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UPDATE 1-U.S. approves ITC Michigan-Ontario power transformers
March 1, 2012 / 6:37 PM / 5 years ago

UPDATE 1-U.S. approves ITC Michigan-Ontario power transformers

* Transformers to stop unscheduled Lake Erie power flows

* Devices could enter service in several weeks

* PARs could save million in power transmission costs (Adds company comment)

By Scott DiSavino

March 1 (Reuters) - The U.S. Department of Energy approved of power transmission company ITC Holdings Corp's long-awaited phase angle regulator power transmission project on the Michigan-Ontario border, which could save consumers in the area millions in electric costs, ITC said Thursday.

ITC projected the phase-shifting transformers, also known as phase angle regulators (PARs), would enter service in the second quarter.

The PARs are designed to help control unscheduled flows of power around Lake Erie. The companies that operate the power grids around the lake have blamed the unscheduled power movements for hundreds or millions of power congestion cost increase.

"We are very pleased that the Department of Energy has approved our Presidential permit to commence operating the phase angle regulators between Michigan and Ontario. Placing the PARs into service will improve reliability for electricity customers in the Lake Erie region by mitigating unscheduled flows of electric power," Gregory Ioanidis, president ITC Michigan, said in a statement.

Electricity traders are very interested in when the PARs enter service because the devices could change the flow of power on the transmission system, boosting prices in some areas and reducing it in others.

The so-called Lake Erie loop flow affects the power grids in the states and provinces around the lake, including Ontario, New York, Ohio and Pennsylvania in the PJM grid and Michigan in the Midwest ISO or MISO.

PJM, the biggest power grid operator in the United States, oversees the system in parts of 13 U.S. Mid-Atlantic and Midwest states and the District of Columbia.

MISO, which oversees the ITC transmission system in Michigan, operates the power grid in parts of 11 U.S. Midwest states and the province of Manitoba in Canada.

FERC TO DECIDE TRANSFORMER COSTS

Separate from the Department of Energy proceeding, another federal agency, the U.S. Federal Energy Regulatory Commission (FERC), the nation's energy regulator, is working with the power grids to decide how to allocate the cost of the PARs.

In December 2010, FERC accepted a proposal by ITC and the MISO to allocate some of the cost of building and operating the transformers to the PJM and New York ISO power grids.

ITC has said it cost about $41.6 million to install the PARs at its Bunce Creek substation in Michigan with a projected annual revenue requirement of about $11.4 million.

But PJM and the New York ISO have opposed that cost-allocation plan and FERC appointed a judge to help settle the ongoing dispute.

For a timeline on the transformers, click on (Reporting by Scott DiSavino; Editing by Lisa Shumaker)

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