Alberta’s first transmission project to go up for competitive bid will bring increased capacity to the busy oilsands region
The Fort McMurray West Transmission Project is powering up, and dozens of companies are competing for the right to be the one flipping the switch.
The Alberta Electric System Operator (AESO) has announced that a new 500-kilovolt transmission line will be built to increase capacity between Edmonton and Fort McMurray. The project includes a new substation 25 kilometres west of Fort McMurray, a 500-kilovolt single-circuit transmission line about 100 kilometres long that will run from that substation to an existing substation in the Wabasca area, and a 500-kilovolt single-circuit transmission line about 400 kilometres long that will run from the Wabasca substation to one near Wabamun, Alta.
Not surprisingly, the driving factor for the line is oilsands development, which is straining the region’s current transmission capacity. Peak load in the region has more than doubled over the last decade and is expected to more than double again over the next 10 years, rising from 1,735 megawatts this year to 3,905 megawatts by 2022.
POWER TO GROW
With industry a major economic driver, AESO wants to ensure that the province has the power it needs to grow. “Alberta’s quality of life and economic well-being, especially the maintenance and creation of jobs, depends on an adequate and reliable supply of electricity to all Albertans, now and well into the future,” says Dawn Delaney, senior external communication advisor for the organization.
The project will be the first of its kind in Alberta to be put out for competitive bid.
“In Alberta, we are going to be spending a lot on transmission lines in the coming years. The provincial government is very interested in minimizing the cost of building those lines and one of the ways you can do that is to inject some competitive pressures or tensions into a marketplace,” explains Elizabeth Moore, director, competitive process, AESO. “The hope is that by putting these projects out to competitive bid, we are going to force folks to sharpen their pencils and come to the table with some really good pricing.”
According to the AESO’s Long-term Transmission Plan, the total cost of all planned projects between 2011 and 2020 is $13.5 billion. The forecast cost for the Fort McMurray West project in that plan is $1.6 billion.
The province mandated the AESO to develop a competitive process, which it did after looking at what has been done in the transmission sector in other jurisdictions, as well as in other sectors in Alberta. It came up with an approach very similar to the public-private partnership approach used for large infrastructure projects like Stoney Trail in Calgary and Anthony Henday Drive in Edmonton.
In this case, the company that wins the bid will be responsible for developing, designing, building, financing, owning, operating and maintaining the project. That’s actually nothing new when it comes to transmission lines. Prior to this project, new transmission projects went to the transmission facility owner (TFO) that operated in the area where the project was needed. The TFO was then responsible for all of the project’s different phases.
One of the goals of moving to a competitive process is to increase innovation throughout the life cycles of new facilities. Moore says that the drive to keep costs down has resulted in technical innovations in other jurisdictions. “In Texas, they came up with an innovative tower design that met the required functional specifications, but was lower in cost than the towers that had traditionally been used,” she says.
The competitive process is already underway. About 30 companies responded to the AESO’s request for expressions of interest. Considering there are currently only four major TFOs in Alberta, it’s obvious that the plan to introduce some competition is bearing fruit and that many others want to play.
In the next stage, scheduled to wrap up in September, the AESO will put out a request for qualifications. A short list of up to five respondents will be asked to submit proposals, and the AESO will select the most qualified proponent that is prepared to deliver at the lowest cost.
Three independent selection panels will evaluate both the qualifications and proposals. Members of the panels will have expertise in areas such as finance, technical requirements, environmental issues and stakeholder consultation.
“We looked for parties who had expertise in certain areas to do a proper evaluation and who didn’t have any tie to companies that do this in Alberta today so that we can ensure a fair and open competition,” Moore says.
The Fort McMurray West project will add approximately 450 megawatts of import capability into the Fort McMurray area and approximately 700 megawatts of export capability out of the area. Construction is expected to begin in 2014 with the project going into service in 2019.