On January 17, 2013, FERC modified its policy regarding what a generation developer as owner of a transmission line must show before reserving capacity on that line for an affiliated generation developer. Specifically, FERC will no longer require that a generation-developing affiliate of the line owner take an ownership interest in the line as a condition of obtaining priority access rights to the line’s capacity.
Prior to the current order, FERC permitted generation-developing affiliates of transmission owners to acquire future firm priority rights on the transmission owners’ generator interconnection facilities when generation-developing affiliates have demonstrated specific expansion plans for their generation projects. This permission, however, was conditioned on the transmission owner ultimately transferring an ownership interest in the facilities to the affiliate. FERC previously explained that the purpose of the transfer of ownership interest was to ensure that arrangements between the transmission provider and its affiliates did not undermine FERC’s open access goals.
The petition for declaratory order was filed by NextEra Energy Resources, LLC (“NextEra”) and two of its affiliated companies, Peetz Logan Interconnect, LLC (“Peetz Logan”) and PWEC, LLC (“PWEC”) (jointly, “Petitioners”). Peetz Logan owns a generator interconnection facility (“Peetz Logan Facilities”), and PWEC is a generation-developer seeking capacity over the Peetz Logan facility for the third phase of its planned wind project. Petitioners asked FERC to verify that PWEC’s planned wind project expansion would be entitled to priority rights over the Peetz Logan Facilities. Petitioners argued that PWEC had planned on the phased expansion and was achieving milestones towards its completion, but requested that FERC waive the condition requiring transfer of ownership of the facilities, because, due to financing reasons, the ownership rights needed to remain entirely with Peetz Logan, and PWEC would thus be operated as only a generating company. Petitioners also argued that all future available capacity would be made available by parties unaffiliated with Petitioners, as third-party requests for service across the Peetz Logan Facilities would be governed by the Peetz Logan Open Access Transmission Tariff (“OATT”), currently pending before FERC.
Arion, a wind developer unaffiliated with Petitioners, had previously requested access to the Peetz Logan Facilities, and intervened in the FERC proceeding. Arion requested that FERC allow the third-party project to move forward with interconnection, and to require Peetz Logan to offer a pro rata curtailment arrangement and interconnection to them at the same terms that Peetz Logan offers interconnection to its affiliates. FERC ultimately found that Petitioners were able to demonstrate that PWEC had pre-existing plans for the phased development of its wind project, noting specific milestones, defined dates and clear progress toward the construction and marketing of the generation. FERC therefore held that “it is no longer appropriate to require a transfer of ownership as a condition for granting priority rights to the generation developing affiliate of a transmission owner.” However, Arion’s request obliged Peetz Logan to file an OATT, making all future requests, including those related to new developments by Petitioners, subject to the terms of the OATT.
FERC noted that while it was making a change to the specific policy in this order, it will continue to more generically evaluate its policies relating to priority rights on interconnection facilities in Docket No. AD12-14-000, et al. To view the order, click here.