FERC okays ‘public utilities’ break for Texas wind projects

The Federal Energy Regulatory Commission on Dec. 10 granted a break to affiliates of EDF Renewable Energy related to the interconnection facilities for their Texas wind projects.

FERC granted a petition for a declaratory order filed by Spinning Spur Wind Two LLC and Spinning Spur Wind Three LLC that disclaims jurisdiction over them as “public utilities” under Part II of the Federal Power Act (FPA) by virtue of their joint ownership of poles and other non-electrical facilities that are used for petitioners’ non-jurisdictional generator tie line and a commission-jurisdictional generator tie line owned and operated by an affiliate.

Petitioners and their affiliate, Spinning Spur Wind LLC, are all indirectly owned by EDF Renewable Energy and have developed or are developing wind generation facilities in the panhandle of Texas in Oldham and Potter counties.

  • Spinning Spur owns and operates a 161-MW wind facility that is connected to the transmission grid operated by the Southwest Power Pool (SPP). All of the output of the Spinning Spur project is sold to Southwestern Public Service under a long-term agreement.
  • Spinning Spur Two owns and operates a 161-MW wind facility within the SPP region located adjacent to, and to the west of, the Spinning Spur project. This facility is connected exclusively to the Electric Reliability Council of Texas (ERCOT) transmission grid by way of an interconnection with a Sharyland Utilities LP transmission line under an ERCOT standard interconnection agreement.
  • Spinning Spur Three is developing a 194-MW wind facility adjacent to, and to the west of, Spinning Spur Two that will be interconnected only to the ERCOT grid under an ERCOT standard interconnection agreement. Spinning Spur Three will be completed in 2015.

Spinning Spur Two originally anticipated that it would sell its output to a purchaser in SPP and, therefore, in conjunction with Spinning Spur constructed interconnection facilities and a generator tie line to connect to the SPP grid (North Circuit). However, prior to beginning construction of the Spinning Spur Two facility, Spinning Spur Two entered into a power purchase agreement with a purchaser in ERCOT and, as a result, constructed a second generator tie line to connect solely to the ERCOT grid (South Circuit). When completed, Spinning Spur Three will also use the South Circuit. The North Circuit and South Circuit are supported by a series of common poles.

“Under a series of co-tenancy and common facilities agreements, Petitioners share ownership of the real estate interests for the interconnection facilities, and jointly own the South Circuit, but have no ownership interest in the poles that support the North and South Circuits,” FERC noted. “Rather, Petitioners state that they have been granted an easement to access and use the poles that are owned and used by Spinning Spur for its North Circuit. Petitioners state that the ownership interests have been separated in this fashion so that Petitioners will not be owners of the poles used by Spinning Spur for its interstate transmission and wholesale sale of electric energy and will not become public utilities under the FPA as owners of facilities subject to the Commission’s jurisdiction.

“Petitioners state that joint ownership of the poles that support the North and South Circuits by Petitioners and Spinning Spur would be desirable to avoid the inefficient duplication of infrastructure and to simplify the ownership of and rights to the infrastructure. Further, Petitioners note that, if EDF Renewable chooses to sell its interest in either of the Petitioners, any such buyer is likely to prefer the security of an ownership interest in the poles supporting the South Circuit rather than a lesser right pursuant to an easement. However, Petitioners note that they do not want a joint ownership arrangement of the poles to render Petitioners public utilities.

“On August 26, 2014, Petitioners filed the Petition for a disclaimer of Commission jurisdiction. In support, Petitioners aver that the Spur Two generation facility and the South Circuit are located entirely within the state of Texas and will be used only for sales of electric energy to a buyer within Texas for consumption within Texas.  Petitioners state that there is no commingling of electricity produced by Spur Two with electric energy flowing in interstate commerce, nor will any of the station power come from SPP. Thus, because Spur Two does not transmit or sell electric energy in interstate commerce and does not own or operate any facilities subject to Commission jurisdiction, Petitioners assert that Spur Two is not currently a public utility. Petitioners add that, for the same reasons, Spur Three will not be a public utility.

“Petitioners contend that they should not become public utilities solely because of joint ownership of the poles that support the North and South Circuits. First, Petitioners argue that the Commission has the discretion to decline to exercise jurisdiction if doing so is in the public interest. According to Petitioners, the standards articulated in the Prior Notice Order permit the Commission to decline to exercise jurisdiction if it finds that ‘regulation will … bring trivial or no public benefits’ through a balancing of the equities. 

“Petitioners argue that regulation of Spur Two and Spur Three as public utilities under the FPA would bring no public benefits because the only potential basis for Commission jurisdiction over Petitioners would be as joint owners of the poles, which will be used by Petitioners for intrastate transactions that are subject to the jurisdiction of the Public Utility Commission of Texas (Texas Commission). Further, Petitioners assert that exercising jurisdiction over Petitioners is not necessary to protect the interstate customers of Spinning Spur or the interstate market because Spinning Spur makes its wholesale sales pursuant to a market-based rate tariff, meaning that there are no rate impacts to consider. Finally, Petitioners assert that, if the Commission finds that joint ownership of the poles would subject them to Commission jurisdiction as public utilities, such a finding would create an incentive to construct separate and duplicative poles. Petitioners claim that such a result would be wasteful and inefficient.”

Said FERC in approving this break: “We find that regulating Petitioners due to their joint ownership of the poles would not further any policy objective or bring about any non-trivial public benefits. Petitioners have no ownership interest in the North Circuit, which is used to interconnect Spinning Spur to the SPP grid, but only in the South Circuit, which interconnects solely to the ERCOT grid. There will be no commingling of electric energy produced by Petitioners with electric energy produced by Spinning Spur and sold in interstate commerce. In addition, sales made by Petitioners into ERCOT using the South Circuit will be subject to the jurisdiction of the Texas Commission, and Spinning Spur’s interstate wholesale sales over the North Circuit are made under a market-based rate tariff. Thus, joint ownership of the poles will not have any rate impacts that we need to consider.”

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.