Part way through the Feb. 27 conference on electric competition, it was so quiet you could hear a hockey puck slide across the ice. No, hell had not frozen over. Rather, it was Commissioner Marc...
Titans of Transmission
ITC and AEP jockey for the lead in building the grid of tomorrow.
do build are optimal.”
Grabbing the Anchor
The new T lines mentioned above (Gateway, Green Power Express, Tallgrass, Prairie Wind, V-Plan), are designed to provide carrying capacity for renewable energy at cost-based rates collected via the sponsoring utility’s OATT, or using the OATT on file with the appropriate RTO or regional grid operator. But that doesn’t mean the merchant-transmission sector has been left out.
In fact, during the month of December 2008 three key merchant-transmission proposals were filed at FERC proposing to charge negotiated market-based rates for new lines designed to carry renewable energy. In fact, these three applications seek to bend the rules now in force for merchant projects, and would require the commission to do some rethinking on what sort of policies would be needed to make sure that the merchant sector can continue raising capital for grid investments during the current economic downturn.
The first two projects, the Zephyr and Chinook lines, are sponsored by the limited partnerships owned by Trans- Canada subsidiary NorthernLights Inc., and are aimed at bringing wind and renewable energy from Wyoming and Montana, respectively, west through southern Idaho and then south through Nevada to the Las Vegas area, to gain access also to retail markets in Arizona and southern California (see Zephyr Trans. LLC, FERC Dkt. ER09-433, filed Dec. 19, 2008; Chinook Power Trans. LLC, FERC Dkt. ER09-432, filed Dec. 19, 2008) .
These two projects are notable in that they purport to make available only 50 percent of available system line capacity to buyers on open-access principles through an open-season solicitation. The remaining 50 percent of capacity would be reserved and presubscribed in a closed process for the benefit of an unnamed wind energy generation developer, who also would help underwrite the initial capital investment.
By excluding one-half of project capacity from resale through an open-access process, and instead reserving that capacity for a private “anchor tenant,” the Zephyr and Chinook projects would violate criteria number 4—allocation of initial transmission rights through an open season—of the so-called “10 commandments” required of merchant transmission projects, as first announced by FERC in the Connecticut-Long Island Cable case (see Northeast Utils. Serv. Co., Dkt. ER01-2584, Mar. 18, 2002, 98 FERC ¶61,310) .
In fact, the idea of relying on an anchor tenant to help fund a large capital project has a long history in the natural gas pipeline industry, and the industry reaction to the Zephyr and Chinook applications uniformly has been positive. It appears quite likely that FERC will approve the two applications as filed, or else require only minor amendments. Moreover, FERC has suggested in prior rulings on merchant-transmission line applications, such as the September 2005 Sea Breeze order (Dkt. ER05-1228, 112 FERC ¶61,295) that the 10 commandments are not etched in stone, but remain flexible.
The third case, however, remains quite problematic, and has spawned a wave of protests.
In this third case, arising out of New England, the Hydro-Quebec subsidiary HQ Energy Services (US) Inc. proposes to join with Northeast Utilities and NSTAR Electric to build a high-voltage, 1,200-MW DC line from