With LaFleur dissenting, FERC rejects agreements for ON transmission line

nevada transmission elp

Because the California ISO has yet to rule on what entity will develop a 500-kV line to connect the Harry Allen substation with the Eldorado substation — the HAE project — FERC rejected as premature several agreements regarding capacity rights, operation and maintenance of the One Nevada Transmission Line (ON Line).

Among the parties that filed agreements regarding the ON Line were Nevada Power and Sierra Pacific Power, both of which are units of NV Energy, and LS Power Development units Great Basin Transmission, Great Basin Transmission South and DesertLink.

NV Energy officials are reviewing the order and evaluating next steps, an NV Energy spokesperson said Nov. 20. An LS Power representative could not be reached for comment by press time on Nov. 20.

In a dissenting statement, FERC Commissioner Cheryl LaFleur asserted that the order takes too harsh of a stance on rejecting commercial agreements and that in doing so, FERC is undermining transmission development.

The agreements involved include a transmission usage and capacity exchange agreement among Great Basin Transmission, Great Basin Transmission South and the NV Energy utilities, an operation and maintenance (O&M) agreement, and a license and sale agreement between Nevada Power and DesertLink. Among other things, the agreements would increase NV Energy’s capacity on the 500-kV ON Line, which began service in 2014, grant DesertLink a license to use Nevada Power property rights and unused transmission assets in development of the HAE project, and have Nevada Power perform O&M services for DesertLink for the HAE project.

The rights within the various agreements hinge on DesertLink being selected by the California ISO to develop the HAE project, which is part of a competitive solicitation process that has yet to be completed, and that is the crux of the problem FERC found with the agreements.

As TransmissionHub reported, DesertLink is one of three firms looking to build the HAE project, along with Exelon Transmission Co. and NextEra Energy Transmission West, in collaboration with Southern California Edison. The project is an economically driven proposal to move power between the Harry Allen substation, which is owned by NV Energy, and the Eldorado substation, which is primarily owned by SCE.

California ISO has not named a winning developer yet, though that is expected to happen by the end of January 2016.

“It would be premature to accept the proposed agreements under the circumstances here,” because some provisions could become moot or ineffective, depending on uncertain future events, such as how the California ISO rules on a developer for the HAE project, FERC said.

If FERC were to accept the agreements, it could cause confusion among interested parties because the commission could have agreements on file that have never become effective or that contain moot terms and conditions, FERC said in the Nov. 19 order (Docket No. ER15-2623).

“While the commission supports the development of needed transmission infrastructure, we are not persuaded that the certainty that the parties seek justifies accepting the proposed agreements given the extent to which their effectiveness and final form are subject to uncertain future events,” FERC said.

The order said NV Energy and the other companies could refile the agreements at a later date when they would not contain the uncertainty and contingent terms present in the proposed agreements.

LaFleur saw things differently, saying she would accept the agreements and allow the parties to update the terms and conditions if needed.

She noted that the transmission use and capacity exchange agreement was an amended agreement regarding the ON Line, modifying an original agreement that led to the development of the line, and that FERC in 2010 praised the original agreement as an “innovative proposal” for joint ownership of the ON Line and a “unique collaboration” between NV Energy and Great Basin Transmission South.

That original agreement also had contingencies, with capacity rights adjusted based on the phased development of the ON Line, LaFleur said.

FERC routinely approves contracts and other filings that ultimately depend on whether a project gets built, and it should have done so in this case, she said.

While the order says that FERC supports transmission development, it “in fact undercuts the commercial certainty needed to promote that development,” LaFleur said. “I believe the signals we send here are particularly important, given the continued growth in competitive transmission development through Order 1000, which could result in similar development partnerships between incumbent utilities and nonincumbent transmission developers.”

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