The co-owner utilities of the Cardinal-Hickory Creek Transmission Line Project have identified an increase in project costs that will be more than 10% above the estimate approved by the Public Service Commission of Wisconsin. These costs are primarily driven by material price increases and ongoing legal expenditures related to multiple challenges to the project’s state and federal authorizations.
Order Point 2 within the Final Decision issued by the Public Service Commission of Wisconsin specifies that the co-owners shall promptly notify the Commission if the project cost may exceed the total estimated project cost by more than 10%. The co-owners have been diligently monitoring the project’s estimated cost. With contracts establishing the pricing for nearly all project structures, conductor, hardware and insulators, the co-owners identified the need to issue this May 20 notice to the Commission.
Rising costs are presently a reality in all industries, and the Cardinal-Hickory Creek project is no exception. We are currently not able to identify a total project completion cost until the Seventh Circuit Court of Appeals has concluded its appeal process and the federal agency decisions on the Refuge are finalized. At that point, we can fully ascertain the total estimated completion cost.
Because this is a multi-value project initially identified by the Midcontinent Independent System Operator (MISO), the total cost of the project is shared across the MISO footprint. Despite cost increases, the project will still provide net economic benefits to energy consumers in Wisconsin, Iowa and across the region. Approximately 85% to 90% of the project costs are paid for by electric consumers outside of Wisconsin and more than 90% of the costs for this project are paid by energy consumers outside of Iowa.
Cost prudency is critical for our energy consumers, investors and owners. We also have a responsibility to our regulators, renewable generation developers and energy consumers to construct this project by December 2023, and we commit to managing these escalating costs to the greatest extent possible.