On March 21, 2019, the Commission issued a proposed order directing two wind energy generators, Cedar Creek Wind Energy, LLC (“Cedar Creek”) and Cedar Creek II, LLC (“Cedar Creek II”) (collectively the “Cedar Creek Entities”) to provide interconnection and transmission service to a proposed wind project, Mountain Breeze Wind, LLC (“Mountain Breeze”) across jointly-owned interconnection customer facilities (“ICIF”) to the Public Service Company of Colorado (“PSCo”) transmission system. Although Cedar Creek II sought to dismiss the matter as an impermissible attempt by Mountain Breeze to acquire an ownership interest in the ICIF outside of a Federal Power Act (“FPA”) Section 203 or Section 205 proceeding, FERC rejected this characterization and instead found narrowly that Mountain Breeze had properly filed an application for Commission-ordered service under FPA Sections 210 and 211. FERC directed the parties to attempt to reach an agreement on the terms and conditions for interconnection and transmission service, or a separate order prescribing such terms and conditions would be issued.

Cedar Creek and Cedar Creek II are wind-generating facilities in Colorado that sell their entire output, 300-MW and 250-MW respectively, to PSCo via a 76-mile, 230-kilovolt ICIF. Together the Cedar Creek Entities own 72 miles of the ICIF as tenants in common pursuant to a co-tenancy, common facilities and easement agreement. Mountain Breeze is constructing a new 170-MW wind project near the ICIF, and submitted, consistent with Section 211 of the FPA, a good faith request to the Cedar Creek Entities for firm point-to-point transmission service over the ICIF to PSCo’s transmission system. Among other things, Mountain Breeze argued that service could be accommodated using existing excess capacity on the ICIF and that FERC Order No. 807 required the Cedar Creek Entities to provide interconnection and transmission service either pursuant to a co-tenancy agreement or through an open access transmission tariff (“OATT”). Mountain Breeze stated that it received initial concurrence from Cedar Creek, but no response from Cedar Creek II, even after Mountain Breeze renewed its Section 211 good faith request in June 2018.

In December 2018, Mountain Breeze filed an application requesting that FERC order the Cedar Creek Entities to provide interconnection and transmission service at terms and conditions either mutually agreed-upon or ordered by the Commission. Cedar Creek and PSCo’s parent company, Xcel Energy Services, Inc., filed motions to intervene in support of the application. Cedar Creek II, however, argued that Mountain Breeze was actually requesting an improper transfer in ownership of jurisdictional facilities under FPA Sections 203 and 205 rather than requesting transmission service under Sections 210 and 211. Cedar Creek II asked FERC to dismiss the application so the parties could continue negotiating a joint operating agreement.

In its proposed order, FERC explained that under FPA Sections 210 and 211 any “electric utility” may request an order requiring a “transmitting utility” to provide interconnection or transmission service following a good faith request to such transmitting utility. FERC found that Mountain Breeze was an “electric utility” under FPA Section 210 because it “sells electric energy” and that the Cedar Creek Entities were “transmitting utilities” for purposes of Section 211, in essence, because of their ownership of the ICIF and its use for wholesale electricity sales. As such, FERC determined it had jurisdiction under Sections 210 and 211 to direct interconnection and transmission service.

FERC next walked through the other relevant requirements for granting the requested order, namely that: (1) Mountain Breeze properly submitted a good faith request; (2) providing the service would be in the public interest; (3) the order would encourage efficient use of the facilities in question; (4) the services would not hamper system reliability; (5) the service would not replace energy provided to the applicant under a contract with the transmitting utility or a rate schedule on file with FERC; and (6) the service would be at rates, terms and conditions necessary to ensure cost-recovery by the transmitting utility. FERC found in Mountain Breeze’s favor in the first five factors. On the last factor, FERC declined to set rates at this time, and instead directed the parties to negotiate terms and conditions of service over the next 90 days, or else the Commission would establish such terms and conditions in a subsequent order.

Finally, FERC disagreed with Mountain Breeze’s characterization of Order No. 807. As FERC explained, nothing in that order requires the owner of an ICIF to extend ownership interests to a third-party requestor or to generate an OATT. Rather, in that order, FERC adopted a blanket waiver of the OATT and certain other requirements for any public utility that might otherwise be required to follow those requirements solely because it owns, controls, or operates ICIF and sells energy from a generating facility (see March 20, 2015 edition of the WER).

A copy of the order is available here.