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Commissioner Cheryl A. LaFleur Statement
November 19, 2015
Docket Nos. ER15-2623-000 and ER15-2625-000
Item No. E-47 PDF
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Order Rejecting Proposed Agreements

“Today’s order rejects, as premature, the Amended Transmission Use and Capacity Exchange Agreement (Amended TUA) and related agreements among Nevada Power, Sierra Pacific, Great Basin Transmission, and Great Basin Transmission South (collectively with Great Basin Transmission, Great Basin). I disagree with the decision to reject the Amended TUA, and I would accept it to allow the parties to update the terms and conditions of their existing arrangements.

“When the Commission accepted the original Transmission Use and Capacity Exchange Agreement (Original TUA) in 2010, it praised this agreement as an “innovative proposal” for joint ownership and a “product of unique collaboration between the [p]arties.”1 The Commission recognized that this partnership was a novel arrangement between an incumbent utility and merchant transmission developer working together to develop needed transmission facilities, and sought to encourage that arrangement. The Original TUA contemplated a carefully balanced transmission development package, and, as does the Amended TUA, contained provisions that were contingent upon unknown future events. Specifically, the Original TUA contemplated the construction of the One Nevada Line (ON Line) as Phase 1, with Great Basin retaining rights to construct two extensions to the ON Line as part of Phase 2. The Original TUA allocated capacity rights following the completion of Phase 1,2 and then adjusted those capacity rights if Phase 2 extensions were constructed, with the precise allocations determined according to which Phase 2 extension first reached commercial operation.3

“Understandably, the parties seek to amend the Original TUA because one of the contemplated Phase 2 transmission segments – the Southern Nevada Intertie Project, now referred to as the HAE Project – is proposed to be developed through the California Independent System Operator (CAISO) Order No. 1000 competitive solicitation process. This development, which was not foreseeable when the parties executed the Original TUA, fundamentally impacts the rights and responsibilities contemplated in that agreement. Now that the HAE Project is being developed through the CAISO Order No. 1000 process, even if Great Basin’s affiliate is chosen in the competitive solicitation process to develop the project, the terms of the Original TUA will no longer govern. Thus, the parties have renegotiated the terms of the Original TUA to reflect this new reality.

“However, today’s order rejects the Amended TUA as premature because it contains amendments that are contingent upon certain future events related to the selection and development of the HAE Project. The order notes that the rejection is without prejudice to the parties re-filing “at a later date when they may be filed without the uncertainty, and contingent terms and conditions, present in the present filing,” and encourages them to do so in order to update the Original TUA, which today’s order acknowledges “no longer reflects the current arrangement.”4 However, I am concerned that, notwithstanding the apparent simplicity of that condition, it is unclear how the parties can actually satisfy that directive in any reasonable time frame.5 The core contingency contained in the Amended TUA is whether the HAE Project is ultimately constructed by June 1, 2023, an outcome that cannot be known before that date until the project enters service or is abandoned. The Commission routinely approves contracts and other filings that ultimately depend on whether a project gets built6 – indeed, it did so when it approved the Original TUA that the parties seek simply to update – and I do not see a meaningful distinction between those circumstances and the amendment at issue here. I am particularly concerned that today’s order keeps an outdated agreement on file because of the amendment’s “prematurity,” while erecting potentially significant barriers to the parties’ ability to update the terms of their commercial arrangement in any reasonable or foreseeable timeframe.

“While recognizing that the Commission should support the development of needed transmission infrastructure, today’s order in fact undercuts the commercial certainty needed to promote that development. I believe the signals we send here are particularly important, given the continued growth in competitive transmission development through Order No. 1000, which could result in similar development partnerships between incumbent utilities and nonincumbent transmission developers. The order recognizes that the decision to accept the Amended TUA or reject it as premature is solely within the Commission’s discretion, and I would exercise that discretion to accept the Amended TUA.

“Accordingly, I respectfully dissent.”






                                               

    1 Nevada Power Co., 133 FERC ¶ 61,166, at P28 (2010) (Original TUA Order).
    2 The ON Line entered service in January 2014, over three years after the Commission approved the Original TUA.
    3Original TUA Order, 133 FERC ¶ 61,166 at PP 6-7 (describing the terms and conditions proposed in the Original TUA governing the potential reallocation of capacity on the ON Line if certain extensions were constructed as part of Phase 2).
    4Order at P 26.
    5This is not an issue for the related agreements that the order addresses, as those agreements will be relevant only if CAISO chooses the Great Basin affiliate as the developer for the HAE Project, a fact which will be known within a matter of months.
    6See, e.g., Xcel Energy Sw. Transmission Co., LLC, 149 FERC ¶ 61,182 (2014); Xcel Energy Transmission Dev. Co., LLC, 149 FERC ¶ 61,181 (2014); Transource Wisconsin, LLC, 149 FERC ¶ 61,180 (2014).