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On April 11, 2011, FPL Energy, LLC, et al., filed with the Texas Supreme Court a petition for review of the Texas Court of Appeals’ decision FPL Energy, LLC, v. TXU Portfolio Management Company, L.P. The case illustrates the significant economic impact that curtailment can have on variable energy resources. For a detailed description of the case and its implications, see our Renewable + Law Blog entry on the Court of Appeals’ decision here.

The petition for review focuses on the question of whether the Court of Appeals was correct in enforcing the liquidated damages provisions contained in three wind energy power purchase agreements. The pertinent provisions in each PPA required the petitioners to pay $50 for every MWh that the plants fell short of achieving the their minimum REC output guarantees—the Court of Appeals’ holding meant that the petitioners owed TXU roughly $29 million in shortfall damages for a four year period of curtailment imposed by the transmission provider (ERCOT), on top of the pain of losing the contract price and the production tax credit on each MWh of energy curtailed.Continue Reading Petition for Review Filed in TXU v. FPL Curtailment Case

Santa Fe-based Chamisa Energy Corporation recently announced a request for proposals for up to 250MW of nameplate wind generation resources to be used to provide energy to a 135 MW or larger compressed air energy storage (CAES) facility under development in Swisher County in the Texas panhandle.  The proposed CAES facility would compress air and store it in…

The Federal Energy Regulatory Commission ("FERC") is seeking comments from energy industry participants on regulatory reforms that address how FERC should regulate merchant transmission development and generator interconnection (or lead) lines. Specifically, FERC desires comments on how it should balance the requirements of open access transmission and the needs of project developers.

Merchant transmission and generator interconnection issues have caused a surge of contested FERC proceedings in recent years. In 2009, merchant transmission developers, for instance, were granted the ability to place transmission capacity with anchor tenants prior to making capacity available through an open season. The anchor tenant model was a significant shift in merchant transmission regulation, but, to date, merchant transmission developers have struggled to maintain meaningful anchor tenant arrangements. As a result, more recent filings at FERC have pushed the boundaries of the anchor tenant model, and FERC now seeks to determine through public comment how its open access policies could be further changed to incentivize merchant transmission development.

Generator interconnection lines have also been a popular subject at FERC of late—specifically whether and how interconnection line owners should be granted priority rights to interconnection capacity. This issue is particularly relevant for renewable energy developers who are planning to build generation projects in phases and will rely on having interconnection capacity available to serve later phases when they come online. To maintain priority over competing interconnection requests, FERC has asked generation developers to show they have established milestones for developing the generation phases that seek priority (and to demonstrate progress toward meeting those milestones). Such filings are generally confidential, and thus interconnection line owners from the outside looking in have not been given much insight into what is required to establish priority. FERC’s precedent on the issue has also created dissimilar treatment of interconnection owners who are affiliated with open access transmission providers.

On March 15, 2011, FERC staff held a technical conference where the invited speakers shared a wide range of opinions on these issues. With respect to merchant transmission, speakers supported (i) creating a new section to the Open Access Transmission Tariff ("OATT") that would specify the rules for developing merchant transmission and the ancillary services obligations of those developers, (ii) placing AC merchant lines under existing incumbent transmission provider OATTs, (iii) allowing more incentives for anchor tenants, and (iv) having FERC back away from regulating these projects in their early stages. Those who spoke about priority to interconnection capacity shared opinions that included (x) requiring interconnection developers to give public notice of their development intentions and allow others to bid on capacity (a "speak now or forever hold your peace" approach), (y) requiring all interconnection owners to develop and maintain an "OATT light"—a pared down version of the full OATT, and (z) advocating for less regulation of interconnection lines altogether. FERC staff also questioned whether and how FERC should regulate transmission service over interconnection facilities that are shared or jointly owned (e.g., through a Joint Ownership Agreement, Shared Facilities Agreement, or Common Facilities Agreement) directly by generation developers, or indirectly through an affiliate that owns and operates an interconnection line.

Written comments on these issues are due to FERC no later than April 21, 2011.

Continue Reading FERC Seeks Comments on Regulatory Reforms for Merchant Transmission and Generator Interconnection Capacity

A group of western utility executives, transmission officials, and regulatory analysts are convening in Portland, Oregon next week to discuss the creation of a western Energy Imbalance Market (“EIM”).  The EIM is part of an Efficient Dispatch Toolkit (“EDT”) proposed by a WECC subcommittee and the Western Interstate Energy Board (“WIEB”) that would include: (1) the EIM to supply energy imbalance service and congestion management, and (2) an Enhanced Curtailment Calculator (“ECC”) to manage power flow impacts across Balancing Authority (“BA”) seams.  As a point of reference, the Southwestern Power Pool launched a similar “Energy Imbalance Service” in 2007.

 

Why:  Renewable energy capacity in the West is expected to grow from roughly 13,000 MW today to 70,000 MW by 2020 as the result of state renewable energy requirements.  Current energy balancing practices are insufficient to meet the challenges of the anticipated variable generation increases in the Western Interconnection, according to a white paper prepared by WIEB staff.  Current bilateral transmission and scheduling practices do not, for instance, make use of remote balancing resources in the Western Interconnection and the EIM could help make more efficient use of generating resources located throughout its footprint.Continue Reading Parties convene in Portland to discuss the creation of an Energy Imbalance Market

On October 20, my colleague Janet Jacobs reported that the U.S. Department of Energy ("DOE") had offered a conditional commitment of $350 million to NV Energy, Inc. and Great Basin Transmission South, LLC, an affiliate of LS Power Group, for development of the 500-kV One Nevada Transmission Line (the "ON Line project").

Well, good news.

Two days…

Congress’ experiment with establishing federal siting authority for transmission lines suffered another setback after a Ninth Circuit Court of Appeals decision issued yesterday, February 1, 2011, vacated the Department of Energy’s (“DOE”) 2007 Transmission Congestion Study that had designated national interest electric transmission corridors in mid-Atlantic and Southwestern states. This ruling is the latest of…

Wind & Solar Integration Summit, Scottsdale, AZ

January 24, 2011, 8 a.m. – 5 p.m., Workshop

January 25, 2011, 7 a.m. – 5:15 p.m., Conference

January 26, 2011, 9 a.m. – 11:45 a.m., Conference

 

As the Workshop Chair, I would like to extend you an invitation to the Wind & Solar Integration Summit…