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Tres Amigas Tie Up

Synchronizing networks to bring green power to market.

Fortnightly Magazine - July 2010

By filing a voluntary application for interconnection under Section 210 or a wheeling order under Section 211, the parties to a proposed transaction may in principle take advantage of Section 201(b)(2) of the FPA, which states that “compliance with any order of the commission under the provisions of section 210 or 211 shall not make an electric utility or other entity subject to the jurisdiction of the Commission…” Tres Amigas noted, however, that an entity building transmission lines to interconnect the ERCOT grid with the project can’t be an electric utility, i.e., a “person. . . that sells electricity” as defined by the FPA, because, under Texas statutory law, “a transmission and distribution utility may not sell electricity…” Accordingly, it conceded, an order under Section 210 wouldn’t be obtainable.

Tres Amigas’ second argument therefore turned on Section 211, under which FERC would disclaim jurisdiction if and when Tres Amigas, itself an electric utility because of energy to be supplied from battery storage, obtained an order under that section directing the ERCOT interconnecting party, a transmitting utility, to wheel power to the project. Under the FPA a “transmitting utility” is an entity that owns or operates transmission facilities in interstate commerce and transmits power at wholesale. FERC therefore would have to find that, but for the jurisdictional exemption provided by Section 211, the ERCOT interconnecting entity would be operating transmission facilities in interstate commerce upon interconnection with the project.

To implement a disclaimer of jurisdiction under Section 211, Tres Amigas agreed to apply for a FERC order directing ERCOT transmitting utilities to wheel power over proposed transmission lines to the project. It also sought FERC’s confirmation that it would be entitled to receive a favorable Section 211 order upon demonstrating that the ordered wheeling will be “in the public interest,” won’t “unreasonably impair the continued reliability of electric systems affected by such order,” and will satisfy federal requirements concerning rates and terms and conditions of ordered transmission service.

Tres Amigas’ third argument urged FERC to disclaim jurisdiction because, among other circumstances, all the electric power flowing over interconnecting lines owned by the ERCOT transmission owner will be synchronized solely with the ERCOT grid and any power sourced in the WECC or EI will be converted by the project to ERCOT-synchronized AC current before entering the ERCOT lines. Tres Amigas also noted that the project would act as a balancing authority operating its own DC system, with several miles of DC transmission lines interposed between the ERCOT interconnection and the WECC and EI grids. Finally, Tres Amigas contended that the real and reactive DC power produced by the project’s VSCs would be fully controllable in contrast to uncontrolled power flows on an AC grid. For the foregoing reasons, Tres Amigas contended, electricity flowing in ERCOT interconnecting transmission lines won’t be commingled with electricity in FERC-jurisdictional grids.

In a parallel order this March, FERC denied Tres Amigas’ application for a disclaimer of jurisdiction. “Independent of whether ‘commingling’ occurs at the Project,” it said, “power transmitted to and from the Project crosses the Texas/New Mexico