On December 3, 2009, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) denied Clipper Windpower Development Company, Inc.’s (“Clipper Windpower”) emergency motion and request for temporary waiver of part of the California Independent System Operator Corporation’s (“CAISO”) Large Generator Interconnection Procedures (“LGIP”). In its motion, Clipper Windpower argued that the current security deposit requirements within CAISO’s LGIP would force it to post a $7.5 million deposit for upgrades that would cost approximately $4.6 million. As such, Clipper Windpower warned that it may have to cancel its 400 MW Conception II wind energy project.
On September 18, 2009, CAISO filed revisions to its LGIP for interconnection requests as part of its Generator Interconnection Process Reform. Clipper Windpower protested the filing because CAISO’s provisions under section 9.2 of the LGIP would not reduce initial financial security deposits for interconnection customers that change their status from Fully Capacity Deliverability to Energy-Only Deliverability prior to the commencement of the Phase II Interconnection Study. Instead, section 9.2 of CAISO’s LGIP does not account for changes made after the final Phase I Interconnection Study. While the Commission accepted CAISO’s revisions by order on November 17, 2009, it also stated that section 9.2 may be unjust and unreasonable as it relates to a switch in deliverability status. As such, the Commission instituted a paper hearing under section 206 of the Federal Power Act.
Clipper Windpower filed its motion soon thereafter on November 20, 2009. It its filing, Clipper Windpower explained that its recent deliverability switch from Full Capacity to Energy-Only, pursuant to section 7.1 of CAISO’s LGIP, reduced its estimated network upgrade costs from $538,000,000 to $4,578,000. However, instead of being able to post a security deposit of $686,700 (15% of the Energy-Only Deliverability network upgrades costs), it would still have to post $7,500,000 under section 9.2 of CAISO’s LGIP. Since this deposit amount exceeds the estimated costs of network upgrades for the project, Clipper Windpower asked the Commission to clarify that it will not have to post this deposit until the Commission determines that such a deposit is just and reasonable.
The Commission however, disagreed with Clipper Windpower and denied its motion. The Commission explained that when it set its paper hearing in November, it also set the earliest refund effective date possible, November 27, 2009. This date provided Clipper Windpower, and any other similarly situated entities, with some protection against possibly unjust and unreasonable financial security obligations. Until the Commission has concluded its paper hearing however, Clipper Windpower must post the required original financial security deposit under section 9.2 of CAISO’s LGIP. The Commission concluded that it was not convinced that there was good cause to grant waiver and thus, it denied Clipper Windpower’s motion.
A copy of the Commission’s order can be found under Docket No. ER08-1317-006 at www.ferc.gov.