Developers of renewable projects often develop the projects in phases. One issue that can arise from phasing is the need for confirmation of priority firm transmission rights on the generation tie line for the later planned phases. The Federal Energy Regulatory Commission (FERC) has begun to permit such reservations in certain circumstances.
Recently, on February 17, 2011, FERC granted a petition for declaratory order by Alta Wind I LLC et al. (the “Alta Wind entities”), requesting that FERC confirm their priority firm transmission rights to the capacity of three transmission lines to be used to interconnect the petitioners’ planned wind and solar generation projects to the transmission grid.1 The Alta Wind entities submitted their request in order to obtain regulatory certainty.
The Alta Wind entities developer maintained it had $350 million already invested with approximately $10 million per year in estimated spending forecast to bring the remaining projects on line. The Alta Wind entities argued that the successful completion of their future generation projects was dependent on access to transmission and that they would be materially impacted without confirmation of their priority transmission rights.
In the past, FERC had accepted similar proposals to reserve capacity on the generation tie line where the owners had specific pre-existing plans to develop generation resources to be served by their line and where they had made consistent material progress towards achieving such plans.2 In those cases, the developments were structured such that ownership interests in the transmission capacity were transferred to each project company, equal to the generation output of that project company, rather than held by one affiliate for use by the others, so that no project company owned more transmission capacity than needed for its output.3 Consistent with this previous precedent,4 FERC granted the request of the Alta Wind entities, finding that the petitioners showed the existence of specific, pre-existing plans, with definite dates and milestones, for phased development of generation that would ultimately employ the full capacity of the transmission lines at issue.5
FERC has denied similar requests (1) where the proceeding was contested, and the specific activity that was undertaken in furtherance of expansion plans was not clearly set out;6 and (2) where the company already has an open access transmission tariff on file with FERC, and the generation project was to serve native load customers.7 A factor that may also be relevant for these types of applications is whether a third party has previously sought access over the transmission line at issue, thereby raising discrimination concerns.8
With the Alta Wind and Milford orders, a pattern is beginning to develop that developers of renewable generation can use as a model for phasing development while getting assurance that they can reserve capacity in their generation tie lines to connect their future planned phases to the grid.