PPL on track to spend more than $1 billion on power grid upgrades

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PPL Chairman, President and CEO William Spence said on Nov. 1 during the company’s 3Q16 earnings call that PPL Electric Utilities is on track to execute more than $1 billion in capital improvements to modernize the grid and strengthen reliability for customers.

“The company’s automated power restoration system has now restored within minutes more than 58,000 customers since that system became fully operational this past June,” he said. “We also continue to add new smart devices to extend these benefits and improve grid resiliency even more. The company is also completing preparations to replace 1.4 million meters in Pennsylvania with new smart meters. The meter replacements are expected to begin before the end of the year and the full $471 million project is expected to be completed by 2019.”

Spence said that transmission expansion also continues, with additional investment focused on reinforcing, expanding and hardening the bulk power system, adding redundancy and making the grid more secure.

Responding to a question about Project Compass, PPL Electric Utilities President Gregory Dudkin said during the call, “[W]e’ve filed an interconnection request with New York ISO [(NYISO)]; we’re expecting a response shortly on that.”

He noted that New York transmission projects go through the Article VII process, which “normally takes two to three years,” and that the company is “in the process of starting that up.”

According to the project’s website, the first segment of Project Compass is a 95-mile, $50 million to $600 million line between Blakely, Pa., and Ramapo, N.Y.

“The proposed 345-kilovolt line will be an important link between” the PJM Interconnection and NYISO regions, according to the website.

While the first segment can stand alone as a valuable grid improvement, PPL Electric Utilities continues to refine the overall plan for the rest of Project Compass, the website stated. As currently envisioned, the full project, which is estimated to cost $3 billion to $4 billion, would run about 475 miles from western Pennsylvania into southeastern New York, according to the website.

Among other things, Spence said that Kentucky Utilities (KU) and Louisville Gas and Electric (LG&E) announced on Nov. 1 that they intend to file rate requests later this month with the Kentucky Public Service Commission, and will seek revenue increases of $103 million and $93 million, respectively, through adjustments to annual base electric rates, Spence said.

LG&E anticipates seeking a revenue increase of $14 million in annual base natural gas rates, he said. “In total, we’re expecting to seek a revenue increase of about $210 million,” Spence added. “The requested increases are driven by additional capital investments that are focused on enhancing our reliability programs across the operational groups, along with technology and infrastructure investments in our customer service areas. This will allow us to continue to provide safe, reliable electric and gas service to customers while meeting federal regulations. Even with the increases, it’s anticipated that LG&E and KU rates will remain well below national averages. If approved by the commission, the increases would take effect in July of 2017.”

He also noted that KU and LG&E will seek approval to invest in an advanced metering system and a distribution automation program as part of their rate case proceeding.

PPL Electric Utilities, along with Southern Company, LG&E and KU, and the Tennessee Valley Authority, on Nov. 1 announced the new Regional Equipment Sharing for Transmission Outage Restoration (RESTORE) initiative, which will establish a voluntary program where participants identify spare transformers and other transmission equipment that would be made available for purchase by other participants should they experience a widespread disaster or physical attack within their service area.

The RESTORE program is intended to expand to include other utilities in the region, the Nov. 1 statement added. The founding companies plan to engage other utilities and transmission owners in their respective regions to discuss their interest in the program, which would not replace other industry programs or internal sparing processes, but will have a complementary role, according to the statement.

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