Transmission developer aims to sustain liquidity at Four Corners trading hub

By Mark Hand

Lucky Corridor LLC, an independent electric transmission developer, wants to build two projects in New Mexico that would transport power produced by renewable energy and natural gas-fired power plants to utilities that could take delivery and then move the power to the Four Corners trading hub in the northwestern part of the state.

The energy mix at Four Corners is changing as some coal plants are closing and several others could follow, according to Lucky Corridor. New Mexico has "an interest in re-supplying the market there with electricity made in New Mexico from wind farms and other generation plants based in New Mexico," Lucky Corridor said in a project application filed with the U.S. Forest Service and the Bureau of Land Management.

Contributing to the declining coal capacity in the Southwest are PNM Resources Inc. subsidiary Public Service Co. of New Mexico's decision to retire units 2 and 3 of the San Juan coal-fired plant, about 15 miles west of Farmington, N.M., and UNS Energy Corp. subsidiary Tucson Electric Power Co.'s plans to cut its 1,510 MW of coal generation capacity by nearly one-third over the next 15 years and meet future needs with gas-fired resources, renewable energy and energy efficiency programs.

Lucky Corridor's transmission projects will move power produced in an area of northeastern New Mexico that "contains significant wind energy that occurs at the time of the day the southwestern U.S. experiences peak demand, as well as first-rate solar, geothermal and natural gas resources," the company said.

"There is virtually no backbone transmission in this incredible resource area," Lucky Corridor CEO Lynn Greene said in an email interview, referring to northeastern New Mexico.

Lucky Corridor announced in July 2013 that it had signed an anchor tenant agreement with Gallegos Wind Farm LLC for 300 MW of capacity on its Lucky Corridor transmission project, a 130-mile, 345-kV line that would travel from Union County, N.M., to a substation in Taos, N.M. Greene said her Colorado based company recently paid for newspaper advertisements in New Mexico soliciting interest in an additional 400 MW of capacity on the line.

In January, Lucky Corridor said it plans to develop a second transmission project, the Mora Line project, which also would be associated with the Gallegos wind farm. "Our projects will supply the clean energy demanded by the renewable portfolio standards of the states historically served by coalfired generation at Four Corners," Greene said in a Jan. 16 news release.

The Lucky Corridor project will move 700 MW about 130 miles, 35 miles of which is on federal lands. The developers will build the transmission line adjacent to an existing 115-kV transmission line owned by Tri-State Generation and Transmission Association Inc. between a point near Tri-State's Gladstone substation and PNM's Ojo substation. The Mora line, which will move 180 MW, will not cross any federal lands. It will move power produced from the first phase of the Gallegos wind farm to a PNM substation. The two projects would cost an estimated $320 million, according to Greene.

FERC in October 2012 signed off on a plan by Lucky Corridor to charge negotiated rates for transmission rights and service on the longer of the two projects. The commission's order gave the company the right to continue to work with Western grid officials and regional utilities to determine the best infrastructure for the region — 230-kV or 345-kV.

According to the company, a 130-mile, single-circuit, 345-kV line would save an estimated $83 million from its previously proposed double-circuit, 230-kV design. "The same size right-of-way works for either design," Greene said. "Ongoing grid studies and market demand will determine which design is built."

Transmission developers bullish on New Mexico

New Mexico's grid congestion issues have attracted interest from electric transmission developers that are pursuing projects, both big and small, to serve customers inside the state and load centers in surrounding states. On a much larger scale than Lucky Corridor's projects, SunZia Transmission has proposed a 515-mile, 500-kV system that would travel through New Mexico and Arizona and possibly provide a route to get wind energy to California.

Along with power industry executives, federal officials view New Mexico as a priority for transmission investment. President Barack Obama's Interagency Rapid Response Team for Transmission, established in 2011, selected the $1.2 billion SunZia Southwest Transmission Project as one of the seven high-voltage transmission projects in the U.S. that would receive help moving through the federal permitting process.

TransmissionLineNewMexicoWhile SunZia has received federal support, Lucky Corridor has benefited from an agreement with the state created New Mexico Renewable Energy.

Transmission Authority, or RETA. Under a memorandum of understanding approved in July 2013, the RETA agreed to assist in the design of Lucky Corridor's construction-phase project finance structure, which could include industrial revenue or other bond financing, according to media reports.

Triangle Gallegos LP, a joint venture between Triangle Cattle Co. Ltd. and Gallegos Wind Farm LLC, recently won a lease bid for a wind farm on about 19,000 acres of Mexico State Trust Land and 31,000 acres of private land in Union County. The lease payments are expected to generate $47 million of revenue for New Mexico State Trust Land beneficiaries over the 45-year life of the project, the New Mexico State Land Office said in an April 28 news release.

Triangle Cattle Co. Ltd. is owned by Glen Black, Coy Myrick and J.D. Myrick, who operate various businesses in New Mexico and Texas, including the development of more than 150,000 acres of wind and solar energy projects. The owners of the Gallegos wind project own a less-than-10% stake in
Lucky Corridor LLC, Greene said.

With up to 285 wind turbines, the Gallegos wind farm could have a generating capacity of up to 500 MW. The project is designed to be built in phases starting in 2015. The wind project's first phase will serve as the anchor customer for Lucky Corridor's Mora transmission line, while the second phase will anchor the Lucky Corridor project, which is scheduled to enter service in 2018.