Merricourt Power Partners LLC is disputing at the Federal Energy Regulatory Commission a recent notice of termination filed with FERC of a Generation Interconnection Agreement (GIA) by the Midcontinent Independent System Operator.
Merricourt said it has been pursuing its North Dakota wind project in good faith, despite setbacks, and asked that the GIA be amended to include a delayed Commercial Operation Date (COD) of Sept. 30, 2017. Its protest to FERC is dated in its body as Dec. 28, 2015, while it is date-stamped as having been received by FERC on Jan. 5.
The initial GIA for this project (queue #G359) was executed by MISO, Montana-Dakota Utilities (MDU) and enXco Development – a subsidiary of EDF Renewable Energy – in April 2010. The original GIA had a COD of Dec. 1, 2012. The GIA was assigned to Merricourt in April 2012. Merricourt is also an EDF Renewable Energy (EDF RE) subsidiary.
Before the initial GIA was executed, in 2008, enXco executed a purchase and sale agreement (PSA) with Northern States Power (NSP). The PSA provided for enXco to develop the project to an initial phase after which NSP would purchase the project’s real estate and assets. enXco and NSP also executed an agreement for enXco to provide further engineering, procurement, construction, commissioning, start-up, and testing to bring the project online for NSP.
In 2011, Xcel Energy (NYSE: XEL), on behalf of subsidiary NSP, terminated the PSA, claiming (among other things) that Merricourt had not secured a permit as required under the PSA. Notwithstanding the setback with Xcel, Merricourt said it continued to work toward developing the project. In 2012 and 2013, Merricourt timely funded and completed tasks in relation to the milestones in the GIA, including:
- All network upgrades were paid for ($17.8 million), built and transferred to MDU and are now integrated and operational;
- All the MDU interconnection facilities were paid for ($600,000) and were completed;
- All network upgrades on the Northwestern Energy grid (affected system) were paid for ($234,330), built and transferred and are now integrated and operational;
- Merricourt paid $750,000 to MDU to cover future O&M expenses on the network upgrades;
- The wind farm collection substation access road was installed; and
- Construction grading of the collection substation was completed.
Earlier in 2015, Merricourt achieved an agreement-in-principle with an unnamed load-serving utility within MISO to purchase the full output from the wind farm beginning Dec. 31, 2016. Merricourt and the utility have been negotiating the power purchase agreement (PPA). The PPA is nearing completion, awaiting confirmation of interconnection service to move toward finalization.
Before Merricourt could finalize commitments under a long-term PPA and commit more money to complete construction of the wind farm, Merricourt needed assurance from MISO that the project would have interconnection service as of Dec. 31, 2016, and thereafter. Article 2.3.1 of the GIA provides MISO with a discretionary right to terminate this GIA if the project ceased (i.e., started, then stopped) to achieve commercial operation for three years after the COD. This language did not apply here because the project never “ceased” commercial operation, said Merricourt. Nonetheless, with a COD of Dec. 1, 2012, and a three-year period after COD ending on Dec. 1, 2015, Merricourt could not risk making significant financial commitments only to have MISO subsequently seek to terminate the GIA. Thus, in June through mid-July of 2015, Merricourt held in-person and follow-up email discussions with MISO, demonstrating the means Merricourt had in place to complete the facility and bring it online by Dec. 31, 2016, and seeking MISO’s assurance of continued interconnection service as of Dec. 31, 2016, and thereafter. MISO refused to provide the assurance, Merricourt said.
FERC punted on Merricourt’s original protest in this matter
In August 2015, Merricourt filed a complaint with FERC asking the commission to address the issue. The commission issued an order in October 2015, noting that MISO was not obligated to make a GIA termination determination until three years after the COD (which in this case is Dec. 1, 2015) and thus determined that resolution of the issue was premature. However, the commission reminded the parties of the availability of the FERC Dispute Resolution Division (FERC DRD) to address this type of issue. In response, Merricourt contacted the FERC DRD, and FERC DRD reached out to MISO to find out whether MISO was willing to engage in dispute resolution. MISO agreed to do so and discussions were held during November and early December 2015.
Although Merricourt’s complaint included a letter of intent from the utility as evidence that Merricourt was negotiating a long-term PPA, Merricourt arranged for the utility to have a conversation with MISO to confirm PPA negotiation was underway. Given the passage of time since the complaint was filed, Merricourt provided additional information addressing how each component of the construction plan would facilitate bringing the facility online by Dec. 31, 2016. Merricourt provided updated commitment letters from engineering, procurement and construction (EP&C) suppliers and vendors.
Among other things, Merricourt provided:
- an updated letter from Vestas committing to deliver turbines to the site between August and September 2016 so long as a Notice to Proceed (NTP) is issued in December 2015;
- serial number information of turbines that EDF RE is holding in storage to be used for the Merricourt project (as evidence that they exist);
- a turbine replacement study to MISO to use Vestas turbines instead of General Electric turbines as initially proposed;
- a copy of an agreement with Shihlin Electric securing Merricourt’s right of first refusal to a manufactured and commissioned 230 kV main power transformer.
To demonstrate Merricourt’s commitment and dispel any notion that the project is speculative, Merricourt also offered to include milestones in an amended GIA like:
- On or before Dec. 15, 2015: Merricourt provides Design and Engineering NTP to Wanzek Construction;
- On or before Dec. 31, 2015: Merricourt executes EP&C contract with Wanzek;
- On or before Dec. 31, 2015: Merricourt exercises its right to the main power transformer with Shihlin Electric;
- On or before Feb. 1, 2016: Merricourt provides confirmation that 10% of the turbines for the project held by EDF RE in storage (representing 5% of the capital expenditure investment of the project) have been transferred to Merricourt; and
- On or before Feb. 1, 2016, Merricourt issues a full NTP to Vestas for the balance of the wind turbines.
In light of the passage of time and that an amended GIA might not be reached until mid-December 2015, and with the known harsh winter conditions in North Dakota that likely would impede some construction, Merricourt requested to move the COD to June 30, 2017. However, Merricourt said it was confident it would have at least 85% (and perhaps 100%) of the facility operating and injecting energy by Dec. 31, 2016, and thus offered to make that a required milestone in the amended GIA as well.
In 2015, the North Dakota Public Service Commission re-issued a Certificate of Site Compatibility for the project. The prior permit was about to expire. The site permit is now valid until 2019. It allows for the construction, operation and decommissioning of up to 75 Vestas V100-2.0-MW wind turbines.