COLUMBUS - TransCanada has temporarily halted construction on infrastructure needed in advance of its proposed Keystone XL pipeline.

Nebraska Public Power District (NPPD) Operations Manager Tom Kent advised the utility's board of directors Friday that TransCanada had canceled any potential work in the state until 2012.

Before segments of the 1,980-mile pipeline can become operational in Nebraska, NPPD must build 74 miles of 115,000-volt transmission lines to power three pumping stations along the proposed route.

The $49.4 million project was expected to begin this fall, however, Kent reported Friday that TransCanada has pushed the in-service date back from May 1 to Oct. 1 of next year.

By postponing work planned for this year, he said, TransCanada has created a "tight window" for NPPD to complete the lines prior to the Oct. 1, 2012, deadline.

A major obstacle is the American burying beetle.

Because of environmental issues relating to the bug, construction of lines from east of Petersburg to east of Ericson and O'Neill to south of Stuart must be done during the colder months, Kent explained - leaving January to March as the only possible build period.

A third line, extending from near Clarks to north of Central City, isn't affected by the beetle. In addition to NPPD's project, powering the pipeline would require Southern Power District, Loup Valleys Rural Public Power District and Niobrara Valley Electric Membership Corporation to build substations near each of the five pumping stations.

TransCanada is still waiting on a Presidential Permit from the U.S. Department of State, which allows the company to use eminent domain during construction.

This permit was expected to be granted by this summer, a TransCanada spokesman said in late January, allowing construction to begin from Cushing, Okla., to the Gulf Coast.

The Calgary, Alberta,-based company expected its newest pipeline to be operational by 2013, carrying 510,000 barrels of crude oil from the Canadian tar sands to refineries along the Texas Gulf Coast.

NPPD Vice President and Chief Financial Officer Traci Bender said although there are concerns about the pipeline's schedule and the possibility of it not being built, the district has no financial liability if the project fails.

"Any dollars we spend, they will be obligated to pay," she said.

The same is true for NPPD's wholesale customers that are responsible for substation construction.

Payments to NPPD, plus interest and borrowing fees, would come over the next 10 years.

Interim President and CEO John McClure noted that the district obtained Canadian legal counsel prior to signing a contract with TransCanada.

"We think we have done everything reasonably possible to create a strong financial guarantee," McClure said.

Although TransCanada touts its Keystone XL pipeline as the "safest-ever" among more than 21,000 miles of lines currently carrying fuel and natural gas beneath Nebraska's soil, critics remain.

Some citizens, landowners and environmental groups contend there are too many risks associated with a pipeline that runs through the fragile Sandhills ecosystem and over the Ogallala Aquifer, a crucial underground source of drinking water and irrigation for the state.

Nebraska lawmakers have introduced three separate bills in response to the pipeline, one subjecting any company transporting hazardous materials through the state by pipeline to an intensive hearing and permitting process through Nebraska Public Service Commission. If a permit is denied by the commission, the company in question couldn't use eminent domain when acquiring easements for its project.

Other bills would require companies to provide up-front financial protection to be used if a leak occurred or the pipeline was abandoned.

Ultimately, the regulation and permitting process for TransCanada's Keystone XL pipeline lies with the federal government.

In other business Friday, Bender reported NPPD had a $100,000 deficit for January. A $3.7 million surplus was budgeted compared to $3.6 million in actual revenues.

However, preliminary figures show the district ended February more than $1 million better than projected.

A $2.3 million surplus is being forecast for 2011.


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