Finding that Rock Island Clean Line LLC, which is developing a major power line across Illinois, is not a “public utility,” the Appellate Court of Illinois, Third District, on Aug. 10 threw out an Illinois Commerce Commission approval of the project.
Illinois Landowners Alliance (ILA), the Illinois Agricultural Association (IAA) and in-state transmission owner Commonwealth Edison (Com Ed) had petitioned this court for review of an order of the Illinois Commerce Commission allowing Rock Island Clean Line to operate as a public utility under the Public Utilities Act, and granted the company a certificate of public convenience and necessity to construct, operate, and maintain a high voltage electric transmission line across several counties in Illinois.
On appeal, petitioners argue that the application should have been dismissed as a matter of law because Rock Island is not a public utility and the commission’s findings in favor of a certificate of public convenience and necessity (CPCN) were not supported by substantial evidence. Said the Aug. 10 decision: “We reverse the Commission’s order granting the certificate and remand for further proceedings.”
Rock Island is a subsidiary of Clean Line Energy Partners LLC, a transmission energy development company, with its principal offices in Houston, Texas. In addition to Rock Island, Clean Line owns four other companies that are developing long-distance transmission projects across the northern states. Rock Island was formed to construct and manage an electric transmission line project that would run from O’Brien County in northwest Iowa to Grundy County in northeast Illinois. The primary purpose of the project is to connect wind generation facilities in northwest Iowa, South Dakota, Nebraska, and Minnesota with electricity markets on the PJM Interconnection grid.
The proposed line would span 379 miles through Iowa to the Mississippi River, crossing the river in Princeton, Iowa, and entering Illinois near Cordova, Illinois. It would then extend approximately 121 miles in Illinois to a Com Ed substation in Grundy County (Collins substation).
In preparation for the project, Rock Island filed an application with the commission for a certificate of public convenience and necessity authorizing it to operate as a transmission-only public utility in Illinois and to construct, operate, and maintain an electric transmission line for wind energy. In its application, Rock Island stated that the development of additional transmission infrastructure is critical to our nation’s ability to utilize its wind resources to meet the demand for electricity from renewable sources. Rock Island further claimed that although wind energy generates an alternating electrical current (AC), it is more cost effective to transmit the energy using a direct current (DC) transmission line.
According to the proposed plan, the Rock Island project would construct a high voltage direct current (HVDC) electric transmission line from Iowa to Illinois. The line would convert AC wind energy to DC electricity at a converter station in O’Brien County, Iowa. From there, the high voltage current would travel 500 miles to a DC-to-AC converter station in Grundy County, Illinois. The proposal stated that Rock Island would then run an AC transmission line a few miles to the Collins substation, where the electricity would be delivered into the PJM grid. The application set forth a proposed route for the line but did not seek the right of eminent domain. Rock Island stated that the project has a capacity of 3,500 MW and is able to connect up to 4,000 MW of generating capacity in the resource area in Iowa to northern Illinois. At that rate, it will deliver 15 million megawatt-hours of electricity annually, enough to power 1.4 million homes.
Company says this project a key to meeting renewable energy goals
According to Rock Island, the demand for electricity from renewable resources in Illinois and surrounding states will remain high for years to come due to state renewable portfolio standards requirements imposed by recent legislation. These state-imposed mandates require utilities to replace energy generated by fossil fuels with renewable energy, and at least 75% of that renewable energy must come from wind power.
David Berry, vice president of strategy and finance for Clean Line, characterized the proposed transmission line as a “merchant project” because Rock Island is assuming the market risk of the project. Rock Island does not have a process to recover its costs from ratepayers and therefore must sell capacity through negotiated contracts. Berry testified that the FERC approved Rock Island’s proposal to presubscribe up to 75% of its transmission capacity to anchor tenants and sell the remaining 25% of the line’s capacity to other generators. Rock Island would market its excess capacity using a bidding process, otherwise known as “open season” bidding, in which Rock Island would offer services to other wind generator customers along the line.
The court said there are essentially two prongs to attaining public utility status: a company must own, control, operate, or manage utility assets, directly or indirectly, within the state; and it must offer those assets for public use without discrimination. “Based on its application and the evidence presented to the Commission, Rock Island failed to meet both requirements,” the court said. It added that Rock Island does not currently own, control, operate, or manage assets within the state.
In addition, the proposed transmission line is not for public use without discrimination, the court ruling said. The anchor tenants, who will use a majority of Rock Island’s transmission capacity, are wind generators in the resource area of northwest Iowa, South Dakota, Nebraska, and Minnesota. According to Rock Island, 75% of the project’s capacity will be sold to generators in the resource area, who will then use the transmission line to deliver their product to the PJM grid. PJM will then distribute the renewable energy electricity to members of its multistate regional transmission organization. The remaining 25% will be sold to those seeking transmission services through an “open season” bidding process approved by the FERC. The FERC order approving the sale of excess capacity does not mandate that an Illinois wind generator or other renewable energy generator participate in the bidding process. But if it did, there is no way to know whether an Illinois energy generator will submit a successful bid. Moreover, the project does not designate any part of the renewable energy transmitted along the proposed line for public use in Illinois. Thus, it fails to satisfy the statute’s public use requirement, the court added.
The petitioners also claim that the commission’s decision should be reversed because its findings are not supported by substantial evidence. “We need not address this issue in light of our determination that the Commission lacked authority to issue a certificate of public convenience and necessity,” the ruling said.