Local electrical utility group signs agreement with private equity firm

The Kansas Power Pool, based in Wichita, has signed an agreement with an arm of the private equity firm Blackstone Capital Group for the money and expertise to build and operate transmission lines and infrastructure in the KPP service area.

KPP consists of 31 municipal electrical utilities, including Augusta, Mulvane, Wellington and Winfield. Chicago-based GridLiance, formed in 2014 by Blackstone, one of the country’s largest private equity investment funds, aims to contract with public utilities to plan, finance, build and operate new transmission projects.

The projects must be deemed necessary by the KPP and the regional utility oversight organization, the Southwest Power Pool, said KPP CEO Mark Chesney.

GridLiance will be paid back over many years from increased assessments on monthly power bills, Chesney said. The costs will be, at least partially, spread among ratepayers throughout the region by the Southwest Power Pool.

He said the reason behind the partnership is that the federal government in recent years has pushed utilities to rebuild the nation’s aging electrical power grid to improve reliability and lower costs. Small utilities such as the KPP are likely to have very expensive, complex projects and wanted to bring in money and expertise from outside.

“Everybody is concerned about the cost of electricity, but our entire country has gone four decades of not building new transmission infrastructure and that is being corrected now,” Chesney said. “Assets are being built now and over the next 10 years that will improve the reliability and cost of the grid.”

This story was originally published June 30, 2016 at 10:40 AM with the headline "Local electrical utility group signs agreement with private equity firm."