NextEra’s Cottonwood Wind unit files another complaint against NPPD

Filed May 20 at the Federal Energy Regulatory Commission was a complaint by Cottonwood Wind Project LLC against the Nebraska Public Power District (NPPD) for its alleged actions under a Generator Interconnection Agreement (GIA) among Cottonwood, NPPD and the Southwest Power Pool (SPP).

The GIA was the subject of a Notice of Cancellation filed by SPP on April 5, 2016, but Cottonwood is filing this May 20 complaint due to NPPD’s unauthorized expenditures for network upgrade construction under the GIA and requested that the commission consolidate this proceeding with the GIA cancellation proceeding.

Cottonwood is the developer of a wind project in Webster County, Nebraska. Cottonwood is part of NextEra Energy Resources LLC, which is a unit of NextEra Energy (NYSE: NEE).

This project has a prolonged history, and the GIA might have been cancelled by Cottonwood in the past had it not been for the unauthorized expenditures by NPPD on network upgrades in 2014, said Cottonwood.

NextEra Energy Resources acquired Cottonwood from another developer in 2012. At the time, the Cottonwood Facility was expected to have a nameplate capacity of 89.7 MW. The original GIA among Cottonwood, NPPD, and SPP was dated August 2011. Under the GIA, two sets of network upgrades were required to be constructed. One of these was the “Rosemont 114 kV substation addition on the Pauline–Guide Rock 115 kV line to accommodate new 115 kV interconnection” (“Rosemont Upgrades”), with an estimated cost of $3,650,000. The other was “Guide Rock 115 kV Breaker Additions–Add 115 kV breakers at Guide Rock due to addition of Rosemont 115 kV substation” (“Guide Rock Upgrades”), with an estimated cost of $2,300,000.

After NextEra Resources acquired Cottonwood, it ended a suspension of the GIA effective April 3, 2013. On March 29, 2013, Cottonwood sent a letter to NPPD stating that NPPD was authorized to proceed with the design work for the Network Upgrades. Cottonwood said it did not authorize construction, which was a later step in the process. NPPD said it could not start construction activities before filing an application for authority to construct with the Nebraska Power Review Board (NPRB) and obtaining an order authorizing construction.

In 2014, Cottonwood said it had ongoing negotiations with NPPD for a power purchase agreement (PPA) for the output of the Cottonwood Facility. Also in 2014, the work schedule under the GIA was amended, and the commercial operation date revised to Dec. 1, 2015.

NPPD made clear in discussions with representatives of Cottonwood during this time that “NPPD would only buy equipment, complete design work, and perhaps do some site grading.” Cottonwood said it realized NPPD would expend some funds on procurement, but these costs would be more easily mitigated if construction had yet to occur and the equipment therefore not installed. NPPD told Cottonwood that it would not do any construction on the Guide Rock Substation or the Rosemont Substation, because NPRB approval was needed for construction of facilities.

During this time in 2014, Cottonwood considered exercising its right to terminate the GIA, but chose not to do so, because of NPPD’s statements that it needed to secure NPRB approval prior to construction commencement. Accordingly, said Cottonwood, there were two obstacles to NPPD spending money on construction under the GIA: its need for approvals from the NPRB and its need for authorization from Cottonwood under the GIA. Based on this, Cottonwood continued exploring potential off-takers for the project, as it could do so for the time being without incurring significant expenditures under the GIA.

NPRB approved Cottonwood’s application to construct at its meeting on Sept. 12, 2014, followed by issuance of a written order on Oct. 24, 2014. The NPRB Order included the condition that Cottonwood enter into a PPA with NPPD for the entire electrical output of the facility within 120 days following issuance of the order. In this period, the GIA was amended again to revise the type and quantity of wind turbines to be deployed at the project.

In the fall of 2014, Cottonwood said it learned from an NPPD official that NPPD had completed construction of the Guide Rock Upgrades. NPPD had not sought from Cottonwood authorization to proceed with this construction under the GIA, Cottonwood said. Nor had NPPD filed an application seeking authorization of such construction with the NPRB.

Cottonwood added: “In response to Cottonwood’s inquiry, NPPD claimed, for the first time, that it did not need NPRB approval for the Guide Rock Upgrades, so NPPD had proceeded to perform the work. NPPD’s actions put Cottonwood in a difficult position. Prior to hearing about NPPD’s expenditure of funds for the Guide Rock Upgrades, Cottonwood had considered terminating the GIA to avoid further project expenses. Now millions of dollars had been spent, and in violation of the GIA. If Cottonwood terminated the GIA at this point, these funds would be lost. But the alternative option of declaring NPPD in breach of the GIA was likewise a poor option. At the time, Cottonwood and NPPD had been engaging in PPA negotiations, as noted by SPP in its communications regarding the GIA. While Cottonwood was very concerned about NPPD’s action, it did not declare NPPD in breach of the GIA, as it did not want to compromise the prospect of a PPA.”

Cottonwood said it has not received any accounting from NPPD on how much it spent on the Guide Rock Upgrades. Under Appendix A of the GIA this was estimated as costing $2,300,000, and NPPD performed this work, without Cottonwood’s consent, in late 2014. Cottonwood requests that the commission find that NPPD violated the GIA due to its failure to comply with the requirement to obtain authorization from Cottonwood before commencing construction, and based on this, order that NPPD provide a refund to Cottonwood of these amounts spent in violation of the GIA.

The issues raised in this proceeding have also been raised in the case filed over cancellation of the GIA. Cottonwood filed a protest in that proceeding, as well. However, while each proceeding involves the GIA and actions by the three parties under the GIA, the two proceedings differ in their scope and potential outcomes. The GIA cancellation proceeding may lead to the termination of the GIA. Cottonwood filed a protest in that proceeding bringing to the commission’s attention many of the facts raised in this complaint. But the commission has repeatedly held that, even if requested by the protestor, it will not treat a protest filed in a proceeding as a complaint. Accordingly, because appropriate resolution cannot be obtained in the GIA cancellation case, Cottonwood said it was compelled to initiate this May 20 complaint to request commission action against NPPD.

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.