Exactly who owns which transmission line?

September 21, 2011

Public Service Indiana cancelled plans for the construction of the Marble Hill nuclear plant in 1984, but one legacy of that project survived, and it provides benefits to Wabash Valley nearly three decades later.

“Owning a share of the transmission system has been financially advantageous to us,” Gary said. “Our cost of money has generally been less than Duke’s, so if we had to pay them to use their assets, we’d be using their cost of money instead of ours. We entered the agreement back then predicated on the fact that we could carry investments at a lower cost.”

The JTS covers just under 6,000 miles of Indiana transmission lines rated at 69 to 345 kilovolts, plus the associated transmission substations. “Many people think that the agreement gives us a certain percentage of those assets, but that’s not true,” Gary noted. “In reality, we own specific facilities. We pay taxes on those specific facilities, and we’re responsible for the cost of any upgrades to them.”

Interestingly, many of the JTS facilities on Wabash Valley’s books are nowhere near our lines, such as a 69 KV transmission line that travels through the southern suburbs of Indianapolis. “It doesn’t matter where the asset is located, or what voltage it is. It’s strictly a matter of each asset’s book value and how the total compares to our investment responsibility under the JTS,” according to Gary. In simple terms, Wabash Valley’s percentage of load in a given year is applied to the total value of assets in the JTS, and the resulting number is defined as our investment responsibility. “That number is compared to the actual book value of our specific JTS assets. If it’s below the book value, we pay the difference to Duke. If it’s above the book value, they pay us.”

Many of the facilities under the JTS are used by multiple parties, and the computations for each reflect that. “We may have 100 percent of the load on a particular substation, but only 83 percent of another,” Gary explained. “So we would have 100 percent of the first one’s book value, but responsibility for just 83 percent of the second’s total value. Those computations apply to every asset for which we can specifically identify our percentage of use.” Under the agreement, Duke has responsibility for the operation, maintenance, and planning over the entire JTS. “That limits confusion when something needs to be repaired.”

While an observer might conclude that the JTS has outlived its usefulness, Gary disagrees. A key benefit is that all the parties understand who will be responsible for which portion of new construction.  He noted, “We don’t have to reinvent or re-negotiate each time we want to do something, because we automatically know how it will be divided. Duke owns a line from Point A to Point B, so if we’re constructing a new line off of that, we know they’ll bear the cost of installing the switches on it, and we’ll assume the cost of the new line itself. It gives everyone a nice set of rules and regulations to follow.”