Public Utility Commission (PUC) of Texas staff on May 1 requested that the PUC find that the issues in a proceeding involving Xcel Energy’s (NYSE:XEL) Southwestern Public Service (SPS) and the Southwest Power Pool (SPP) “are not ripe for decision,” and SPS and SPP responded on May 2, requesting that the PUC deny staff’s motion.
As TransmissionHub reported, SPS and SPP, in a joint petition filed on Feb. 28 with the PUC, requested that the PUC resolve as a matter of law the issue involving whether SPS has the exclusive right to build and operate new regionally funded transmission facilities in areas of Texas that lie within the company’s service area.
SPS contends that the Public Utility Regulatory Act (PURA) grants an incumbent electric utility operating in areas outside of ERCOT a right of first refusal to build new transmission facilities located in the service area prescribed for that utility by the PUC.
In contrast, the petition added, SPP avers that there is no clear statement in Texas law that incumbent utilities have such a right of first refusal, and therefore SPP is proceeding as if there is no right of first refusal under Texas law and abiding by the portion of its Open Access Transmission Tariff (OATT) that requires the competitive solicitation and designation of transmission owners, including non-incumbents, to build and operate new transmission facilities in areas of Texas within the SPP footprint.
Because a regionally funded transmission project located in SPS’ service territory – the new 345-kV Potter to Tolk line – is scheduled to be considered by the SPP Board of Directors within the next two months, SPS last month filed a lawsuit in state district court in Potter County, Texas, seeking a declaration that it has the right to build the project, the petition said.
In light of the PUC’s familiarity with PURA and its statutory duty to oversee the electric industry in Texas, SPS and SPP have agreed to abate the lawsuit and to seek a declaration from the PUC regarding whether Texas law grants SPS a right of first refusal to build the regionally funded transmission project or whether SPP must follow the competitive bid process in the absence of such right of first refusal under Texas law, the petition said.
In its May 1 filing, staff noted that SPP and SPS on April 27 filed a joint letter indicating that SPP’s board has ordered additional study on the Potter-Tolk line that served as the impetus for the filing of the petition in the docket (Docket No. 46901). As a result, it appears that SPP’s board would not decide whether to approve the line until April 2018, at the earliest, staff said.
The deferral of the line means that the question raised in the current joint petition is no longer ripe for consideration, and as a result, a PUC order on the merits would be an advisory opinion, staff said.
A declaratory order can only be issued if the underlying issues are ripe – that is, if there is an actual or imminent harm to be remedied, staff said.
Staff noted that there are two components to the ripeness determination:
- Fitness of the issues for judicial decision, which requires that facts be sufficiently developed for the PUC to resolve the issues, including facts that demonstrate the likelihood of harm
- Hardship to the parties of withholding judicial review. Hardship to the parties examines the imminence and degree of harm; if a party could seek declaratory relief in the future when the threat of harm actually occurs, no hardship exists
Staff said that SPS’ allegations in the joint petition include the allegation that it would have to incur expenses of at least $750,000 to participate in SPP’s competitive process if there is no right of first refusal under Texas law. Staff added that SPS alleged that those expenses would be avoidable if Texas law contains a right of first refusal.
In this instance, studies on the Potter-Tolk line are not expected to be complete until April 2018, and given that this is the second time that SPP’s board has directed additional study of the line, it is currently unclear whether the board would approve the line once the new study is complete, staff said.
If the PUC declined to rule on the current petition, SPS could seek declaratory relief when potential approval of the line once again becomes imminent or if potential approval of a different transmission line project in SPS’ retail service territory were to become imminent, staff said.
While the letter from SPP and SPS indicates that the issues raised in the docket will need to be resolved in order for SPP to properly apply its tariff to future transmission projects, it contains no indication of the imminence of any such projects, nor does it name any projects specifically, staff claimed.
Therefore, any harm alleged by any of the parties as a result of the Potter-Tolk line is not imminent, and no hardship exists, staff claimed.
Joint reply of SPP, SPS to staff filing
In a May 2 joint reply to staff’s filing, SPS and SPP said that while not styled as such, staff’s May 1 pleading is essentially a motion to dismiss, and they requested that the PUC deny staff’s request to dismiss the docket as being moot.
“Contrary to staff’s contention, the SPP’s decision to defer a decision on the Potter-Tolk transmission line has not rendered this action moot,” SPS and SPP said. “Parties still need guidance on an important issue of Texas utility law, and dismissal of this docket would simply transfer the responsibility for providing that guidance from the commission to a federal district court, which has far less experience construing and implementing the Public Utility Regulatory Act (“PURA”) than the commission does.”
Contrary to staff’s contention, the case is ripe, SPS and SPP claimed, adding that it is inevitable that either SPP or the Midcontinent ISO (MISO) will authorize construction of a regionally funded transmission facility in Texas within the near future.
“And when that happens, SPP or MISO will not necessarily have the luxury to wait several months for parties to initiate another proceeding at this commission, negotiate a briefing schedule, brief the issues, and wait for a commission decision,” SPS and SPP said. “Reliability concerns may dictate a more expeditious schedule for awarding the transmission project.”
SPS and SPP also noted that the declaratory judgment action that SPS brought SPP is pending in the United States District Court for the Northern District of Texas, and has been abated to give the PUC an opportunity to decide how to interpret PURA.
If the PUC case is dismissed, SPS and SPP said, then the federal district court case will be activated, and that court will presumably decide the parties’ rights and obligations under PURA. SPS and SPP also noted that if the PUC decides to intervene in that court case, it will do so as a party, rather than as the decision maker.
SPS and SPP said that if the PUC does not deny staff’s motion at a May 4 open meeting, then it should defer a decision on the motion until SPP, SPS and other interested parties have had a chance to respond to staff’s motion on the merits.