Following motions for rehearing of its order regarding the application by the city of Garland, Texas, d/b/a Garland Power & Light, to amend a certificate of convenience and necessity (CCN) for a double-circuit 345-kV transmission line in Rusk and Panola counties, the Public Utility Commission (PUC) of Texas is requesting briefing on certain issues.
The PUC, in a Dec. 1 order, requested briefing on these issues:
- Does the PUC’s order issued on Sept. 8 violate the dormant commerce clause of the U.S. Constitution?
- Is the assignment of costs in the PUC’s order within the PUC’s authority?
- Does the PUC’s order violate a FERC interconnection order?
As TransmissionHub reported, the PUC in an Aug. 25 “draft order” adopted – with conditions – a proposal for decision issued by the administrative law judges at the State Office of Administrative Hearings (SOAH) regarding the application by Garland Power & Light, to amend its CCN for the double-circuit 345-kV transmission line.
The SOAH’s proposal for decision adopted a settled route and recommended a number of conditions. The PUC also noted that in its order, the term, “Garland project” describes the transmission line and the Rusk and Panola substations. The focus of the proceeding (PUC Docket No. 45624; SOAH Docket No. 473-16-2751) was the conditions that should be imposed regarding Garland’s transmission line.
As noted by the PUC, Garland in February filed an application with the PUC proposing, in conjunction with Rusk Interconnection LLC, an affiliate of Southern Cross Transmission LLC, to design and build the new line connecting the proposed Rusk switching station to be built and owned by Oncor Electric Delivery Company LLC, located about eight miles northeast of Mount Enterprise in Rusk County, Texas, to a proposed switching station – the Panola substation – located on the eastern edge of Panola County, adjacent to the Louisiana border, about nine miles north of Joaquin.
The proposed line would be about 37 miles to 40 miles long. The Panola substation, to be built by Rusk Interconnection and owned by Garland, will be interconnected to a new high-voltage, direct current converter station, to be owned by Southern Cross, adjacent to the Panola substation, but across the border in Louisiana (Southern Cross DC tie).
The PUC also noted that the Southern Cross DC tie will interconnect on the Louisiana side to a 400-mile transmission line (Southern Cross line) that will terminate at an as-yet-to-be-determined end point in the SERC Reliability Corporation transmission system.
In its September order, the PUC adopted the proposal for decision, with some exceptions. The PUC said that Garland is to build the project along route “RP9,” the route agreed to by the intervening landowners, Garland and Southern Cross Transmission in an unopposed route settlement agreement. The estimated cost of route RP9 is about $109m.
The PUC also said in its September order that Southern Cross Transmission must provide the PUC with evidence that it has secured the funding to build the Garland project, the Southern Cross DC tie, and all related interconnection facilities before Garland, Southern Cross Transmission, and Rusk Interconnection, and their affiliates, are permitted to seek condemnation of any landowner’s land in Panola County for the Garland project, so long as the landowner provides access to the land for surveying and design purposes.
Garland is to not recover costs paid by Rusk Interconnection in its transmission cost of service, and no utility may recover any costs related to the Rusk or Panola substations or the Rusk-to-Panola line in its transmission cost of service. Southern Cross Transmission must pay all costs incurred by ERCOT for certain ERCOT studies, protocol revisions, and any other ERCOT activities required by the Garland project or the Southern Cross DC tie.
The PUC also said that any additional costs associated with the Garland project or the Southern Cross DC tie that would otherwise be borne by ERCOT ratepayers are to instead be borne by Southern Cross Transmission, unless otherwise required by PUC rules.
Any incremental transmission and ancillary services costs required in order to support imports or exports over the Southern Cross DC tie are to be directly assigned to those imports or exports. The PUC further noted that no utility is to recover any costs associated with the Garland project or the Southern Cross DC tie in the utility’s cost of service.
Southern Cross Transmission motion
Southern Cross Transmission, in an October motion filed with the PUC, said that in two amendments to the Public Utility Regulatory Act (PURA) in 2015, the Legislature required persons, including electric utilities, to obtain a CCN to interconnect a facility that allows power to be imported into or exported out of the ERCOT grid.
Recognizing that Southern Cross Transmission had already obtained an order from FERC directing Garland to interconnect the Southern Cross Transmission project and Oncor and CenterPoint to provide transmission service, the Legislature included a provision requiring the PUC to approve Garland’s CCN within 185 days from filing and allowed the PUC to prescribe reasonable conditions to protect the public interest that are consistent with Southern Cross Transmission’s FERC interconnection order.
Southern Cross Transmission also said that the PUC’s authority over it is limited, noting that Southern Cross Transmission is not and will never be subject to the PUC’s jurisdiction as an electric utility, transmission service provider, or buyer or seller of electricity within Texas under PURA. While the PUC can impose administrative penalties for violations of PURA or a PUC rule or order, no provision of PURA authorizes the PUC to impose costs directly on Southern Cross Transmission as has been ordered in the instant case, Southern Cross Transmission said.
Southern Cross Transmission claimed that the PUC’s key errors include:
- The PUC’s decision to directly assign costs to Southern Cross Transmission is an impermissible burden on interstate commerce and contravenes the FERC’s directive that ERCOT transmission owners provide transmission service to users of the Southern Cross Transmission DC Tie at rates that are just and reasonable and not unduly discriminatory
- The PUC’s decision to directly assign ancillary service costs associated with the Garland project or the Southern Cross DC tie to Southern Cross Transmission and entities using the Southern Cross Transmission tie is contrary to certain PURA sections, which require that transmission service be provided at reasonable prices with terms and conditions that are not discriminatory or anticompetitive
- The PUC’s absolute prohibition against any utility’s recovering costs related to the Rusk substation – and its decision to instead impose those costs on Southern Cross Transmission – in the absence of a request for cost recovery and without determining whether such a request meets statutory standards for cost recovery constitutes a deprivation of due process and a taking of property for public use without just compensation in violation of the Texas and U.S. Constitutions
The Texas Industrial Energy Consumers (TIEC), in a separate October motion filed with the PUC, said that the PUC’s final order appropriately requires Southern Cross Transmission and entities using the Southern Cross DC tie to bear all incremental costs associated with interconnecting the Southern Cross DC tie. That condition, the TIEC said, is a departure from the PUC’s typical practice of socializing all transmission and ancillary service costs to customers in ERCOT, and is justified based on the evidence that the Southern Cross DC tie will primarily be exporting and will provide no meaningful benefits to ERCOT customers.
Noting that there is no finding of fact specifically stating that that cost assignment is premised on the lack of benefits to ERCOT customers, the TIEC said that the PUC’s final order should be strengthened to better withstand a potential appeal by adding a finding that explicitly reflects that rationale.
Among other things, the TIEC said that it proposes this new finding of fact: “113A. The evidence demonstrates that the Southern Cross DC tie will be exporting the vast majority of the time, and Southern Cross has not shown that interconnecting the DC tie will provide any meaningful benefits to customers in Texas. It is therefore reasonable, protective of the public interest, and consistent with the FERC order to depart from the traditional philosophy of ‘load pays’ for this project and directly assign incremental costs associated with ancillary services, transmission upgrades, and other items that may increase costs for ERCOT customers.”
Staff reply to motions
PUC staff, in Oct. 18 reply to the motions filed with the PUC, said that it recommends denial of Southern Cross Transmission’s motion and that it disputes all points of error identified by Southern Cross Transmission as being unfounded.
The PUC’s decision appropriately balanced the economic interests of Southern Cross Transmission with the PUC’s statutory duty to protect the public interest in approving the application, and the decision takes great care not to place the reliability of the entire ERCOT system at risk for the economic desires of a single market participant, staff said.
The reasonable conditions imposed by the PUC do not discriminate against interstate commerce or Southern Cross Transmission as a market participant, and are well within the authority granted to the PUC by PURA and PUC rules, staff said. Among other things, staff said that through its statement of position and cross-examination, Southern Cross Transmission had ample notice that costs should be allocated to it, as well as an opportunity to respond.
Staff did not provide a reply to the TIEC’s motion.
Southern Cross Transmission, the TIEC, and PUC staff are to – and other parties may – submit initial briefs by Dec. 14, and reply briefs by Dec. 28, the PUC said in its Dec. 1 order.
In a separate Dec. 1 order, the PUC said that it does not grant any particular party’s motion for rehearing, but does grant rehearing to reconsider its decision.