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Tres Amigas Tie Up

Synchronizing networks to bring green power to market.

Fortnightly Magazine - July 2010

only way in which it will attract customers is to provide a service that has some economic value to market participants. If [it] does not offer some benefit to prospective customers, it will not be able to recover the investment for which it has assumed the risk.”

Disclaimer of Jurisdiction

Although opportunities exist to build transmission lines from competitive renewable energy zones (CREZ) in Texas interconnecting with the project, ERCOT utilities advised Tres Amigas they wouldn’t be able to obtain approvals in Texas to construct such lines absent a FERC disclaimer of jurisdiction—necessary, they asserted, to preserve ERCOT’s plenary exemption from federal oversight.

Accordingly, Tres Amigas filed an application at FERC requesting a three-part ruling that any transmission owner whose lines interconnect the ERCOT grid to the project won’t be subject to FERC jurisdiction as a public utility under federal law; transmission services over AC lines from ERCOT to the project ( i.e., synchronized with the ERCOT grid) won’t be subject to FERC jurisdiction; and creation of a new AC to DC interconnection between the project and ERCOT won’t change the existing jurisdictional status of any ERCOT utilities or transactions.

The application advanced alternative legal bases for relief, the first an omnibus rationale that the AC electric grid in ERCOT, which isn’t synchronized with out-of-state systems, doesn’t allow locally sourced energy to “commingle” in interstate commerce and therefore isn’t subject to FERC jurisdiction. The second argument urged FERC to rule that Tres Amigas would be eligible for jurisdictional disclaimer under Section 201(b)(2) the Federal Power Act (FPA) if it were to obtain a wheeling order under Section 211. The third argument justified a jurisdictional disclaimer based on “the unique design of the Tres Amigas superstation, which will maintain the electrical separation of ERCOT and the interstate grids using new technology and a unique configuration of facilities.”

The FPA confers FERC jurisdiction over all transmission facilities that operate in interstate commerce but expressly recognizes ERCOT as a separate jurisdictional entity outside interstate commerce, regulated by the Public Utility Commission of Texas. Whether transmission lines and energy transactions are deemed to be, or take place in, interstate commerce depends, according to Supreme Court precedent, on a factual determination that electricity within a synchronized AC grid “commingles” across state lines. Tres Amigas argued that “commingling” doesn’t apply to electricity flows between asynchronous grids, such as ERCOT and the EI or WECC, linked by AC/DC converters. When so linked, for power to be scheduled from one interconnection to another, the current first must be converted from an AC wave to a DC pulse and then back to an AC wave synchronized with the receiving grid. As a result, the power isn’t free-flowing or commingled; arguably isn’t in interstate commerce; and therefore doesn’t subject transmission lines within ERCOT or the transaction itself to federal jurisdiction.

Tres Amigas’ second argument invoked FERC’s power, under the Public Utility Regulatory Policies Act of 1978, to order interconnection (FPA , Section 210 ) and wheeling (FPA , Section 211 ) by a non-jurisdictional entity without subjecting it to FERC regulation.