Brookfield wins $400m Texas wind transmission project

A joint venture owned by the Canadian asset manager will provide the largest wind transmission project in the state’s history. Analysts say it could also provide Brookfield with a platform for growth in the US utilities market.

A joint venture owned by Brookfield Asset Management has been selected as the provider for a $400 million wind power transmission line project in Texas.

The project is the largest of its kind in Texas and one of several power transmission projects totalling nearly $5 billion that the Public Utility Commission of Texas is awarding in an effort to accommodate 18,456 megawatts of additional capacity under the state's electric transmission development program.

The commission selected Wind Energy Transmission Texas (WETT) as the provider for the project. The company is a 50-50 joint venture between Brookfield Asset Management and Spanish construction firm Isolux Corsan. Brookfield Infrastructure Partners (BIP), a listed infrastructure fund managed by Brookfield Asset Management, will participate in the joint venture ownership but the size of its stake is yet to be determined.

WETT is now required to submit an application to the commission for a public certificate of convenience and necessity, which will enable it to do business in the state as a transmission line operator. If the application is approved, WETT will built a network of power transmission lines in northern and central Texas that will connect wind generation projects in West Texas with major power markets such as Dallas.

Construction could begin as early as 2010 and could take about two years, but project costs and transmission line routes are still being finalised, John Stinebaugh, chief financial officer of Brookfield's infrastructure group, told InfrastructureInvestor. WETT will own the project once it becomes operational.

Wachovia equity analyst Brendan Maiorana estimated that the project could add as much as $.26 per share to BIP’s share price, assuming that all of Brookfield’s interests in WETT flow to BIP and earn a regulated return of 10 percent.

Maiorana also noted that the project could give Brookfield a platform from which to make additional acquisitions in the US utilities market.

“Since the joint venture will soon have a local track record, we surmise it will be in strong position to win additional project awards,” Maiorana wrote.

Stinebaugh didn't exclude the possibility of WETT becoming a platform for acqusitions in the future but said that Brookfield's core focus right now is on developing the wind transmission project.

“We are very excited about it. It is our first transmission development project in the United States and it is something that we want to build upon,” Stinebaugh said.

Brookfield Asset Management listed BIP on the New York Stock Exchange in early February 2008 at $20.19 to focus on infrastructure investments primarily in Organisation for Economic Cooperation and Development-member states.

The fund is 50 percent owned by Toronto-based Brookfield Asset Management and its employees and directors. Besides infrastructure, Brookfield manages property, power generation and other specialty funds, with total assets under management of $90 billion.

BIP shares were up $.08 to $13.28 in New York Stock Exchange trading on Monday morning.

WETT (yellow lines): part of Texas' Competitive Renewable Energy Zones program
Source: Regulatory filings, Texas Public Utility Commission