FERC grants clarification on GridLiance subsidiary transmission plans

FERC on March 31 addressed rehearing requests of various parties to its Oct. 29, 2015, order on the transmission plan of GridLiance subsidiary South Central MCN (SCMCN), which sought a return on equity (ROE) of 11.4% and incentives for being a stand-alone transmission company and a member of a regional transmission organization (RTO).

GridLiance, which was formed in 2014 as a Transco designed to develop, own and maintain transmission assets in partnership with electric cooperative, municipal utilities and joint action agencies, sought rehearing on the FERC order, which set ROE matters for hearing and denied an ROE incentive for being a Transco. When GridLiance was formed, company officials said public power entities are often left out in the RTO process, missing out on investing in, and financially gaining from, large regional transmission projects.

GridLiance has reached deals to buy the transmission assets of Tri-County Electric Cooperative (TCEC), based in Hooker, Okla., and the city of Nixa, Mo., which would be the first transmission assets GridLiance would own. TCEC’s assets include about 410 miles of 69-kV and 115-kV transmission lines, while Nixa’s assets include about 10 miles of transmission lines and related facilities.

In an April 4 statement, GridLiance said it completed the acquisition of the TCEC transmission assets and assumed operational responsibility for them beginning April 1. The completion of the deal marks an important milestone for GridLiance to help public power interests solve their transmission issues, Ed Rahill, president and CEO of Gridliance, said in the statement.

“Over the long term, we can provide TCEC with a clear path to invest in SPP transmission projects that will reduce network congestion, increase service reliability and lower service costs,” Rahill said.

“Joining forces with GridLiance allows us to prioritize distribution system improvements while leaving the upgrading of our transmission assets in GridLiance’s very capable and experienced hands,” Jack Perkins, CEO of TCEC, said in the statement.

“Equally as important, we look forward to jointly investing with them in transmission projects that were previously inaccessible to us,” Perkins said.

In its Sept. 1, 2015, petition, SCMCN sought a 50 basis point adder to its ROE for participation in the Southwest Power Pool (SPP) and a 100 basis point adder for being a Transco. The Oct. 29, 2015, order from FERC accepted the 50 basis point adder and denied the 100 basis point adder because utility companies would be part of SCMCN’s business plan. The municipal and cooperative utilities as partners would disqualify SCMCN from being classified as a Transco under FERC precedent, the commission said.

The company sought rehearing, asserting that the public power entities would have only passive investor status similar to other Transcos, but FERC denied rehearing on this point. SCMCN “merely reiterates the argument advanced” in its Sept. 1 filing, and unlike other Transcos with passive investor interests, SCMCN public power partners will co-own assets and persons from the public power partners will hold one-third of the SCMCN board seats, “which would allow market participants the ability to influence day-to-day operations,” FERC said.

Xcel Energy Services also sought rehearing, asserting that SCMCN should be required to file under Federal Power Act (FPA) Section 205 if it seeks to classify as transmission facilities any assets that FERC has previously determined do not qualify as transmission facilities. The concern is that SCMCN may try to acquire facilities not deemed as transmission, reclassify them as transmission facilities under the SPP tariff and spread the costs associated with those facilities to load customers within SPP, FERC related.

The March 31 order granted a clarification, stating that SCMCN “is required to make a filing under Section 205 of the FPA if it seeks to classify as transmission facilities” any assets FERC has previously determined do not qualify as transmission facilities.

GridLiance is backed by Blackstone Energy Partners, an affiliate of Blackstone (NYSE:BX), GridLiance noted in the April 4 statement.

This story was updated on April 4 at 9:30 a.m. EDT, to include information from the April 4 statement of GridLiance.