Northern Indiana Public Service Company (NIPSCO) plans to file its response to Pioneer Transmission‘s complaint regarding ownership of the first segment of the Pioneer project early this week, a source close to the situation told TransmissionHub.
Pioneer, a joint venture by Duke Energy (NYSE:DUK) and American Electric Power (NYSE:AEP), on Feb. 8 asked FERC to intervene in a dispute with NIPSCO over who has the right to invest in and construct the first segment of the 765-kV Pioneer project (FERC docket EL 12-24). Under FERC rules, NIPSCO, a subsidiary of NiSource (NYSE:NI) has 21 days to file a response.
In Pioneer’s complaint, as in the complaint Xcel Energy (NYSE:XEL) filed against American Transmission Company (FERC docket EL12-28), the Midwest ISO’s (MISO) transmission ownership agreement and the development of MISO’s multi-value project portfolio play a central role, said two sources familiar with the matter.
NIPSCO will file as intervener in the Xcel Energy complaint, taking Xcel Energy’s side, the first source said.
According to Part IV of MISO’s transmission ownership agreement, “ownership and the responsibilities to construct facilities which are connected between two (2) or more Owners’ facilities belong equally to each Owner, unless such Owners otherwise agree, and the responsibility for maintaining such facilities belongs to the Owners of the facilities unless otherwise agreed by such Owners.”
“That’s an important aspect of the case that’s right at the heart of it,” the first source familiar said.
“The real issue is whether that joint ownership provision was in effect an obligation to build, not a right to interfere or jump into someone else’s project,” the second source familiar said.
The proposed 765-kV line would extend from the proposed New Reynolds substation to Duke’s existing Greentown substation. There is some dispute, however, over the New Reynolds substation, which Pioneer has proposed building, as NIPSCO has claimed the line would connect to a Reynolds substation, which it owns.
“We have a letter from MISO’s general counsel saying the endpoint would be Pioneer’s New Reynolds substation but somewhere in the paperwork it got changed to Reynolds in one area and New Reynolds in another,” a spokesperson for AEP told TransmissionHub, adding that, according to AEP, the Reynolds substation is not a substation. “According to the folks I’ve talked with, Reynolds is a transformer on a pole,” the spokesperson claimed.
NIPSCO did not return a request for comment as of press time.
Pioneer has full rights to the project in question, as it does not interconnect into any other company’s lines, the AEP spokesperson claimed. According to Pioneer’s complaint, “NIPSCO’s position is that it is entitled to 100 percent of the investment and ownership in new facilities and equipment at the New Reynolds substation and fifty percent of the investment and ownership of the 765kV line from New Reynolds to Greentown.”
In its complaint, Pioneer details the investment in terms of time and money spent on the project. “When Pioneer comes in and says that it should be able to build the project it planned, well, the answer is, No, because you’re not a planning authority,” the first source said. “So now you’re asking FERC to second-guess the planning authority. You shouldn’t do that,” he added.
ATC to respond to Xcel Energy’s complaint “fairly soon”
ATC’s reply to Xcel Energy’s complaint regarding ownership over the La Crosse-Madison, or Badger Coulee, line will also be filed “fairly soon,” the second source said. ATC will likely argue MISO’s transmission owners agreement provision is an obligation to build, rather than a right to joint ownership, he added.
“People do joint lines all the time but if somebody unilaterally wants to build a line, is that TOA provision really applicable, or was it something intended to be used if nobody wanted to build the line and it needed to be built?” the second source said.
He added that Xcel Energy would be interested in participating in the line because its ratepayers won’t have to be the only ones paying for it; as an MVP, the costs for the project are allocated across the MISO region, “so that makes it an attractive opportunity if they can get a piece of it,” the second source said.
Xcel Energy has also proposed to build in Wisconsin the Rochester-Hampton-La Crosse line, which would connect to the same substation that the La Crosse-Madison line would connect to. This could unravel further ownership questions, the second source pointed out.
“The other interesting question is, if Xcel can claim 50% of La Crosse-Madison, can ATC claim 50% of the Rochester-Hampton-La Crosse line?” the second source said.
This article was amended at 9:38 a.m. on Feb. 28, 2012, to include that NIPSCO would file as intervener in the Xcel Energy/ATC case.