The Public Utility Commission (PUC) of Texas, in a May 23 order, approved the City of Garland’s (d/b/a Garland Power & Light) application to amend its certificate of convenience and necessity (CCN) for a 38-mile, double-circuit, 345-kV transmission line in Rusk and Panola counties.
As TransmissionHub reported last December, Garland filed an application with the PUC in February 2016 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 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, which will have a capacity of about 2,100 MW).
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.
The PUC in an Aug. 25, 2016, draft order adopted – with conditions – a proposal for decision issued by the administrative law judges (ALJs) 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 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.
May 23 order
As noted in the May 23 order, the PUC issued its original order on Sept. 8, 2016, and in early October 2016, the Texas Industrial Energy Consumers (TIEC) and Southern Cross Transmission each filed a motion for rehearing. The PUC in November 2016 granted rehearing to reconsider its decision, issuing an order to memorialize that decision on Dec. 1, 2016.
In its May 23 order, the PUC said that it adopts the proposal for decision, with some exceptions. The PUC said that it primarily adds additional conditions necessary to protect the public interest and the reliability of the ERCOT system, as well as address issues raised after issuance of the proposal for decision.
The ALJs proposed some conditions that they denoted as public interest conditions, others that they denoted as routing conditions, and several others that they denoted as ERCOT conditions, the PUC said. While it generally agrees with the conditions proposed by the ALJs, the PUC said that it believes that more conditions, and some modifications to the proposed conditions, are required to protect the public interest.
The unique characteristics of the docket justify the conditions imposed by the PUC in its May 23 order, the PUC said. The size of the DC tie to which the Rusk-to-Panola transmission line (also referred to in the order as the Garland line) will be connected is unprecedented, the PUC said, noting that if the Southern Cross DC tie becomes operational, it will become the newest and most-severe single contingency in ERCOT – and that is one of the reasons the facility is unique.
The fact that the DC tie may appear to be a load when exporting electricity does not preclude that characterization, the PUC added. The loss of that “load” could cause a critical imbalance on the ERCOT system. Furthermore, the PUC added, when the DC tie may appear as a resource, at least one study shows that, at certain levels of importing power over that DC tie, “there would be thermal overloads on the ERCOT system.”
Thus, the PUC said, the Southern Cross DC tie poses serious reliability questions, and it is uncertain the degree to which the PUC’s current rules and ERCOT’s protocols, bylaws, operating guides, standards, and systems may need to be revised to address those concerns – although there is little doubt some revision is required.
The PUC said that those reliability concerns lead to questions of cost – how much will it cost, and who should be responsible for the costs, to minimize the effects of, or to be prepared to deal with, that new contingency? The current market structure in ERCOT assigns cost responsibility to the customers in ERCOT, and that structure most likely will need to be adjusted to ensure that all users of the ERCOT system will pay their fair share of system costs, the PUC said.
The PUC said that it has ordered ERCOT to study the effects of the Southern Cross DC tie on the ERCOT market and system, and to implement any necessary modifications to its protocols, bylaws, operating guides, and systems. The conditions established by its May 23 order will likely be superseded by subsequent rulemakings and protocol revisions, the PUC said.
Based on the record, the PUC said, the costs that ERCOT ratepayers should not bear include:
- Costs to build, operate, maintain, upgrade, or decommission the facilities
- Costs for the studies, protocol, operating guide, and system changes, as well as any other activities by ERCOT that are required because of the Garland line, the Oncor or Garland substations, or the Southern Cross DC tie
- Any additional costs associated with the Garland line, the Garland or Oncor substations, or the Southern Cross DC tie that are specific to the import or export of power over the Southern Cross DC tie and therefore should not be uplifted to the ERCOT market or that cannot be recovered from end-use customers under the current billing system
The PUC said that it also decides that this case should comport with the general principle that cost causers should pay for their use of the ERCOT grid. Because of the unique circumstances – including the larger size – of the Southern Cross DC tie, there may be some additional import-related costs that are not captured by the current regulatory scheme, the PUC said, noting that those costs, if any, are allocated to Southern Cross in the May 23 order.
Furthermore, when power is exported over the Southern Cross DC tie, the current regulatory scheme does not allocate costs properly to end users because there is no market participant to which those costs can be directed, and those costs are therefore allocated to Southern Cross in the May 23 order, the PUC said.
The PUC also said that additional costs that may be incurred because of the unique circumstances of the Southern Cross DC tie may not be properly accounted for and, therefore, are allocated to Southern Cross in the May 23 order.
The PUC said that it finds it reasonable, protective of the public interest, and consistent with the FERC order, to require Southern Cross Transmission and Garland to back down or temporarily terminate exports if ERCOT determines that such is necessary to avoid or mitigate a potential reliability issue.
In its motion for rehearing, Southern Cross raised the allegation that provisions of the PUC’s order violate the dormant commerce clause of the U.S. Constitution, the PUC said, noting that the commerce clause gives Congress the power “[t]o regulate commerce … among the several states…” The U.S. Supreme Court has interpreted that grant of authority to be exclusive and has struck down state and local laws that unduly burden interstate commerce even if Congress has not passed legislation on the particular issue, the PUC said, noting that that is commonly referred to as the dormant commerce clause.
In this case, the PUC said, Congress has acted through the Federal Power Act, which allows FERC to order transmission interconnection and transmission; FERC ordered the interconnection at issue in this docket in its order, TX 11-1-001. In light of Congress’ clear legislative action, there is no dormant commerce clause issue here, the PUC said.
Among other things, the PUC said that many of the proposed conditions depend on ERCOT completing studies or other activities that should be included in an order to ERCOT to undertake and complete those activities. Those directives to ERCOT should be accomplished in a separate project and specified in an order issued in that project, the PUC said.
PUC Project No. 46304
Separately on May 23, the PUC issued an order in PUC Project No. 46304 that addresses directives to ERCOT arising out of the final order on rehearing in Docket No. 45624.
The PUC said that Garland is forbidden from energizing the Rusk-to-Panola transmission line until ERCOT completes the tasks, which include that ERCOT is to determine the appropriate market participation category for Southern Cross Transmission and for any other entity associated with the Southern Cross DC tie for which a new market-participant category may be appropriate.
Also, ERCOT is to study and determine how best to model the Southern Cross DC tie in its transmission planning cases, make any necessary revisions to its standards, guides, systems, and protocols as appropriate, and certify to the PUC when it has completed those actions.
Among other things, ERCOT is to study and determine what transmission upgrades, if any, are necessary to manage congestion resulting from power flows over the Southern Cross DC tie, make any necessary revisions to its standards, guides, systems, and protocols as appropriate, and certify to the PUC when it has completed those actions, the PUC added.