good example ofsuccessful regional electricity exchange. It serves as a model forthe establishment of other power pools in Africa.

However, warns Musaba, “Developing a competitive marketis not a copy-paste exercise. What works elsewhere may not workfor Africa. We need to develop our own model, taking into accountour economics and demographics.”


Data & Statistics

Expected Load Growth in Europe

Electric Energy Balance in Europe

South-east European countries such as Croatia, Greece, Macedonia and Romania are expected to register a greater increase in peak load compared with othercontinental European countries.

The big net importers of electric power in 2007 were Italy, the Netherlands, Portugal, Belgium, Austria and Croatia. France was the biggest net exporter of electricpower in the past year.

(TWh, 2007)

Source: Union for the Coordination of Transmission of Electricity

Source: Union for the Coordination of Transmission of Electricity

Countries Net Generation Physical Imports Physical Exports Exchanges Pumped Storage ConsumptionAustria 63.7 22.1 15.5 6.6 3.0 67.4Belgium 84.9 15.8 9.0 6.8 1.7 89.9Bosnia-Herzegovina 11.8 3.5 4.1 -0.6 - 11.2Bulgaria 38.7 3.0 7.5 -4.5 0.6 33.6Croatia 11.3 7.9 1.5 6.4 - 17.7Czech Republic 81.4 10.2 26.4 -16.2 0.6 64.7France 544.7 10.5 67.2 -56.7 7.7 480.3Germany 597.3 44.3 63.3 -19.0 9.1 569.2Greece 52.5 6.4 2.1 4.3 1.1 55.7Hungary 37.3 14.7 10.7 4.0 - 41.3Italy 301.5 48.6 2.6 46.0 7.6 339.9Luxembourg 3.9 6.8 2.9 4.0 1.1 6.8Macedonia 6.1 3.4 0.9 2.5 - 8.6Montenegro 2.0 4.8 2.2 2.6 - 4.7Netherlands 98.8 23.1 5.6 17.6 - 116.4Poland 148.4 7.8 13.1 -5.4 0.9 142.2Portugal 43.1 9.6 2.2 7.5 0.5 50.0Romania 56.4 4.0 6.1 -2.1 0.2 54.1Serbia 39.0 8.9 8.7 0.2 0.9 38.4Slovak Republic 26.1 13.6 11.9 1.7 0.2 27.6Slovenia 13.1 6.1 5.7 0.4 - 13.5Spain 271.1 8.8 14.5 -5.8 4.3 261.0Switzerland 65.9 48.6 50.6 -2.1 2.1 61.8Ukraine West 8.2 2.9 6.8 -4.0 - 4.3

Country Yearly Load (TWh) Expected Growth Rate in Load (%)2005 2006 2007 2008-13 2013-18

Austria 57.1 58.9 67.4 2.0 1.5Belgium 87.9 90.4 89.9 1.2 0.9Bosnia-Herzegovina 11.1 11.1 11.2 2.2 1.9Bulgaria 36.6 37.9 33.1 0.8 1.0Croatia 16.7 17.2 17.4 4.0 2.5Czech Republic 62.7 64.2 - 1.4 1.0France 483.2 478.4 480.3 1.0 1.0Germany 563.2 567.0 - 0.6 0.6Greece 52.9 54.0 55.7 3.0 3.0Hungary 39.3 40.6 41.3 2.0 2.0Italy 330.5 337.8 339.8 2.2 2.2Luxembourg 6.2 6.6 6.8 2.0 2.1Macedonia 8.1 8.3 8.6 3.0 3.0Netherlands 114.7 116.1 117.0 2.0 2.0Poland 130.7 136.5 142.2 2.4 1.9Portugal 47.9 49.1 51.6 3.1 3.1Romania 51.9 53.1 54.1 3.0 2.8Slovak Republic 26.3 27.2 27.6 1.7 1.5


Data & Statistics

Leading transmission operators in Latin AmericaA few big companies dominate the electric power transmission industry in Latin America. In Brazil, it is Eletrobras - through its two main subsidiaries CompanhiaHidrelétrica do São Francisco (CHESF) and FURNAS. In Mexico, Comision Federal de Electricidad (CFE) is the wholesole transmission owner. Another company thathas big aspirations in Latin America is Colombia’s ISA Group. Over the past few years, ISA has picked up assets in many countries and plans to continue to do so.

A. Share in national transmission network length; B. In local currency and includes revenues from businesses other than transmission1. Citilec is 50% owned by Pampa Holdings, a leading energy investor in Argentina2. Transener’s 90% subsidiary, Transba, owns another 6,000 km of 220 kV and 132 kV transmission lines3. Includes 230 kV and above lines in National Integrated System, does not include 66 kV/132 kV sub-transmission lines; Source: Abrate4. 100% of 500 kV lines and 46% of lines between 110 kV and 500 kV5. ISA’s wholly owned subsidiary, Transelca, owns another 1,540 km of transmission lines accounting for 8% of the national network6. 40% through its subsidiary, Transelca7. ISA holds two more transmission companies in Peru - ISA Peru and Transmantaro8. Owns the 750 kV, 450kV and 220 kV networkSource: Company websites, press reports and analyst reports

Country Company Ownership Line length Percentage of 2007 revenuesB

(km) nationalnetworkA (%)

Argentina Compania Nacional Citilec (52.7%)1; 9,1452 95 ARS505 millionde Transporte Energetica Public (47.3%)en Alta Tension (Transener)

Bolivia Transportadora de Electricidad Red Electrica de 1,961 73 BOB230 millionSA (TBE) Espana of Spain

Brazil Companhia Hidrelétrica do Subsidiary of state-owned 17,4513 21 BRL4,075 millionSão Francisco (CHESF) Eletrobras

Companhia de Trasmissão ISA Group of Colombia 8,4943 10 BRL1,315 millionde Energia Elétrica Paulista (37.5%); Eletrobras (36.3%);(CTEEP) ISA Others ( 26.2 %)

Furnas Centrais Eletricas Subsidiary of state-owned 16,8783 20 BRL 5,563 million(FURNAS) Eletrobras

Chile Transelec S.A. Brookfield Asset 8,279 1004 CLP130 millionManagement Consortium

Colombia Interconexion Electrica Colombian government 10,000 73 COP762 billionS.A. E.S.P. (ISA E.S.P)5 (52.94%)

Mexico Comision Federal de Mexican government 49,004 100 MXN225 billionElectricidad (CFE)

Peru7 Red de Energia del Peru (REP) Colombia’s ISA (70%)6; 5,407 47 PEN217 millionEmpresa de Energía deBogotá (30%)

Venezuela CVG Edelca Venezuela government 5,700 1008 NA

Planned transmission lines in United States (circuit km, 230 kV and above)

Note: Original figures in circuit miles, converted by us into circuit kmSource: North American Electric Reliability Corporation, 2007

The NERC expects that the length of the US transmission network (220 kV and above) would reach over 278,400 circuit km by 2011, roughly a 7per cent increasesince 2006.

Utilities 2006 2007-2011 2012-2016 2016Existing Additions Additions Total installed

Electric Reliability Council of Texas 13,704 1,407 389 15,500Florida Reliability Coordinating Council 11,541 478 130 12,149Midwest Reliability Organization 25,927 2,915 126 28,967Northeast Power Coordinating Council 9,963 546 26 10,535ReliabilityFirst Corporation 43,256 710 - 43,967Southeastern Electric Reliability Council 52,020 2,699 922 55,641Southwest Power Pool 12,247 1,788 34 14,069Western Electricity Coordinating Council 94,438 7,091 4,088 105,616Total-U.S. 263,096 17,632 5,715 286,444


Deal Watch

AMERICAS

Brazil's Cemig and Alupar increase stake in transmissionholding, Brookfield exits

Brazilian power company Companhia Energetica de MinasGerais, or Cemig, has acquired 95 per cent of BrookfieldInfrastructure's shares in each of the five transmission companiesunder the local energy holding group, Transmissoras Brasileirasde Energia (TBE).

Alupar Investimentos, a Brazilian investment firm withinterests in energy assets, has acquired the remaining 5 per centof Brookfield's shares in these companies.

The five companies that TBE comprises are: EmpresaAmazonense de Transmissao de Energia S.A., Empresa Paraensede Transmissao de Energia S.A., Empresa Norte de Transmissaode Energia S.A., Empresa Regional de Transmissao de EnergiaS.A. and Empresa Catarinense de Transmissao de Energia S.A.Together, these companies operate 2,119 km of transmission linesand earn an annual permitted revenue of BRL525 million.

Brookfield owns between 7.5 per cent and 25 per cent equitystake in these transmission companies. Cemig's holding is similarto that of Brookfield's. Alupar is the majority stakeholder, with40-50 per cent stake in each company. Brookfield expects toreceive about BRL480 million (USD261 million) from the sale.The transaction is subject to approval by Brazil's energy regulatorAneel, national development bank BNDES and other bodies.

Tonbridge Power arranges credit facilities for MATL projectTonbridge Power, which is developing the 214 mile (344 km)

interconnection between the US and Canada, has entered into amandate letter and term sheet agreement with a New York-basedfinancial institution for a USD90 million construction and termloan facility for the project. The agreement has been signed byMontana Alberta Tie Limited (MATL), the project developer andTonbridge's wholly owned subsidiary.

The credit facility would be used to fund a 230 kV ACtransmission line between Lethbridge in Alberta on the Canadianside and the Great Falls in Montana on the US side. The companyhas also signed a USD9 million network upgrade facility for theassociated Great Falls substation.

Meanwhile, MATL has signed an arrangement for revenueprepayment worth USD35 million with one of its customers,NaturEner, which will use the line to evacuate power from itsproposed wind farm in the US. MATL has signed severaltransmission rights agreements for the line. The regulators inCanada have given their approval for construction on theCanadian side. The US regulators are yet to give their go-ahead.

Brazil's CTEEP and subsidiary receive funds from BNDESBrazilian development bank BNDES has approved a BRL329

million (USD173 million) loan for Sao Paulo-based energycompany CTEEP to build its transmission system.

The amount will finance about 66 per cent of CTEEP's capitalplan for the period 2008-10. The company aims to spend a totalof BRL496.5 million (USD270 million) over this period tomodernise and improve its transmission system and constructnew lines.

CTEEP owns a total of 18,500 km of transmission lines anddistributes 60 per cent of the energy consumed in south-easternBrazil.

BNDES has also granted a BRL70.5 million credit facility toCTEEP's subsidiary Interligacao Eletrica de Minas Gerais (IEMG).The funds will be used to build a line linking two substations inMinas Gerais state. The 500 kV, 173km Contagem-Santana doParaíso line would cross 13 municipalities.

BNDES's loan accounts for 51 per cent of the total investmentin the project. CTEEP holds 60 per cent share in IEMG, andSpanish power company Cymi Holding 40 per cent.

SAESA Group’s acquisition completeThe Public Service Enterprise Group (PSEG), a diversified

energy group and one of the 10 largest electric companies in theUS, has closed the sale of the Chile-based Sociedad Austral deElectricidad S.A (SAESA) Group to a consortium formed by theOntario Teachers’ Pension Plan and Morgan StanleyInfrastructure (MSI).

The SAESA Group consists of three electric distributionbusinesses (SAESA, Frontel and Luz Osorno) that serve about2.6 million people in Chile; one transmission company STS thatowns and operates 950 km of transmission lines; one verticallyintegrated electric company Edelaysen; and one generationcompany PSEG Generacion. The group’s combined generationcapacity is about 135 MW.

The transaction had a final equity sale value of about USD887million. Teachers’ and MSI will each own 50 per cent equity inSAESA. The new owners have also assumed approximatelyUSD400 million of the consolidated debt of the Chilean company.The enterprise value of SAESA is quoted at USD1.3 billion.

PSEG’s after-tax proceeds from the sale are estimated to beabout USD600 million. The sale is expected to generate an after-tax gain of USD170-180 million for PSEG during 2008.

Spanish electricity companies Endesa SA, Iberdrola SA andUnion Fenosa; Colombia’s state-owned utility EPM; and AshmoreGroup were also in the race for SAESA. Credit Suisse acted asthe financial adviser to PSEG on the deal.

In an effort to decrease its international exposure, PSEG lastyear also sold off its interests in the electric distributionbusinesses, Chilquinta Energia in Chile and Luz del Sur in Peru,as well as its ownership interest in Peruvian hydroelectricgeneration company Electroandes. Its remaining internationalassets now consist of small investments in electric generationplants in Italy, India and Venezuela.

IDB approves USD28.5 million for transmission projects inHonduras

The Inter-American Development Bank (IDB) has approvedan initial USD28.5 million loan as part of a USD48.5 millionfinancing package to help Honduras' state power company, Enee,undertake priority transmission investments. The remainingUSD20 million would be approved in 2009.

The funds will be used in particular for transmission worksin areas that have a high demand for energy and lack sufficienttransmission facilities. The funds will also be used to supportthe restructuring of Enee.


Deal Watch

Ontario fund and Singapore’s GIC buy stake in Texas-basedOncor

One of Canada’s biggest public pension funds has teamedup with a Singapore government fund to buy 19.75 per cent equitystake in one the Texas’ biggest electric transmission anddistribution companies.

The Ontario Municipal Employees Retirement System(OMERS) and the Government of Singapore InvestmentCorporation (GIC) have paid USD1.25 billion to Energy FutureHoldings Corporation (EFH) to buy this equity in the Dallas-based Oncor Electric Delivery Co. Oncor provides electricity toover 7 million Texans through more than 185,000 km oftransmission and distribution lines.

The equity is likely to be split 50:50 between the buyers. Thedeal, however, requires US regulatory approval.

The deal has been done through Borealis, which managesOMERS infrastructure investments. Credit Suisse acted as thefinancial adviser to EFH and Lehman Brothers acted as thefinancial adviser to the investor group for the transaction.

ASIA-PACIFIC

USD42 million credit approved for transmission line in southernUzbekistan

The Islamic Development Bank has approved a USD42million credit to the Government of Uzbekistan for constructionof a transmission project in the southern part of the country. Thecredit has a 15-year maturity period, including a three-year graceperiod. The agreement for the credit is expected to be signed inthe fourth quarter of 2008.

Uzbekenergo, the state joint-stock power company, will buildthe project, which includes the 240 km 500 kV Guzar-Surkhantransmission line and the associated substations. The project costis estimated at USD93 million.

The Uzbekistan Reconstruction and Development Fund andthe OPEC Fund have also been approached for part-financingthe project. Uzbekenergo plans to attract USD913.8 million offoreign investments in 2008-12 for electricity projects.

India's Power Grid to buy 26 per cent in cross-bordertransmission company

State-owned power transmission utility Power GridCorporation of India Limited (PGCIL), will buy 26 per cent equitystake in the Cross Border Power Transmission Company(CBPTC), which proposes to build the first Indo-Nepaltransmission link.

CBPTC is a special purpose vehicle (SPV) of IL&FSInfrastructure Development Corporation, a financial institutionfocused on developing infrastructure in India. It has proposedto construct a 400 kV DC link from Muzaffarpur in northern Indiato Dhalkhebar in Nepal.

PGCIL's role in the project would be restricted to the Indianportion of the transmission link. The SPV has already obtainedapproval from the Nepal Electricity Authority.

The Indo-Nepal transmission line is expected to initially

transfer 500 MW of power from Nepal to India. The exports maybe increased in the future as several power projects with Indianinvestments are likely to go online in Nepal in the coming years.

EUROPE

Serbia granted EUR20 million for second phase of transmissionline project

The European Agency for Reconstruction (EAR) has grantedEUR20 million (USD29 million) to Serbian power grid operatorElektromreza Srbije for the second phase of a transmission line.

The agency had earlier approved EUR7 million for the firstphase of the 140.5 km transmission line which will connect Serbiato its southern neighbour Macedonia. The first phase includesconstruction of a 40.5 km line between the towns of Nis andLeskovac, while the second phase comprises a 100 km line fromLeskovac to the Macedonian border.

In all, the EAR has financed EUR27 million of the total EUR31million needed for the construction of the entire line.Elektromreza Srbije will provide the remaining funds.

Construction work on the first phase is already going on, andis expected to be completed in January 2009. Work on the secondphase is expected to start in spring next year. The entiretransmission line is scheduled to be completed by 2010.

Italy’s Terna Signs EUR650 million loan agreementThe Italian power grid operator, Terna, has signed an

agreement for a EUR650 million (USD1.02 billion) bank loan anda revolving credit line for EUR500 million (USD788 million).

The syndicated bank loan was signed with French banksBBVA, Societe Generale and BNP Paribas; Japanese Bank ofTokyo-Mitsubishi; and Italian bank Dexia Crediop. The loan willhave a 7-year maturity with a credit spread equal to 50 basispoints over Euribor.

The revolving credit line was signed with Royal Bank ofScotland and Spanish bank Banco Santander. It is available forfive years with a credit spread equal to 70 basis points overEuribor, which may vary according to the percentage of the lineused and to the credit assigned by the rating agencies.

The financing will provide Terna with the flexibility to fundits energy plan. In January, the company had announced that itwill invest more than EUR3.1 billion over the next five years tostrengthen the country’s energy security.

Germany gives EUR40 million to KosovoGermany has given Kosovo EUR40 million of the EUR100

million it had pledged in July 2008. The funds will be used topart-finance a cross-border 400 kV electricity transmission lineconnecting Tirana in Albania with Prishtina in Kosovo.

The installment is only for 2008. Of this, EUR23 million is agrant by the German government while EUR17 million is “soft”credit from the German development bank, KfW. Germany willdisburse the remaining EUR60 million in 2009. Meanwhile,Germany is also considering part-financing the Albania portionof the line.


Project Update

AMERICAS

Bruce-Milton Transmission Reinforcement Project, CanadaDeveloper: Hydro One

Project detail and status: The project involves construction of a180 km, double-circuit 500 kV transmission line between theBruce power plant in Kincardine and Hydro One’s switchingstation in Milton. The line will transfer renewable power underdevelopment in the Bruce area to southern Ontario. The projectis estimated to cost over CAD635 million.

The Ontario Energy Board approved the proposal in September.The board’s decision is, however, conditional upon the projectreceiving all the necessary approvals. Key among them is envi-ronmental approval. Hydro One plans to submit the draft to theenvironment ministry in November. The line is expected to gointo service in December 2011.

Mid-Atlantic Power Pathway, USADeveloper: Pepco Holdings Incorporated (PHI)

Project detail and status: The Mid-Atlantic Power Pathway is a230 mile (370 km), 500 kV transmission line that will originate innorthern Virginia, cross southern Maryland and the DelmarvaPeninsula and link with the power grid in southern New Jersey.It is estimated to cost over USD1.05 billion and is expected to becomplete by 2013.

In August 2008, the developer filed with the Federal Energy Regu-latory Commission (FERC) for certain rate incentives for theproject. PHI and its subsidiaries in the states across which theline will pass are holding community information meetings alongthe proposed route of the project. PHI is expected to shortly be-gin the process to seek environmental clearance.

PHI is also considering building two 230 kV support power linesin southern New Jersey and the Delmarva Peninsula to connectwith the 500 kV line. These lines are being evaluated by PJM, themid-Atlantic regional transmission organisation. If approved, thelines would add USD150 million to the project cost and be inservice in 2014.

Montana-Alberta Tie Line, Canada/USADeveloper: Montana Alberta Tie Limited (MATL), a whollyowned subsidiary of Tonbridge Power

Project detail and status: The MATL project comprises a 215 mile(346 km) 230 kV alternating current (AC) line that will intercon-nect the Canadian and US electricity markets. It will be the first-ever merchant power transmission line between the two coun-tries and will link Lethbridge in Alberta on the Canadian side toGreat Falls in Montana on the US side.

The project has received approval from the Alberta Energy andUtilities Board. The company is expected to submit the final en-vironment impact statement to the US Department of Energy inOctober.

The project is estimated to cost USD140 million. In September,Tonbridge entered into a mandate letter and term sheet agree-ment for a proposed USD90 million construction and term loanfacility for the project. The company also signed a USD9 millionfacility to upgrade the related Great Falls substation. The two

credit facilities will be disbursed by a New York-based financialinstitution and are subject to credit approval and satisfactorycompletion of due diligence.

Once operational, the line would be capable of transporting 300MW of electricity in either direction. The company has alreadysigned several transmission rights agreements for capacity to bemade available on the line. SNC Lavalin is the prime contractorfor the project.

Meanwhile, MATL has signed an arrangement for revenue pre-payment worth USD35 million with one of its customers,NaturEner, a Spanish wind energy developer with projects inMontana. The line is expected to be operational in 2009.

New York Regional Interconnection Project, USADeveloper: NYRI Incorporated (a consortium of investors includ-ing Borealis Infrastructure Management and American Con-sumer Industries)

Project detail and status: The New York Regional Interconnec-tion (NYRI) project comprises a 190 mile (306 km) high-voltagedirect current (HVDC) transmission line that will connect Na-tional Grid’s substation in the town of Marcy in Oneida Countyto Central Hudson Gas & Electric Corporation’s substation inthe town of New Windsor, Orange County.

Last month, NYRI’s application for the line was deemed “com-plete” by New York’s Public Service Commission (PSC), afterhaving been rejected twice as incomplete. In September, the FERCapproved an additional 2.75 per cent return on equity (RoE) forthe company, on top of a reasonable base rate, conditional on thestate PSC approving the project.

The PSC is now holding public information forums and publicstatement hearings on the project. The developers estimate thatthe line would cost USD2 billion and could be in service by 2012.

Paddock-Rockdale Project, USADeveloper: American Transmission Company (ATC)

Project detail and status: This is a 35 mile (56 km), 345 kV trans-mission line to be built between ATC’s Paddock substation in thetown of Beloit and Rockdale substation in the town of Christiana,in the state of Wisconsin. The project would be built largely onexisting right-of-way. The PSC of Wisconsin gave its final ap-proval in August.

In September, ATC reportedly began construction on this line,projected to be in service in 2010. The estimated cost of the projectis USD133 million.

Potomac-Appalachian Transmission Highline, USADeveloper: Joint venture between American Electric Power (AEP)and Allegheny Energy

Project detail and status: The Potomac-Appalachian Transmis-sion Highline (PATH)

project comprises 244 miles (392 km) of 765 kV transmission linesfrom St Albans, Charleston, West Virginia to Bedington, north-east of Martinsburg in New Jersey. It also includes 46 miles ofdouble-circuit 500 kV lines from Bedington to a new substationto be built at Kemptown, southeast of Frederick, Maryland. PATHis, in fact, part of AEP’s proposed I-765 Interstate project, a much


Project Update

larger, USD3 billion, 550 mile line that would run up to NewJersey.

The St Albans-Bedington segment will be owned by PATH WestVirginia Transmission Company (PATH West Virginia). TheBedington-Kemptown segment will be owned by PATH Allegh-eny Transmission Company (PATH Allegheny). The entire projectis estimated to cost USD1.8 billion. Allegheny estimates that itstotal investment in the project will be USD1.2 billion with theremaining USD600 million coming from AEP.

The FERC has granted an incentive RoE of 14.3 per cent for theproject. The developers are reportedly now working on possiblerouting options and the environmental assessment. After stud-ies have been completed, the companies will apply for regula-tory approvals from the Maryland and West Virginia PSCs bythe end of this year. The developers are simultaneously holdingpublic information meetings on the project. PATH is scheduledto be complete in 2012.

Rockdale-West Middleton Project, USADeveloper: American Transmission Company

Project detail and status: The project involves constructing 35-55 miles (56-88 km) of new 345 kV line to connect Rockdale sub-station in Christiana with West Middleton substation inMiddleton, Dane County.

The project has attracted a lot of controversy, including whetherthe line is needed or not, which route to use, and whether tobuild part of the line underground.

That proposal is before the Wisconsin PSC for review. A decisionis expected in 2009. If the project is approved by the PSC, con-struction of the power line would start in 2010, and the line wouldbe energised in 2013. ATC estimates that the project cost wouldbe between USD213 million and USD250 million.

Tehachapi Renewable Transmission Project Segments 4-11, USADeveloper: Southern California Edison (SCE)

Project detail and status: The Tehachapi Renewable Transmis-sion Project (TRTP) is aimed at tapping wind-generated electric-ity in the Tehachapi Pass in Kern County in the state of Califor-nia. It is divided into eight segments. TRTP segments 4-11 is acontinuation of the TRTP segments 1-3 project (formerly calledthe Antelope Valley project). Construction work on segments 1to 3 is expected to be complete by 2009.

TRTP segments 4-11 is a 250-mile (402 km) project, estimated tocost USD1.8 billion. It comprises several 500 kV and 220 kV linesand substations. The project is under regulatory review and theroute is being reviewed by the state Public Utility Commissionand the City. In September, City officials argued in favour of re-routing the project. SCE has, however, disputed the costs of re-routing.

SCE expects to begin construction in summer 2009 once all theapprovals are in place. The project is expected to be complete bythe end of 2013.

Trans-Allegheny Interstate Line, USADeveloper: Allegheny Energy

Project detail and status: The project is being developed by

Allegheny’s wholly owned subsidiary, Trans-Allegheny InterstateLine Company (TrAILCo). This 500 kV transmission line wasoriginally proposed to run 240 miles (386 km) across three states– Pennsylvania, West Virginia and Virginia. However, after fac-ing severe opposition in Pennsylvania, in September the devel-opers decided to reroute the project.

Last month, two administrative law judges for the PennsylvaniaPublic Utility Commission recommended that the agency denya request to build the line. Allegheny then announced it wouldabandon the 36-mile (58 km) stretch passing through the state,but will build a so-called “critical” 1.2-mile stretch and a newsubstation in Greene County in the state. West Virginia’s PSChas already approved the line, while a Virginia State Corpora-tion Commission hearing examiner has recommended that stateregulators in Virginia also approve it.

The original project cost is estimated at USD1.2 billion. The de-velopers are working on the funding. In August 2008 they closeda USD550 million senior secured credit - a USD530 million term-loan and a USD20 million revolving facility - with a seven-yearmaturity. Both parts have an initial borrowing rate equal to theLondon Interbank Offered Rate (Libor) plus 1.875 per cent. TheFERC has allowed Allegheny a 12.7 per cent RoE for this project.

The TrAIL project also includes construction of three new 138kV lines in southwestern Pennsylvania, each approximately 5miles in length. The project would interconnect to DominionVirginia Power’s substation in Loudon, Virginia. Dominion willalso own, construct and operate part of the TrAIL project inLoudon County.

Kenny Construction Company will contract out works relatedwith the project. The overall project has a targeted completiondate of 2011.

ASIA-PACIFIC

Guzar-Surkhan Transmission Line, UzbekistanDeveloper: Uzbekenergo

Project detail and status: This is a 500 kV transmission line to bebuilt in southern Uzbekistan. The project is estimated to costUSD93 million. Construction is expected to begin in 2009 and becomplete before 2010-end.

In September the Islamic Development Bank (IsDB) approved aUSD42 million credit to the Uzbekistan Government for theproject. The credit has been allocated for 15 years, including athree-year grace period. The Uzbekistan Reconstruction andDevelopment Fund and OPEC Fund are also expected to con-tribute towards financing the project.

Mundra Transmission Line, IndiaDeveloper: Power Grid Corporation of India Limited (PGCIL)

Project detail and status: The transmission project associatedwith Tata Power’s planned 4,000 MW “ultra mega power project”at Mundra in the state of Gujarat consists of three 400 kV double-circuit lines. The transmission lines will be developed by India’sfederal grid operator, PGCIL.

In September, PGCIL’s board approved an investment of INR48.24billion (USD1.1 billion) to build these lines, which will link the


Project Update

plant to the towns of Limbdi (300 km), Ranchodpur (390 km),and Jetpur (330 km).

Muzaffarpur (India)-Dhalkherbad (Nepal) Transmission LineDeveloper: Cross-Border Power Transmission Company ownedby PGCIL, Infrastructure Leasing and Finance Services (IL&FS)of India and Nepal Electricity Authority.

Project detail and status: This is a proposed 400 kV direct cur-rent link from Muzaffarpur in northern India to Dhalkhebad inNepal. The line will be 145 km long.

In September, PGCIL agreed to buy a 26 per cent equity stake inthe company. PGCIL’s role in the project would be restricted tothe Indian portion of the transmission link.

The proposed Indo-Nepal transmission line is expected to startoperations by transferring 500 MW of power from Nepal to In-dia. Exports may increase in future as several power projectswith Indian investment are likely to go onstream in Nepal in thecoming years.

EUROPE

Cobra Link, the Netherlands/DenmarkDeveloper: TenneT and Energinet.dk

Project detail and status: This is a newly announcedinterconnector between the Netherlands and Denmark to ex-change wind-generated electricity between the two countries.Like most other interconnectors between EU and the Nordic coun-tries, this is also expected to be a HVDC link.

The grid operators of the two countries will carry out technicaland economic investigations over the next months. They are ex-pected to be ready with a business case, which will identify theeconomic benefits of the power link, its capacity, size of invest-ment required and date of commissioning.

Nis-Leskovac-Vranje (Serbia)–Skopje (Macedonia)InterconnectorDeveloper: EMS (Serbia) and MEPSO (Macedonia)

Project detail and status: The project is a 400 kV cross-borderinterconnection between Serbia and Macedonia. On the Serbianside, the line will run 140.5 km and is divided into two phases.

Phase I comprises construction of a 40.5-km line between theeastern town of Nis and Leskovac in southern Serbia, while thesecond phase will deliver a 100-km line from Leskovac to Vranjeand from there to the Macedonian border. The Macedonian gridoperator will then build the line up to the capital city of Skopje.

The project also involves construction of two substations in Serbia,one each at Leskovac and Vranje. Plans on the Macedonian sideare yet to be firmed up.

In September, the European Agency for Reconstruction (EAR)granted EUR20 million to EMS for the second phase of the projecton the Serbian side. The agency had earlier approved EUR7.0million for the first phase. The total project cost, including bothphases, is estimated at EUR31 million. EAR has granted EUR27million and the Serbian grid operator will provide the remain-

der of the funding.

Construction work on the first phase on the Serbian side is al-ready underway, with completion expected in January 2009. Thesecond phase is expected to start in spring next year and theentire transmission line is scheduled to be complete by 2010.

Tirana-Prishtina Transmission Line Project, Albania/KosovoDevelopers: OST, Albania and KOSTT, Kosovo

Project detail and status: The proposed 238 km, 400 kV trans-mission line project will interconnect the Tirana, Albania andPrishtina, Kosovo power grids for exchange of electricity. Theproject is estimated to cost EUR58 million (USD83.05 million).

The grid operators of the two countries will construct the por-tions of the lines passing through their respective countries. InSeptember, these companies announced that construction wouldbegin in 2009 and will take about 20 months for completion.

Germany’s development bank KfW will contribute part of theEUR34 million which Albania will spend for the construction ofits section of the transmission line.

KfW is reportedly ready to extend a EUR12 million soft loan forthe construction of the 85-km Kosovo section of the power line.The Kosovo section is estimated to cost EUR24 million.

MIDDLE EAST & AFRICA

Bujagali Transmission Line, UgandaDeveloper: Uganda Electricity Transmission Company Limited(UETCL)

Project detail and status: This is a 220 kV and 132 kV lines projectthat will evacuate power from the 250 MW Bujagali hydro powerplant under construction on the Victoria Nile in Uganda. Theline would run 76 km from Bujagali dam to Kawanda, 19 kmfrom Kawanda to Mutundwe substation in Kampala and 5 kmfrom Bujagali dam to Nalubaale power station in Njeru.

In September, Uganda’s National Forestry Authority granted alicence to UETCL, allowing the line to pass through the centralforest reserves of Mabira, Kifu, and Namyoya.

Jyoti Structures Limited of India has the turnkey contract (val-ued at USD139 million) to construct the lines. Siemens is the sub-contractor for the substation equipment. UETCL expects to com-mission the line in 2011. The transmission project is being fundedby the African Development Bank and the Japanese InternationalBank.

Undersea Cable Project, QatarDeveloper: Qatar General Electricity and Water Corporation(Kahramaa)

Project detail and status: This 63 km, 220 kV undersea trans-mission line project is part of Qatar’s Power Transmission Ex-pansion Phase VIII programme.

In September, Italian cable manufacturer Prysmian was awardedthe contract, worth EUR140 million, for the manufacture andinstallation of the cable. Installation will start in 2009 and is sched-uled to be completed by the end of 2010.


Company News

Areva enters into a new partnership with Shanghai ElectricAreva has signed a new partnership agreement with

Shanghai Electric, one of the largest mechanical and electricalequipment manufacturers in China. The companies already havea 50:50 joint venture (JV) for manufacturing power transformers.

Under the new agreement, the companies will build twotransformer manufacturing sites in Wuhan, Hubei Province ineastern China and in Lingang near Shanghai. The new facilitieswill manufacture and test AC ultra high voltage (UHV)transformers up to 1,200 kV, direct current (DC) transmissionconverting transformers up to 1,200 kV, and smoothing reactors.Production is expected to begin in 2009.

As a result, the JV’s power transformer production capacityin China is expected to triple to 70,000 MVA, with a possibleincrease to 85,000 MVA within the next five years. BusinessDevelopment Asia acted as the financial adviser to Areva on thepartnership with Shanghai Electric.

Areva will also build a new research and development centrein Shanghai at an initial investment of about USD27 million. Thefacility, focusing on UHV technology, is scheduled to open bythe end of 2009 and will employ more than 300 engineers.

Areva T&D doubles production capacity at Aix-les-Bains,launches new GIS product

Meanwhile, Areva T&D has expanded its Aix-les-Bainsproduction facility in France. The company has spend aboutEUR20 million for the construction of two new buildings, officesand assembly workshops for gas-insulated substations (GISs).

This investment comes in the wake of the huge worldwidedemand for GISs, estimated to be growing at over 20 per centper year for the past three years. It will enable Areva to doubleits production capacities for GIS. The new assembly line will beoperational in October.

Meanwhile, Areva has launched a new GIS product, the F35170 kV 50 kA. The company claims that it is the most compactGIS in the 170 kV market. The new product is eco-designed anduses more than 90 per cent recyclable materials.

Areva T&D India and GE Consumer & Industrial India form astrategic alliance

Areva T&D India and GE Consumer & Industrial India haveformed a strategic alliance for providing turnkey electricalsolutions in the power, metals, mining, minerals and materialhandling markets.

GE will contribute its expertise in the low voltage segment tothe alliance, while Areva will bring its expertise in high andmedium voltage products and systems.

ABB awarded USD32 million substation order by Hydro OneSwedish power technology major ABB has been awarded

orders worth USD32 million from Toronto-based Hydro OneNetworks to provide high voltage power products for the

expansion of two existing 550 kV/80 kV substations in Ontario,Canada.

ABB will design, manufacture, test, supply and providetechnical support for the expansion of seven gas-insulatedswitchgear circuit-breaker positions. This includes a gas-insulated bus for new line exit connections and provision ofinterfaces for the existing gas-insulated substations.

ABB signs USD75 million deal to upgrade Eskom’s gridMeanwhile, ABB has won a USD75 million contract from

South Africa’s state-owned utility Eskom to supply and installcircuit breakers to strengthen the country’s electricity network.

ABB, which is investing ZAR400 million in a factory andoffices in South Africa, is to deliver about 2,000 circuit breakerswith operating voltages of 66 kV and 132 kV over a five-yearperiod.

Siemens-Prysmian consortium to connect offshore wind farmto the British grid

Thanet Offshore Wind Limited has awarded a contract worthabout EUR87 million to Siemens Energy and consortium partnerPrysmian Cables & Systems to connect the upcoming 300 MWThanet offshore wind power project to Britain’s electricity grid.Prysmian’s share of the contract is worth around EUR36 million.

The wind farm is expected to be grid connected and readyfor operation by October 2009. Once completed, Thanet will bethe world’s largest offshore wind farm project.

Siemens’ contract includes construction of a 33/132 kVsubstation, supply of two 180 MVA power transformers, andbuilding a new high voltage switching station in Richborough,Kent. Prysmian will supply two sub-sea cables of three-phase132 kV, which will be 55 km long.

It will also be involved in the design, supply and installationof approximately 75 km of 33 kV submarine cables to connectthe wind park to the grid. The cables will be manufactured atPrysmian’s submarine cable factory in Arco Felice, Italy and willbe delivered by March 2009.

Prysmian wins contract for Qatar’s first high voltage submarinepower link

The Qatar General Electricity and Water Corporation hasawarded a EUR140 million contract to Italian cable manufacturerPrysmian for setting up the first submarine power cableconnection to capital Doha. Work on the 63 km, 220 kV powerline will start in 2009 and is due to be completed by the end of2010.

This follows a EUR168 million contract recently secured by aPrysmian-led consortium for construction of a high voltageunderground cable system in the Middle East. The company isalso currently involved in the construction of a submarine powerconnection between Saudi Arabia and Bahrain. This projectbelongs to the Gulf Cooperation Council InterconnectionAuthority.


Company News

Nexans launches a new range of cable solutions for windgeneration

Nexans has launched its WINDLINK® range of cablesolutions, including power/control cables, special cables andaccessories which support wind turbines of all sizes.

The range includes copper, aluminum and fibre-optic cables.Its components have been tested under live operating conditionsand mechanical stresses to ensure compatibility and durabilityas a system. Nexans has also developed special insulationcompounds for low voltage loop cables that can withstand atleast 2,000 torsion cycles at -40 degree Celsius.

Pike Electric completes acquisition of Shaw Energy DeliveryPike Electric Corporation has completed the acquisition of

Shaw Energy Delivery Services (EDS), an affiliate of The ShawGroup, Inc. The Mount Airy-based Pike Electric had announcedthe acquisition in June. The company has paid USD24 million incash for the Charlotte-based EDS.

Pike provides outsourced electric transmission and distribution(T&D) services in the US. The purchase of EDS will allow Pike tooffer a wider range of T&D engineering, procurement andconstruction services. EDS will expand its service territory intothe West Coast, Southwest and the Pacific Northwest.

The Shaw Group had bought EDS in 2003 from the DukeEnergy Corporation for USD22.5 million.

Meanwhile, Pike predicts revenues of USD620-650 millionfor the year ending June 30, 2009. For the year ended June 2008,it earned a revenue of USD552 million.

Sumitomo and AE Power sign contract with EskomJapan-based Sumitomo Corporation and AE Power Systems

have signed a long-term contract with South Africa’s Eskom tosupply auto transformers and shunt reactors for the latter’ssubstations.

The contract is valid for seven years (2008-15) and is expectedto be worth approximately JPY20 billion (USD188 million). Eskomhas the option to extend the contract by three years.

Sumitomo and AE Power will design, manufacture, test andinstall three 765 kV, 2,000 MVA auto transformers and four shuntreactors. The companies expect further orders, based on Eskom’stransmission network expansion plans in South Africa.

Last year, Sumitomo and AE Power won a contract to supply765 kV auto transformers and shunt reactors in South Africa.The equipment is currently being installed.

India’s KEC International bags two orders worth USD48 millionRPG group company KEC International has bagged two

orders worth INR2.17 billion (USD48 million) from NTPC ElectricSupply Company Limited (NESCL) and Power Grid, India’s state-run grid operator.

The order from NESCL, worth INR1.2 billion, is for a turnkey

rural electrification project in Keonjhar district in the eastern stateof Orissa. The project covers electrification of 2,195 villages andinvolves construction of eight substations. It is to be completedbefore March 2010.

The second order, another turnkey project, is worth INR970million and is for the 765 kV, 185 km single-circuit Balia-Lucknowtransmission line in the northern state of Uttar Pradesh. The dealinvolves supplying and commissioning towers and line material.The project is scheduled to be completed before June 2010.

Hubbell acquires three power equipment and servicescompanies

Hubbell, Inc., which provides a range of power sectorequipment including T&D products, has announced threeacquisitions – that of USCO Power Equipment Corporation, CDRSystems Corporation and ElectroComposites. Hubbell has notdisclosed the financial terms of the deals.

Alabama-based USCO provides transmission line andsubstation disconnect switches and accessories for the electricityutility industry. USCO’s product range covers voltage ratings of15-500 kV and current ratings of 600-5,500 amperes.

CDR Systems, based in Florida, manufactures polymerconcrete and fibre-glass enclosures. ElectroComposites of Quebec,Canada is a manufacturer of high voltage condenser bushinghoused in composite materials.

SNC-Lavalin acquires the assets of two Bucharest-basedengineering groups

The Montreal-based SNC-Lavalin Group has acquired theassets of two engineering groups based in Bucharest, Romania.This has strengthened the group’s presence in Romania andEastern Europe. The new full-service firm will handle design,engineering, procurement, construction, management and projectcommissioning.

The acquisitions have provided SNC-Lavalin with a multi-disciplinary engineering team of over 200 professionals withextensive experience in steel metallurgy and other industrialprocess plants, materials handling and in the infrastructure,commercial and institutional sectors.

Weldy-Lamont wins USD350 million contract in GhanaWeldy-Lamont Associates, a 13-employee engineering firm

based in Illinois, has been awarded a USD350 million ruralelectrification turnkey contract by the Government of Ghana. Thecompany will provide procurement, engineering, installation andmanagement services for Ghana’s Self Help Electrification Project(SHEP) IV.

Under the contract, Weldy-Lamont Associates will procureequipment and services from US suppliers to fill the order, backedby a USD344 million loan from the Export-Import Bank of the US.

The contract for SHEP IV was awarded on the basis of thecompany’s performance in SHEP III. Ghana plans to connectapproximately 3,800 villages to the national grid by 2020.


Tenders & Contracts

ASIA-PACIFIC

Augmentation of Talcher II Transmission SystemCountry: IndiaOrganisation: REC Transmission Projects CompanyClosing Date: November 12, 2008Description/Scope of work: Augmentation of the Talcher-IItransmission system through tariff-based competitive bidding.The scope of the work involves construction of three 400 kV DClines, 400 kV switching station and associated equipment.Contact: Chief Executive Officer, REC Transmission ProjectsCompany Limited. Core – 4, SCOPE Complex, 7, Lodhi Road,New Delhi–110 003, India.Phone: 0091 11 24369852 Fax: 0091 11 2436985E-Mail: [email protected]: http://www.recindia.nic.in.

Extension of Aminbazar and Meghnaghat 230 kV substationsCountry: BangladeshOrganisation: Power Grid Company of Bangladesh Limited(PGCB)Description/Scope of work: Extension of the existing Aminbazarand Meghnaghat 230 kV/132 kV substations on a turnkey basis,following the Asian Development Bank’s (ADB) internationalcompetitive bidding procedure. The works are scheduled to becompleted within 18 months from the date of signing the contract.Closing date: October 16, 2008Contact: PGCB, Institution of Engineers Bangladesh Bhaban(4th floor), Ramna, Dhaka-1000Phone: 880-2-9555475, 9550514Fax: 880-2-7171833

Construction of 400 kV DC line in HaryanaCountry: IndiaOrganisation: Haryana Vidyut Prasaran Nigam Limited(HVPNL)Description/Scope of work: Single-part sealed tenders invited forconstruction of a 68.5 km long, 400 kV direct current (DC) linefrom Jhajjar thermal power plant to Daulatabad, Haryana withtwin Moose ACSR conductors on a turnkey basis.Closing date: October 17, 2008Contact: Chief Engineer (MM), HVPNL, Power Colony,Industrial Area Phase-II,Panchkula-134113, Haryana, IndiaPhone: 0091-172-2591742Fax: 0091-172-2591742Website: http://www.hvpn.govt.in

Insulator packages for 765 kV Wardha lineCountry: IndiaOrganisation: Power Grid Corporation of India Limited (PGCIL)Description/Scope of work: International competitive biddingtender for insulator packages C1 and C2 of the 765 kV SC Wardhatransmission line associated with the Western Region System

Strengthening Scheme (WRSSS) II.Closing date: October 20, 2008Contact: PGCIL, Saudamini, Plot No. 2, Sector 29,Gurgaon-122001, Haryana, IndiaPhone: 0091-124-2571700-19, Extn: 2395/2368/67/38Fax: 0091-124-2571831Website: http://www.powergridindia.com

40 per cent FSC package at Wardha substationCountry: IndiaOrganisation: PGCILDescription/Scope of work: Sealed bids invited from eligiblebidders for a 40 per cent fixed series compensation (FSC) packageat Wardha substation for the 400 kV double circuit Wardha-Raipur transmission line (quad) associated with WRSSS II (SetA). Bidding will be conducted through the internationalcompetitive bidding procedures specified in the World Bank’sguidelines: procurement through International Bank forReconstruction and Development (IBRD) loans and InternationalDevelopment Association (IDA) credits.Closing date: October 30, 2008Contact: Chief Manager (CS-WR), PGCIL, Saudamini, 3rd Floor,Plot No. 2, Sector 29, Gurgaon-122001, Haryana, IndiaPhone: 0091-124-2571844 Fax: 0091-124-2571831Website: http://www.powergridindia.com

40 per cent FSC package at 400 kV Raipur substationCountry: IndiaOrganisation: PGCILDescription/Scope of work: Sealed bids invited from eligiblebidders for a 40 per cent FSC package at the 400 kV Raipursubstation for the 400 kV DC Raipur-Raigarh line associated withthe East-West Transmission Corridor Strengthening Scheme.Closing date: October 31, 2008Contact: Chief Manager (CS-NRII)/Manager (CS-NRII), PGCIL,Saudamini, 3rd Floor, Plot No. 2, Sector 29, Gurgaon-122001,Haryana, IndiaPhone: 0091-124-2571700-719 Fax: 0091-124-2571831Email: [email protected]: http://www.powergridindia.com

25 per cent FSC package at Rajgarh substationCountry: IndiaOrganisation: PGCILDescription/Scope of work: Sealed bids invited from eligiblebidders for a 25 per cent FSC package at Rajgarh substation forthe 400 kV double circuit Rajgarh-Kasor transmission lineassociated with WRSSS II (Set C). Bidding will be conductedthrough the international competitive bidding scheme proceduresspecified in the World Bank’s guidelines: procurement underIBRD loans and IDA credits.Closing date: November 4, 2008Contact: PGCIL, Saudamini, 3rd Floor, Plot No. 2, Sector 29,Gurgaon-122001, Haryana, IndiaPhone: 0091-124-2571835/0091-124-2571700Fax: 0091-124-2571831E-mail: [email protected]


Tenders & Contracts

Composite insulator package for 400 kV Dadri-Bamnauli DC lineat Dadri Stage II PlantCountry: IndiaOrganisation: PGCILDescription/Scope of work: International competitive bidsinvited for the composite insulator package for the 400 kV Dadri-Bamnauli DC line associated with NTPC’s Dadri Stage II powerplant.Closing date: November 11, 2008Contact: PGCIL, Saudamini, Plot No. 2, Sector 29,Gurgaon-122001, Haryana, IndiaPhone: 0091-124-2571700-19, Extn: 2395/2368/67/38Fax: 0091-124-2571831Website: http://www.powergridindia.com

Procurement of 315 MVA, 400 kV power transformersCountry: IndiaOrganisation: Madhya Pradesh Power Transmission Company(MPPTC)Description/Scope of work: International competitive bids areinvited for procurement of 315 MVA, 400 kV power transformersin accordance with ADB’s single-stage one-envelope biddingprocedure.Closing date: November 25, 2008Contact: Executive Director, MPPTC, Shakti Bhawan,Block III, Jabalpur, Madhya Pradesh, IndiaPhone: 761-2661450Fax: 761-2665593Website: www.mptransco.nic.in

Upgradation of 132 kV Olak Lampit lineCountry: MalaysiaOrganisation: Tenaga Nasional BerhadDescription/Scope of work: Bids are invited for upgradation ofthe 132 kV Olak Lampit-Banting line and 132 kV Loop-In /Outinto PMU Olak Lampit from Shah Alam South/Teluk PanglimaGarang-Banting.Closing date: October 16, 2008Contact: Azlan Bin Othman, Transmission Division, TenagaNasional Berhad, Level 3, Transmission Building 129, JalanBangsar 50732, Kuala Lumpur, MalaysiaPhone: 019- 2149548Email: [email protected]: http://www.tnb.com.my

Supply of 220 kV transmission line materialCountry: PakistanOrganisation: Pakistan Electric Power Company (Pepco)Description/Scope of work: Supply of 220 kV double circuit twinbundle conductor transmission line material (towers, conductors,insulators).Closing date: October 23, 2008Contact: Pepco, Chief Engineer EHV-I, NTDC House,34 Industrial Area, Gulberg III, Lahore, PakistanPhone: 0092-42-9263246Fax: 0092-42-9263247Website: http://www.pepco.gov.pk

Construction of 230 kV Ratchaburi lineCountry: ThailandOrganisation: Electricity Generating Authority of ThailandDescription/Scope of work: Supply and construction of the 230kV Ratchaburi 3-Samut Sakhon 4 line under transmission systemexpansion project number 11.Closing date: October 17, 2008Contact: Transmission System Engineering Department, RoomNo. 506, 5th Floor, Building TOR 101, Bangkruai, Nonthaburi-11130, ThailandPhone: 66-24361422Fax: 66-24336317, 66-24335523, 66-24344064Website: http://www.egat.co.th

Construction of 230 kV switchyardsCountry: ThailandOrganisation: Electricity Generating Authority of ThailandDescription/Scope of work: Supply and construction of 230 kV/115 kV switchyards at Phangnga 2 and Phuket 3, 230 kVswitchyards at Krabi substation, and supply of equipment forthe 115 kV Phangnga substation under transmission systemexpansion project number 11.Closing date: October 30, 2008Contact: Transmission System Engineering Department, RoomNo. 506, 5th Floor, Building TOR 101, Bangkruai, Nonthaburi-11130, ThailandPhone: 66-24361422Fax: 66-24336317, 66-24335523, 66-24344064Website: http://www.egat.co.th

Construction of 115 kV lines in Tha Wung and Tha TakoCountry: ThailandOrganisation: Electricity Generating Authority of ThailandDescription/Scope of work: Supply and construction of the 115kV Tha Wung-Lop Buri 1 and 115 kV Tha Tako-Chai Badantransmission lines under transmission system expansion projectnumber 11.Closing date: November 7, 2008Contact: Transmission System Engineering Department, RoomNo. 506, 5th Floor, Building TOR 101, Bangkruai, Nonthaburi-11130 ThailandPhone: 66-24361422Fax: 66-24336317, 66-24335523, 66-24344064Website: http://www.egat.co.th

Supply of equipment for 500 kV linesCountry: VietnamOrganisation: Northern Vietnam Power Project ManagementBoard (NVPPMB)Description/Scope of work: Supply of optical ground wire(OPGW) cable and related accessories for the 500 kV Son La-Hoa Binh and Son La-Nho Quan lines (Package I.5) under thecompetitive bidding rules of ADB. Bidders should haveexperience in execution of at least two contracts for exportingOPGW cables for 220 kV or above transmission lines in the pastfive years.Closing date: November 10, 2008


Tenders & Contracts

Contact: Tran Viet Hung, Director, NVPPMB, No. 1111D HongHa Street, Hoan Kiem District, Hanoi City, VietnamPhone: 84-04-2103063 Fax: 84-04-9840824

Supply of shunt reactors for 500 kV linesCountry: VietnamOrganisation: NVPPMBDescription/Scope of work: Supply of shunt reactors for the 500kV Son La-Hoa Binh and Son La-Nho Quan lines (Package I.6)under ADB’s competitive bidding rules. Bidders should haveexperience in design, manufacture and supply of a minimum oftwo 500 kV, 91 MVAR (or higher capacity) three-phase/one-phaseshunt reactors in the past five years, as part of two differentprojects in a country/countries other than their own, which havebeen in operation for at least one year.Closing date: November 10, 2008Contact: Tran Viet Hung, Director, NVPPMB, No. 1111D HongHa Street, Hoan Kiem District, Hanoi City, VietnamPhone: 84-04-2103063 Fax: 84-04-9840824

Supply of conductors and earth wires for 500 kV linesCountry: VietnamOrganisation: NVPPMBDescription/Scope of work: Bids from eligible parties for supplyof conductors and earth wires for the 500 kV Son La-Hoa Binhand Son La-Nho Quan lines in the following lots: Lot I-1.1 –Supply of 1,400,398m Conductor ACSR 330/43 and 900m Earthwire Phlox; Lot I-1.2 – Supply of 1,479,458.6m Conductor ACSR330/43; Lot I-1.3 – Supply of 1,458,361.7m Conductor ACSR 330/43; Lot I-1.4 – Supply of 1,291,421.1m Conductor ACSR330/43and 700m earth wire Phlox-116.Closing date: November 10, 2008Contact: Tran Viet Hung, Director, NVPPMB, No. 1111DHong Ha Street, Hoan Kiem District, Hanoi City, VietnamPhone: 84-04-2103063Fax: 84-04-9840824Email: [email protected]

Supply of equipment for 110 kV Cho Roc-Cat Ba lineCountry: VietnamOrganisation: Hai Phong Power Company Limited (HPPCL)Description/Scope of work: Sealed bids from eligible andqualified bidders for equipment and materials for the 110 kVCho Roc-Cat Ba transmission line. This includes supply ofconductors, POGW cables and steel towers.Closing date: November 11, 2008Contact: HPPCL, Room No. 405, C House, 4th Floor,9 Tran Hung Dao Street, Haiphong, Guyen Thanh Hai, VietnamPhone: 84-31-3210246 Fax: 84-31-3810045Email: [email protected]

Construction of 220 kV Thuan An and Xuan Loc substationsCountry: VietnamOrganisation: Southern Vietnam Power Project ManagementBoard (SVPPMB)

Description/Scope of work: Invitation to bid for constructionof: 220 kV Thuan An substation (Package TA-W05) andtransmission lines; and 220 kV Xuan Loc substation (Package XL-G03), supply, installation and services of integrated controlprotection system, communication equipment and SCADA system.Closing date: November 25, 2008Contact: SVPPMB, 383 Ben Chuong Duong, District 1,Ho Chi Minh City, VietnamPhone: 84-8-2100719Fax: 84-8-8361096

Construction of 500 kV Song May substationCountry: VietnamOrganisation: SVPPMBDescription/Scope of work: Construction of 500 kVSong May substation (Package 8) under IDA’s bidding procedure.Closing date: November 25, 2008Contact: SVPPMB, 383 Ben Chuong Duong, District 1,Ho Chi Minh City, VietnamPhone: 84-8-2100719Fax: 84-8-8361096

EUROPE

Reconstruction of substations and switchgearCountry: BulgariaOrganisation: Natsionalna Elektricheska Kompania (NEK)Description/Scope of work: Reconstruction of three substationsand the associated 400 kV switchyards – Tzarevetz 400/110/31.5kV, Burgas 400/110/31.5 kV and Metalurgichna 400/110 kV.Companies may submit proposals for each substation separatelyor for all three together. About 70 per cent of the contract will befinanced from grant support and the remaining 30 per cent byNEK.Closing date: November 11, 2008Contact: L.Vitanova, 5 Vesletz Str., Sofia, 1000 InvestmentDivision, BulgariaFax: 359-2-98612 88Email: [email protected]

Capacity strengthening capacity of Serbian EMSCountry: SerbiaOrganisation: Delegation of the European CommissionDescription/Scope of work: Strengthening the capacity of theSerbian electricity transmission system and market operator(EMS) under a financing from the European Union. The purposeof the contract is to provide technical assistance to the EMS forfurther development of operational business processes andimprove its performance.Closing date: October 17, 2008Contact: Sofija Arandjelovic, Finance and Contracts Section, GTC19a Avenue Building, Vladimira Popovica 40, 11070, Belgrade,SerbiaPhone: 381-11-30832 00Fax: 381-11- 30832 01Email: [email protected]


Tenders & Contracts

Procurement of equipment for Mojkovac and AndrijevicasubstationsCountry: MontenegroOrganisation: Elektroprivreda Crne Gore AD NiksicDescription/Scope of work: Supply of equipment for connectionof the 220/110/35 kV Mojkovac substation to the 220 kV Podgorica-Pljevlja line, and for connection of the 110/35 kV Andrijevicasubstation to the 110 kV Trebjesica-Berane line under three lots.Lot 1: steel lattice self-supported towers structure; Lot 2:conductors, insulators and suspension; and Lot 3: protectionrelays and meters.Closing date: October 23, 2008Contact: Nada Bojanic, Procurement Specialist,Elektroprivreda Crne Gore AD Niksic, FC Prenos.Bulevar Sv. Petra Cetinjskog 18, 2nd Floor,Conference Room No. 204, 81000 Podgorica, MontenegroPhone: 382-20-201725Fax: 382-20-201726Email: [email protected]

Construction of 750 kV Rivne-Kyiv linesCountry: UkraineOrganisation: UkrenergoDescription/Scope of work: Prequalification for final design,supply, construction and commissioning of two 750 kVtransmission lines – the 353 km Rivne NPP-ST Kievska line andthe 135 km diversion of the Khmelnitsk NPP-Chernobyl NPP toKievska. The environmental and social impact assessment of theproject is available to bidders.Closing date: November 10, 2008Contact: Oleg Levitsky, Head of Capital ConstructionDepartment, Ukrenergo.25, Kominternu Str. 01032,City of Kyiv, UkrainePhone: 38-044-2383092Fax: 38-044-2383035Email: [email protected]

MIDDLE EAST & AFRICA

Consultancy services for electrification in Chibabava and BuzidistrictsCountry: MozambiqueOrganisation: Electricidade de Moçambique (EDM)Description/Scope of work: Consultancy services for planning,tendering, engineering, project management and supervisionworks for construction of the 91 km long overhead 110 kVMavuzi-Chibabava transmission line. Turnkey contract fordesign, supply and installation of electrical networks will beawarded on the basis of competitive tendering, in accordancewith EU rules.Closing date: November 7, 2008Contact: Marcelino Alberto, Board Member,EDM, 368 Filipe Samuel Magaia Ave.,PO Box 2532, Maputo, Mozambique.Phone: 258-21-301062Fax: 258-21-322074.

Construction of 132/33 kV substation and associatedtransmission systemCountry: OmanOrganisation: Oman Electricity Transmission CompanyDescription/Scope of work: Construction of a 132/33 kV gridstation and the associated transmission system in the Yiti area ofthe Muscat governorate.Closing date: October 20, 2008Contact: Tender Board, PO Box 787,Al-Khuwair 133, OmanPhone: 96824 602073/602556Fax: 96824 602063

Consultancy services for preparation of transmissiondepartment policyCountry: OmanOrganisation: Oman Electricity Transmission CompanyDescription/Scope of work: Consultancy services for preparationof transmission department policy and procedure.Closing date: October 25, 2008Contact: Procurement and Contracts Department,Oman Electricity Transmission Company,Saih At Maleh Road, Mina Al Fahal Lane: 1033,Building No. 2699, OmanPhone: 96824 602073/602556Fax: 96824 602063Website: www.omangrid.com

Construction of 132/33 kV Wadi Saa substationCountry: OmanOrganisation: Oman Electricity Transmission CompanyDescription/Scope of work: Construction of the 132/33 kV WadiSaa grid station and associated transmission system in theBuraimi governorate.Closing date: October 27, 2008Contact: Tender Board, PO Box 787,Al-Khuwair 133, OmanPhone: 96824 602073/602556Fax: 96824 602063

Engineering consultancy services for transmission systemexpansionCountry: QatarOrganisation: Qatar General Electricity and Water Corporation(Kahramaa)Description/Scope of work: Engineering consultancy servicesfor Phase 9 of Qatar’s power transmission system expansion.Closing date: October 26, 2008Contact: Technical Affairs, Electricity Projects Department,Kahramaa Building No. 2,Dafna, Floor No. 13, QatarPhone: 9744845555, 9744845464Fax: 9744845496, 9744845496

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