The Federal Energy Regulatory Commission on Sept. 16 issued an order accepting an unexecuted Large Generator Interconnection Agreement (LGIA) filed by Southern California Edison for service to its affiliate, Watson Cogeneration.
The commission also rejected as “premature” Watson’s proposal to memorialize in the LGIA the ability to have priority over future third-party generators on a 1.4-mile, 220-kV double circuit interconnection facility owned by SoCal Edison. The Sept. 16 order also dismissed Watson’s application for interconnection as moot.
Watson owns and operates a 398-MW cogeneration facility in Carson, Calif., that has been interconnected to SoCal Edison’s system since 1987 via a 1.4-mile, 220-kV double circuit line. According to Watson, the double-circuit line was specifically constructed at Watson’s expense in order to provide its customer with reliable delivery. Both Watson and SoCal Edison are subsidiaries of Edison International (NYSE: EIX).
Watson explained that its generating facility supplies electricity and thermal energy to the Tesoro Los Angeles Refinery, which produces transportation fuels. Watson stated that this is the largest producer of jet fuel for the Los Angeles International Airport and one of the largest petroleum refineries on the West Coast.
The parties have agreed to terminate the original Power Purchase Agreement in favor of service under the LGIA of the California Independent System Operator (CAISO) Open Access Transmission Tariff. The parties negotiated and agreed to all terms of the LGIA, save one. Watson sought to include a provision granting Watson priority use of the existing interconnection facilities should a third party in the future request interconnection service on those facilities. SoCal Edison considered this provision to be in conflict with the pro forma LGIA, which SoCal Edison asserts provides for the use of interconnection facilities by third parties and requires that curtailments be made on an equitable and non-discriminatory basis. So it refused to include the provision in the LGIA.
Watson sought FERC declaration of interconnection rights
On July 12, in response to SoCal Edison’s refusal to include the disputed provision in the LGIA, Watson filed its Interconnection Application with FERC. Watson requested that the commission:
- direct SoCal Edison to continue providing the existing physical interconnection to the Watson facility;
- direct SoCal Edison and CAISO to execute the LGIA including Watson’s proposed deviation from the pro forma LGIA; and
- establish the effective date of the LGIA to be contemporaneous with the effective date of a transition power purchase agreement.
SoCal Edison made the LGIA filing on July 18, noting that Watson’s request to include the disputed language would grant Watson priority over future third-party generators on the double circuit line that connects Watson’s facilities to the CAISO-controlled grid. According to SoCal Edison, Watson’s request is tantamount to a request for curtailment priority which SoCal Edison asserts is precluded in the pro forma LGIA.
SoCal Edison argued that the commission should dismiss Watson’s Interconnection Application as moot. SoCal Edison stated that Watson is an existing, interconnected generation resource and that there is no question that SoCal Edison will continue to provide existing physical interconnection to the Watson facility. So it said an application for interconnection is not the proper FERC vehicle for addressing this dispute. SoCal Edison argued that under the Large Generator Interconnection Procedures an LGIA dispute between parties may be sent to dispute resolution or be elevated to the commission upon request by the interconnection customer for the transmission provider to file the unexecuted agreement with the commission.
SoCal Edison argued that it negotiated with Watson in good faith and was willing to sign the pro forma LGIA, or to file it with the commission unexecuted. Further, SoCal Edison said that the existence of its LGIA filing renders the instant proceeding moot.
Watson responded that SoCal Edison acknowledges (in its motion to dismiss) that Watson has a right to priority in the allocation of capacity of the existing interconnection facilities when and if a third party later seeks to interconnect using the same facilities. Given this “admission,” Watson stated that its Interconnection Application is warranted and not “moot” as SoCal Edison argued. Watson also moved to dismiss SoCal Edison’s LGIA filing, arguing among other things that SoCal Edison’s tariff does not permit SoCal Edison to file an unexecuted LGIA unless the counterparty expressly requests such a filing and that Watson has made no such request.
FERC decides not to decide this issue for now
“We will deny Watson’s motion to dismiss the LGIA Filing,” said the Sept. 16 FERC ruling. “Watson is already interconnected with SoCal Edison, and SoCal Edison is currently providing, and has committed to continue providing, interconnection service to Watson as it transitions from state- to Commission-jurisdictional interconnection service. In these circumstances, we find that SoCal Edison’s LGIA Filing is the appropriate proceeding in which to resolve this dispute.”
For similar reasons, Watson’s Interconnection Application is not the proper vehicle to resolve this matter, FERC added.
“The Commission is not persuaded that there is any need to approve a deviation from the pro forma LGIA at this time,” the decision said. “This dispute turns on whether to include in the LGIA Watson’s non-conforming provision providing Watson the right to export over any one of the two circuits comprising the existing interconnection facilities, notwithstanding any other provision in the LGIA, in the event SoCal Edison elects to provide service to another entity relying in part or in whole on the interconnection facilities. There is no third party requesting such service now, nor have we been made aware of any such third party request on the foreseeable horizon.”
FERC said it finds this contingency to be “too remote and speculative” to warrant a deviation from the pro forma LGIA between these parties now. “We therefore will accept the unexecuted LGIA and reject the proposed deviation as unnecessary,” it added. “We also accept, for good cause shown, the requested effective date of August 1, 2013. The Commission will address any actual future disputes, should they arise, when and if they are presented to us in future filings.”