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FERC Proposes To Clarify Open Access Obligations for Owners of Generator Tie Lines

May 19, 2014 posted by Eric Christensen

In a proposal that should clarify federal rules concern access to generator tie-lines, and therefore provide assurance to project developers and their financial backers, the Federal Energy Regulatory Commission ("FERC") at last week's monthly meeting proposed new rules to govern third-party access to such tie-lines. While at first blush, this issue may seem obscure, it has far-reaching consequences for both open access to and investment in the nation's electric system. The proposed rule also clarifies how FERC will reconcile two of its most important policy goals -- investment in new generation resources and open access to the nation's transmission grid. The proposed rules are important because generator tie-lines often cover hundreds of miles and operate at extremely high voltages, especially when delivering power from generation resources located in remote, rural areas that otherwise have limited access to the backbone transmission grid. The proposed rules are therefore particularly important for wind generation and utility-scale solar, where the best resources are often located far from existing transmission lines. FERC's proposal notes several cases where tie-lines to link, for example, large wind generation projects to the grid span hundreds of miles and operate at voltages as high as 345-kV, and therefore look much like backbone transmission assets. If adopted, FERC's proposed rule would generally excuse generation project owners from the requirement to grant open access to these tie-lines under FERC's Order No. 888 regime. Instead, should a third party seek access to transmission on a generator tie-line, it would file a request under Sections 210, 211 and 212 of the Federal Power Act ("FPA"), provisions added to the FPA in the 1970s to allow transmission access for independent power producers. Providing open access to these lines thus provides a means for new generation to move from these remote locations to far-off load centers. On the other hand, generator tie-lines are built for the specific purpose of interconnecting particular generation projects to the primary transmission grid. Granting transmission capacity to third parties under FERC's open access regime can therefore limit the transmission capacity available to move power from the primary generation project, thus undermining incentives to invest in new generation. FERC's proposed rule seeks to resolve this dilemma by providing project investors with assurances that capacity on transmission tie-lines will remain available if needed, while allowing open access to such lines where new project developments or electricity demand justify use of the transmission capacity. If a Section 210-211-212 request is made, the proposed rules would allow the generation project owner to demonstrate that available transmission capacity is already pledged to planned generation developments, and a rebuttable presumption would be applied giving any planned generation projects priority access to the available transmission capacity. This aspect of the proposal addresses the common situation where large renewable generation projects are built in phases, while the tie-line for the staged project is constructed with sufficient capacity to carry power from all planned phases. If project owner succeeds in demonstrating that the available capacity is pledged to future phases of generation construction, the third party seeking transmission capacity would then be responsible for paying for upgrades sufficient to accommodate the capacity it seeks. Comments on FERC's proposal will be due in mid- to late July. If you have any questions about FERC, open transmission access, project construction or other matters related to energy, natural resources, or environmental law, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group or Environment & Natural Resources practice group. We're proud that our partner Jim Waldo was recently named 2013 Lawyer of the Year for Energy and Natural Resources Law, and practice group members Don Cohen, Bill Lynn, and Brad Jones were all named among Seattle's Best Lawyers.