US FERC approves incentives for transmission lines

LOS ANGELES, Dec 3 (Reuters) - The U.S. Federal Energy Regulatory Commission has approved rate incentives for two power transmission projects that would transit wind power, FERC said on Wednesday.

The proposed projects include the $500 million, 170-mile, 765-kilovolt (kV) Tallgrass Transmission project in Oklahoma and the $600 million, 230-mile, 765-kV Prairie Wind Transmission project centered near Medicine Lodge, Kansas.

Tallgrass is owned equally by a subsidiary of OGE Energy Corp (OGE.N) and a joint venture called Electric Transmission America, which is owned by units of major utility parents American Electric Power (AEP.N) and MidAmerican Energy Holdings Co, owned by Berkshire Hathaway (BRKa.N).

OGE is a holding company for Oklahoma Gas and Electric Co.

Tallgrass is expected to be completed by 2013 and construction to begin before 2010. Prairie Wind is expected to open by the end of 2013.

Prairie Wind is a limited liability company owned equally by Westar Energy Inc (WR.N) and the AEP-MidAmerican venture called Electric Transmission America.

The FERC has set a hearing for the companies' formula rates and rate protocols.

"The companies asked for identical formula rates with implementation protocols to recover their projected costs under the SPP tariff, subject to true-up, as well as a 13.3 percent return on equity," said a FERC statement.

The 13.3 percent return on equity includes 2.5 percent in incentives for participation in a regional power grid organization, for new technology and for investing in renewable power transmission, FERC said.

FERC said the two transmission projects would transport at least 5,800 megawatts of about 40,000 MW of new renewable power now in the queue for the Southwest Power Pool, the U.S. region that includes Kansas and Oklahoma for electricity issues. (Reporting by Bernie Woodall; Editing by Gary Hill)