Public Service Co. of New Mexico, 092012 FERC, ER12-1699-000

Docket Nº:ER12-1699-000, ER12-1698-000
Party Name:Public Service Company of New Mexico, Power Network New Mexico, LLC, and New Mexico Renewable Energy Transmission Authority Power Network New Mexico, LLC, and New Mexico Renewable Energy Transmission Authority
Judge Panel:Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John R. Norris, Cheryl A. LaFleur, and Tony T. Clark. Kimberly D. Bose, Secretary.
Case Date:September 20, 2012
Court:Federal Energy Regulatory Commission

140 FERC ¶ 61, 230

Public Service Company of New Mexico, Power Network New Mexico, LLC, and New Mexico Renewable Energy Transmission Authority

Power Network New Mexico, LLC, and New Mexico Renewable Energy Transmission Authority

Nos. ER12-1699-000, ER12-1698-000

United States of America, Federal Energy Regulatory Commission

September 20, 2012

Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John R. Norris, Cheryl A. LaFleur, and Tony T. Clark.

ORDER ON WAIVER PETITION AND NEGOTIATED RATES PROPOSAL

1. On May 2, 2012, Public Service Company of New Mexico (PNM), 1 Power Network New Mexico, LLC (Power Network), and New Mexico Renewable Energy Transmission Authority (RETA) (together, Waiver Applicants) filed a petition for limited waiver of certain PNM Open Access Transmission Tariff (OATT) provisions, which would allow the Central New Mexico Transmission Collector Project (Power Network Project) to advance to the first position in PNM’s transmission queue (Waiver Request). Also on May 2, 2012, Power Network and RETA (together, Negotiated Rate Applicants) filed an application requesting authorization to charge negotiated rates for transmission rights on the Power Network Project (Negotiated Rates Application).2 Negotiated Rate Applicants filed their request pursuant to section 205 of the Federal Power Act (FPA)3 and section 35 of the Commission’s regulations.4 As discussed below, we will deny the Waiver Request, and as a result, dismiss the Negotiated Rates Application as premature.

1. Background

A. The Applicants

2. Waiver Applicants and Negotiated Rate Applicants explain that RETA is a New Mexico state government instrumentality with the statutory responsibility to finance, plan, acquire, maintain, and operate transmission and energy storage facilities in order to stimulate clean energy production, create high paying jobs, encourage capital investment, and increase economic development in rural areas.5 RETA has the power of eminent domain, which allows it to acquire land rights necessary for renewable energy resource development in New Mexico.6

3. Waiver Applicants and Negotiated Rate Applicants state that, in 2010, RETA commissioned studies by Los Alamos National Laboratory (LANL) and identified the Power Network Project as a means of facilitating transmission in eastern and central New Mexico.7 Waiver Applicants state that the Power Network Project will help RETA advance the public interest by facilitating the development of new electric transmission projects, which is essential for further development of renewable resources in western New Mexico. Waiver Applicants and Negotiated Rate Applicants state that RETA was involved in assessing the potential route and feasibility of the Power Network Project within New Mexico, including land acquisition issues. Waiver Applicants and Negotiated Rate Applicants add that RETA is also involved in assisting the Power Network Project with any New Mexico state permitting and regulatory issues.8

4. Waiver Applicants and Negotiated Rate Applicants continue that, in March 2011, RETA signed a memorandum of understanding with Goldman Sachs Infrastructure Partners II, L.P. and GS International Infrastructure Partners II, L.P. (together, GSIP)9to fund the Power Network Project. GSIP created Power Network, a special purpose entity, to work with RETA and develop the Power Network Project.10 Subsequently, on October 27, 2011, RETA asserts that it entered into an agreement with Power Network through which RETA will acquire and construct the Power Network Project, and RETA will lease the Power Network Project to Power Network. Waiver Applicants and Negotiated Rate Applicants explain that Power Network will be the public utility transmission provider and will enter into contracts with third parties for the operation and maintenance of the Power Network Project and the administration of the OATT for Power Network.11

B. The Power Network Project

5. Waiver Applicants state that the Power Network Project is designed to provide bundled service over its new facilities and PNM’s transmission system from Rio Puerco12to Four Corners13 for one composite rate. The Power Network Project will result in the construction of new facilities consisting of approximately 200 miles of 345 kV double circuit transmission facilities from eastern and central New Mexico to Rio Puerco, adding at least 1, 500 MW of new electric transmission capacity.14 From Rio Puerco, the Power Network Project will also provide service over PNM’s transmission system.

6. In order to provide service from Rio Puerco to Four Corners, Waiver Applicants state that Power Network submitted transmission service requests to PNM totaling 1, 500 MW for long-term firm point-to-point transmission service from Rio Puerco to Four Corners, and has executed a system impact study agreement with PNM to study its requests on the same path in a single cluster.15 Waiver Applicants confirm that Power Network will pay for all of the network upgrades required to interconnect the portion of the Power Network Project in eastern and central New Mexico with PNM’s transmission system in order to acquire transmission service over the PNM system to Four Corners.16Waiver Applicants state that they have completed the preliminary engineering study for the Power Network Project, and they add that they are in the process of finalizing the routing and obtaining necessary rights of way for the new facilities. Waiver Applicants state that the Power Network Project is expected to cost $350 million and commence commercial operation in 2015.17

C. PNM’s Transmission Queue

7. Waiver Applicants state that, currently, PNM’s transmission queue is processed on a first-come, first-served basis.18 Waiver Applicants state that the PNM transmission queue has a backlog of 60 requests from seven different customers for 8, 400 MW of long-term firm point-to-point transmission service. Waiver Applicants state that all but one of the transmission service requests, for 70 MW, indicate a point of delivery at Four Corners. Waiver Applicants state that Power Network’s queue positions are 46-60. Waiver Applicants state that, based on existing transmission commitments on PNM’s system to Four Corners, even the addition of 100 MW of firm point-to-point transmission service requests from eastern New Mexico to Four Corners would trigger a major transmission expansion on the PNM system. 19

8. Waiver Applicants explain that PNM intends to undertake extensive transmission queue reform, but they estimate that it will take several years to develop and fully implement transmission queue reform.20

D. Anchor Customer Solicitation Process

9. Waiver Applicants and Negotiated Rate Applicants state that they intend to fully subscribe the Power Network Project’s capacity, both the new facilities and the capacity on the PNM transmission system to Four Corners, through an anchor customer solicitation and open season process.21 Waiver Applicants and Negotiated Rate Applicants assert that they have completed the first stage of the anchor customer selection process.22 Waiver Applicants and Negotiated Rate Applicants state that Power Network and RETA held an open solicitation for the Power Network Project’s capacity and “reached out to” all parties in PNM’s transmission and interconnection queues and others whom their research showed had interest in renewable power in New Mexico or an interest in delivering power to Four Corners.23 Waiver Applicants and Negotiated Rate Applicants state that RETA oversaw the design and conduct of the anchor customer selection process for the Power Network Project, including identifying potential customers, developing selection criteria, developing the Precedent Agreement, 24 and selecting the anchor customers.25

10. Waiver Applicants and Negotiated Rate Applicants state that Power Network and RETA received commitments from two customers for 1, 050 MW of transmission capacity. Waiver Applicants and Negotiated Rate Applicants state that Arabella Wind LLC (Arabella), an affiliate of Gestamp Solar, was awarded 300 MW of capacity and Arabella currently holds positions 3, 4, 6, and 7 in PNM’s transmission queue. Waiver Applicants and Negotiated Rate Applicants state that Power Network and RETA signed a letter of intent for 750 MW with First Wind Energy, LLC (First Wind). Waiver Applicants and Negotiated Rate Applicants state that if First Wind does not enter into a Precedent Agreement, the 750 MW would be offered in a second round open solicitation for anchor customers. Waiver Applicants and Negotiated Rate Applicants state that Power Network and RETA intend to hold a second anchor customer solicitation to pre-subscribe up to a total of 1, 200 MW. Waiver Applicants and Negotiated Rate Applicants state that Power Network and RETA commit to allocate the remaining 300 MW through a traditional open season process.26

E. Request for Waiver and Application for Negotiated Rates

11. Waiver Applicants request waiver of certain provisions of PNM’s OATT to allow Power Network’s transmission service requests on behalf of the Power Network Project to be first in PNM’s transmission queue.27

12. Separately, Negotiated Rate Applicants request the following: (1) authority to charge negotiated rates over both the new segment of the Power Network Project from eastern and central New Mexico to Rio Puerco, and on PNM’s transmission system from Rio Puerco to Four Corners; (2) approval of the capacity allocation process, including the presubscription of up to 80 percent of the Power Network Project’s capacity to anchor customers through the anchor customer selection process; and (3) certain waivers.28 The Waiver Application and the Negotiated Rates Application are discussed...

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