Owners of Springerville plant stake file complaint against Tucson Electric

Financial entities that own stakes in the coal-fired Unit 1 of the Springerville Generating Station in Arizona filed a complaint Nov. 7 with the Federal Energy Regulatory Commission accusing Tucson Electric Power (TEP) of favoring its own generation over this capacity in terms of transmission.

Alterna Springerville LLC, LDVF1 TEP LLC, Wilmington Trust Co. and William J. Wade asked FERC for relief from Tucson Electric Power’s “unlawful and unduly discriminatory denial of firm transmission service rights to which Complainants are entitled in favor of its own generation and generation owned by others. Complainants thus respectfully request the issuance of an order requiring TEP to transmit Alterna’s and LDVF1’s entitlement share of energy that they schedule and direct TEP to generate from Unit 1 of the Springerville Generating Station in Springerville, Arizona (‘SGS’), on a firm basis to the point of interconnection of TEP’s transmission system at the Palo Verde switchyard beginning on January 1, 2015, consistent with Complainants’ contractual and legal rights.”

TEP has advised these entities that there is no Available Transfer Capability (ATC) on the path from SGS to Palo Verde for Alterna’s and LDVF1’s scheduled SGS output as of Jan. 1, 2015. “Although TEP currently utilizes this path for its leased interest in the SGS output, TEP plans to take that transmission capacity after the Lease Agreements expire and dedicate that capacity to carrying energy from its own recently-acquired asset, the Gila River Power Station (‘Gila River’), notwithstanding its contractual obligations to Alterna and LDVF1 and its OATT provisions,” the complaint said. “TEP’s refusal to transmit Alterna’s and LDVF1’s scheduled entitlement shares of energy to Palo Verde deprives Alterna and LDVF1 of the ability to sell electricity from their entitlement shares of SGS’s output into the only markets in which the sale of such electricity is commercially feasible. There is no other delivery point on TEP’s system that is reasonably acceptable to the Complainants because no other delivery point will provide Alterna and LDVF1 with access to a commercially feasible market in which the Owner/Lessors will have a reasonable opportunity to recover their costs.

“Other delivery points that have been proposed by TEP are unacceptable to the Complainants because wholesale electricity markets at those locations are too illiquid and/or would require the Owner/Lessors to incur pancaked transmission rates on systems of other public  utilities in order to have Alterna’s and LDVF1’s scheduled entitlement shares of energy from SGS delivered to Palo Verde. Such multiple transmission charges would drive up Alterna’s and LDVF1’s costs needlessly and would cause them to lose money on the sale of electricity from their entitlement shares of the output of SGS.”

Alterna Springerville had filed on Oct. 16 at the Federal Energy Regulatory Commission for authorization to sell at market-based rates energy, capacity, and ancillary services to any purchaser for resale consistent with the terms of its proposed tariff. Alterna Springerville’s primary business activity is owning, via a passive grantor trust, an approximately 43.0693% undivided interest in Springerville Unit 1 and a 21.53465% undivided interest in associated common facilities at this power plant. Unit 1 is a 424.8 MW (nameplate) coal-fired facility located near Springerville, Arizona, in the Tucson Electric Power balancing authority area.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.