Xcel says Calpine’s interconnect issue at Mankato not a big deal – right now

An issue that Calpine (NYSE: CPN) is having at the Federal Energy Regulatory Commission with revising its Generator Interconnection Agreement (GIA) with the Midcontinent ISO for Calpine’s planned expansion of its gas-fired Mankato power plant is not an issue to be dealt with right now, said Northern States Power d/b/a Xcel Energy in a March 9 filing at the Minnesota Public Utilities Commission.

The Minnesota commission on Feb. 5 approved Xcel to add new capacity, including through a new power purchase agreement (PPA) with Calpine for an expanded Mankato power plant. After that order was issued, there was a petition for reconsideration filed by the Xcel Large Industrials (XLI), a petition for rehearing and reconsideration lodged by Invenergy Thermal Development LLC, and a request for clarification or reconsideration from the state Department of Commerce. Invenergy was one of the finalists for this business out of an expansion of its gas-fired Cannon Falls plant, but didn’t make the final cut in the Feb. 5 order.

Xcel in its Mar 9 filing responded to all three motions. Invenergy’s petition, it said, suggests that the commission should reconsider its selection of the Calpine PPA as not being in the public interest because of the risk of increased transmission costs. In making this claim, Invenergy points to a pending FERC decision regarding the ability of Calpine’s new combined cycle (CC) facility at its Mankato Energy Center (MEC) to interconnect to the Xcel system under a simple amendment of Calpine’s current GIA for the existing plant.

“If FERC concludes that Calpine’s new CC facility must interconnect to our system pursuant to a new GIA separate from Calpine’s current MEC GIA, the interconnection process would typically take another 18 months or longer,” Xcel wrote. “And the new transmission studies conducted during that process could potentially identify additional network transmission upgrades as necessary before the facility can interconnect, the costs of which would pass through to our customers. It is important to note, however, that MISO has vigorously defended its decision to allow Calpine to interconnect its new CC facility to our system pursuant to an amendment and restatement of Calpine’s current MEC GIA, and has provided FERC a detailed explanation of how it is wholly consistent with MISO tariff and practice. Calpine included MISO’s responses to FERC’s deficiency letter and Invenergy’s motion to intervene in that case as attachments to its March 6, 2015 Answer in this proceeding, which provide the Commission additional context from which to assess the scope of the risk that FERC will rule against MISO on this issue.”

Xcel added: “We also understand that FERC’s Order resolving whether or not MISO may amend and restate MEC’s current GIA to include the interconnection of Calpine’s new CC facility will be issued by mid-March 2015. Given the impending timing, we believe that it would be in the best interests of the parties and the Commission to wait to take any action with respect to this issue until after FERC issues its Order. In the event that FERC does not approve Calpine’s amended and restated GIA, the Company proposes making a filing that explains the anticipated consequences of such a decision on the in-service date and costs of the Calpine PPA for the Commission to evaluate before the Company proceeds further with the Calpine PPA.”

Xcel said generally that the reconsideration petitions filed by XLI, Invenergy, and the Department of Commerce do not raise any new issue or point to any new evidence that warrants the commission’s reconsideration of its Feb. 5 order. The commission should therefore deny the petitions, Xcel added. The commission can take up on its own motion any issues that may arise out of FERC’s resolution of the question of whether Calpine’s new CC facility at MEC may interconnect to the transmission grid through an amended/restated or new GIA, the utility said.

Calpine argued on March 2 at FERC in defense of MISO, saying MISO’s extension of a deadline to add new gas-fired capacity at the Mankato power plant didn’t unfairly hurt new wind capacity competing in the MISO project queue. Calpine, on behalf of its subsidiary Mankato Energy Center LLC, supported arguments that MISO filed in this matter. “As explained herein, the Commission should reject attempts by certain intervenors, including a competitor of Mankato, to hijack this proceeding and promptly accept the Amended and Restated Standard Large Generator Interconnection Agreement (the ‘Amended GIA’) among Mankato, Northern States Power Company (‘NSP’), and MISO, that was filed on October 15, 2014,” Calpine added in its filing with FERC.

The “competitor” it mentioned is Invenergy.

Under the existing GIA, Calpine at Mankato has approval for a 922 MVA facility, rated at 682 MW Summer gross and 757 MW Winter gross and 667 MW Summer net and 740 MW Winter net. This facility is composed of three units in a combined cycle rated at 226 MVA for combustion turbine generator no. 1, 226 MVA for combustion turbine generator no. 2 and 470 MVA for the steam turbine generator. Phase 1 involved the installation of the first 226 MVA combustion turbine generator and the 470 MVA steam turbine generator. The now needed Phase 2 consists of installing the second 226 MVA combustion turbine.

Said Invenergy’s Feb. 25 rehearing request to the Minnesota commission on this issue: “While the issues surrounding the GIA are properly before FERC, not this Commission, the Commission should be aware that the issue of interconnection risk associated with the Calpine project is not trivial or hypothetical, but real and potentially significant. Under the [Feb. 5] Order, and the PPA between Calpine and Xcel that the Order approves, Xcel and its ratepayers now bear the additional costs associated with this risk – a result not consistent with the public interest.”

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.