FERC: Cal-ISO, SoCalEd actions possibly discriminate against Nevada Hydro project

The California ISO’s notice of termination and Southern California Edison‘s (SCE) large generator interconnection agreement (LGIA) with respect to Nevada Hydro‘s proposed transmission and hydro projects may be unjust and unreasonable, FERC said Aug. 8. 

The commission on Aug. 8 issued an order establishing hearing and settlement judge procedures in the matter (Docket Nos. ER12-1302,ER12-1305, ER12-1312).

“[R]egarding the notice of termination, it is unclear from the record before us whether other customers in the interconnection queue would be harmed if the notice of termination is not granted,” FERC said in the order. “Also, it is not clear from the record whether there are other projects that are similarly situated to Nevada Hydro’s with respect to time in the queue but are either being allowed to remain in the queue or not subject to termination for failure to meet milestones.”

FERC said further information was needed regarding why the proposed SCE LGIA assumes only an interconnection to SCE “when the parties have indicated that interconnection to both SoCalEdison and SDG&E were adopted as the base assumption for system impact studies by CAISO, SDG&E, SoCal Edison, and Nevada Hydro.”

“Additionally, there appears to be an inconsistency with proposing an LGIA among SoCalEdison, CAISO, and Nevada Hydro to interconnect the LEAPS project, yet proposing to terminate the LGIA among SDG&E, CAISO, and Nevada Hydro based upon the allegation that LEAPS is unlikely to be built,” FERC said.

Nevada Hydro has proposed a two-part project: the Lake Elsinore Advanced Pump Storage (LEAPS) hydroelectric project and the Talega-Escondido/Valley-Serrano transmission line. The TE/VS line would run between SCE and San Diego Gas & Electric service territory. A separate line would connect the LEAPS project to a midpoint of the TE/VS project.

“Over the years, we had to get interconnects and sign LGIAs for LEAPS, which would also apply to the transmission line,” David Kates, project manager for the Nevada Hydro project, told TransmissionHub on Aug. 9. “The way the ISO structured everything, we had basically worked separately with San Diego first on their connection, SoCalEdison on the other connection. The San Diego process went fairly quickly and we submitted to FERC an unsigned LGIA, which the FERC helped us to execute eventually. Then, earlier this year, we were finally able to get to point with SoCalEd where we had few unresolved issues, so we filed that unexecuted [LGIA] at the FERC as well.”

“Just about the same time that the SoCalEdison unsigned LGIA was filed – and it was filed by ISO and SoCalEd at nearly the same time – the ISO moved to dismiss our LGIA with San Diego. We protested with FERC all those moves.”

SCE on March 21 filed with FERC an unexecuted LGIA between Nevada Hydro, the Cal-ISO and itself. The Cal-ISO on the same day filed an identical LGIA as a service agreement under its tariff. Cal-ISO also filed a notice of termination of a separate LGIA among Nevada Hydro, the ISO, and San Diego Gas and Electric Company (SDG&E). 

In support of its termination notice, Cal-ISO argued that Nevada Hydro breached the terms of the SDG&E LGIA by failing to meet certain LGIA milestones, which has delayed the project’s in-service date of April 26, 2016. The ISO said LEAPS should be pursued under a new and separate interconnection request.

“The ISO filed a notice of termination at FERC because, after seven years, Nevada Hydro has been unable to complete its permitting for its proposed pumped storage power plant,” a Cal-ISO spokesperson said in an e-mail to TransmissionHub on Aug. 10. “It has started over again on its federal application for a hydro plant because its water partner, Lake Elsinore Water District, abandoned the project and it has no water source for the plant.”

Nevada Hydro in response argued that meeting certain milestones was not tied to a specific date, and that it has express authority to change the milestone dates. The company has also argued that Cal-ISO’s attempt to terminate the LGIA denies it the opportunity to achieve its in-service date.

“Nevada Hydro claims that any potential breach cannot constitute a default of the LGIA, because CAISO and SDG&E have directly contributed to Nevada Hydro’s delays by initially treating LEAPS as a singular project with a single scope of work to be developed jointly between SDG&E, SoCal Edison and Nevada Hydro, but then bifurcating the interconnection requests into two separate proceedings,” FERC summarized in the order. 

Cal-ISO also argued that the Nevada Hydro project’s delays would have a potentially negative impact on other interconnection customers in the queue if the SDG&E LGIA is not terminated. The ISO argued that network upgrades embedded in the earlier-queued interconnection configuration form the basis for the later-queued interconnection customer configuration, and extending the milestones with respect to the earlier-queued customer requires the later-queued customer to pick up the upgrades to maintain the commercial operation date, FERC said.

Given the project delays, later-queued customers may incur additional interconnection study costs resulting from the need for Cal-ISO and the participating transmission owners to maintain two sets of reliability and deliverability studies for alternative scenarios, one with LEAPS and TE/VS, and one without, Cal-ISO argued.

In response, Nevada Hydro argued that such a development is no different than uncertainty posed by any other project in Cal-ISO’s queue, and said it should not be singled out before it has had a chance to demonstrate its potential benefits to the California Public Utilities Commission and FERC. The company also noted there are older projects in the ISO’s interconnection queue. 

FERC’s order “seems more supportive of independent transmission, and perhaps acknowledges the strength of the utilities and the ISO in putting these arrangements together,” Kates said. “It may be indicating that FERC is now finally willing to try to level the playing field.” 

In a statement e-mailed to TransmissionHub, SCE said the FERC order does not take a position on the validity of any party’s position. 

“The order includes fairly routine language stating that disagreements are best resolved through an evidentiary hearing,” SCE said.

The purpose of an LGIA is to interconnect a generation facility to the grid controlled by the independent system operator, SCE said.

“The Nevada Hydro proposal goes beyond that scope by seeking interconnection of a stand-alone transmission line potentially without a generation facility,” SCE said. “Typically, proposals to develop a stand-alone transmission line must be submitted to the independent system operator’s transmission planning process for review and approval.”

FERC said it accepts the proposed Cal-ISO and SCE LGIAs and the notice of termination for filing, suspends them for a nominal period to become effective Aug. 11, subject to refund.

The hearing will be held in abeyance to provide time for the companies to settle the matter amongst themselves.

SCE is a subsidiary of Edison International (NYSE:EIX), and SDG&E is a subsidiary of Sempra Energy (NYSE:SRE).

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.