FERC on Oct. 1 authorized Lucky Corridor to charge negotiated rates, subject to conditions, on its proposed transmission upgrade.
After applying its four-factor test, FERC said it found Lucky Corridor’s request to charge negotiated rates to be just and reasonable.
The project is a 93-mile transmission facility upgrade of an existing Tri-State Generation and Transmission Association 115-kV line to a double-circuit 230-kV transmission line in northern New Mexico. The project interconnects with Tri-State’s existing 230-kV Gladstone substation to a point of delivery at Tri-State’s existing 345-kV Taos substation. The line is capable of delivering approximately 1,100 MW.
CEO Lynn Greene in May told TransmissionHub the cost of the project was expected to decline from the estimated $350m.
Lucky Corridor on May 22 requested approval to presubscribe up to 70% of the project’s capacity to anchor customers through long-term bilateral negotiations, with the remainder to be allocated through an open season process. FERC has approved the open season process, subject to the submission of informational reports, which much include the terms of the open season, identities of parties that purchase capacity and the amount, price and terms of that capacity.
“Lucky Corridor meets the definition of a merchant transmission owner because it assumes the full market risk associated with the project and has no captive customers that would be required to pay the cost of the project,” the commission said. “Moreover, no customer is required to purchase transmission service over the capacity owned by Lucky Corridor in this project.”
The company has to file its joint ownership agreement (JOA) with Tri-State Generation within 15 days of executing the agreement, and its open access transmission tariff (OATT) no later than one year after service begins. Approval of negotiated rate authority is contingent upon FERC’s approval of Lucky Corridor’s filing the JOA, the commission said.
Lucky Corridor entered into memorandums of understanding (MOUs) with Western Area Power Administration (WAPA) and with New Mexico Renewable Energy Transmission Authority (RETA) to explore joint development and financing of the project. The MOU with RETA allows the company to use RETA’s eminent domain authority and long-term bond financing authority. In order to be eligible for funding from RETA, however, the MOU requires that Lucky Corridor ensure that at least 30% of the energy on the line originate from renewable energy sources.
“Lucky Corridor states that it must be able to pre-subscribe a substantial portion of its capacity to renewable and gas-fired generation to ensure that it is able to meet the requirements of the financing agreement with RETA,” FERC said in its order. “While we conditionally accept Lucky Corridor’s proposal to pre-subscribe up to 70% of the transmission capacity on the project to anchor customers, we do not authorize any preference based on the type of generating resources.”
The company also entered into agreements with Tri-State and Public Service Company of New Mexico to participate in a non-tariff transmission system impact study.