UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Southwest Power Pool, Inc. ) E.ON U.S. LLC ) Docket No. EL Cash Creek Generation LLC ) JOINT PETITION OF SOUTHWEST POWER POOL, INC., E.ON U.S. LLC, AND CASH CREEK LLC FOR DECLARATORY ORDER Pursuant to section 219 of the Federal Power Act ( FPA ), 16 U.S.C. 825s, and section 207 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission ( Commission or FERC ), 18 C.F.R , Southwest Power Pool, Inc. ( SPP ), E.ON U.S. LLC ( E.ON ), and Cash Creek LLC ( Cash Creek ) (jointly, Parties ) hereby submit this Petition for Declaratory Order requesting that the Commission decide certain disputed legal, policy and tariff issues related to a generator interconnection request submitted by Cash Creek. As more fully chronicled in the Parties Stipulated Statement of Facts (Part II, infra), Cash Creek s request seeks generation interconnection service pursuant to the terms of Attachment M of E.ON s Open Access Transmission Tariff, FERC Electric Tariff, Fourth Revised, Volume No. 1 ( E.ON OATT or Tariff ) for a proposed generator to be developed in Henderson County, Kentucky. Following extensive discussions between the Parties, and the engagement of the Commission s Dispute Resolution Service ( DRS ), the Parties agreed to submit this petition in order to resolve the stipulated issues identified in Part III hereof. The Parties agree that with respect to these stipulated issues, there are no disputed material facts which would preclude the Commission from issuing the requested determinations. The Parties further agree that given the nature of the issues presented

2 herein, time is of the essence. Therefore, the Parties request expedited consideration of this Petition. In support, the Parties state as follow: I. DESCRIPTION OF THE PARTIES A. SPP SPP is a Commission-approved Regional Transmission Organization ( RTO ) organized under Arkansas law as a non-profit corporation with its principal place of business in Little Rock, Arkansas. SPP currently has 53 Members in nine states and serves more than 4.5 million customers in a 255,000 square-mile area. Pursuant to the terms of a Commission-approved agreement between SPP and E.ON, SPP serves as the Independent Transmission Organization ( ITO ) for E.ON s two public utilities, Louisville Gas & Electric Company ( LG&E ) and Kentucky Utilities Company ( KU ). 1 In this capacity, and among other responsibilities, SPP processes transmission service requests, oversees E.ON s generator interconnection process, performs Feasibility and System Impact Studies, evaluates electronic tags, and organizes meetings and functions on behalf of E.ON s stakeholders. SPP has been deemed by the Commission to be an independent and appropriate entity to perform these identified functions. B. E.ON E.ON, through its wholly-owned operating subsidiaries, LG&E and KU, owns an integrated electric transmission system serving 318,000 natural gas customers in Louisville and surrounding counties, and approximately 900,000 electricity customers in 1 Louisville Gas & Elec. Co., et al., 114 FERC 61,282 (2006). 2

3 over 90 Kentucky counties and five counties in Virginia. E.ON s U.S. operations are headquartered in Louisville, Kentucky. E.ON s electric transmission and related services are subject to regulation under the FPA and are offered pursuant to the terms of E.ON s FERC-approved OATT. C. CASH CREEK LLC Cash Creek is a wholly-owned subsidiary of the ERORA Group, LLC, an owner and developer of coal gasification and power generation plants. The ERORA Group, LLC is privately held by Green Rock Energy, LLC, GE Financial Services and management. II. STIPULATED STATEMENT OF FACTS 1. On April 24, 2007, Cash Creek submitted an application for Generator Interconnection Service to SPP as the ITO responsible for administering the Large Generator Interconnection Procedures ( LGIP ) under Attachment M of the E.ON OATT. [JE No. 1] On May 29, 2007, an initial scoping meeting was held with representatives of the ITO, Cash Creek, E.ON, Big Rivers Electric Corporation ( BREC ), Owensboro Municipal Utilities ( OMU ), Vectren, and Tennessee Valley Authority ( TVA ). Minutes of the scoping meeting are included. [JE No. 2]. Notes created by SPP regarding the scope of the feasibility study are also included. [JE No. 3]. 2 Use of the term JE refers to the Joint Exhibits that the Parties have agreed to include with this Petition. 3

4 3. On July 17, 2007, SPP tendered a Feasibility Study Agreement ( FSA ) to Cash Creek. 4. On July 18, 2007, Cash Creek executed an Interconnection Study Letter Agreement with BREC, a cooperative corporation that is located in a separate control area adjacent to the E.ON transmission system. E.ON and the SPP were not involved in the negotiation or execution of this agreement. [JE No. 4]. 5. The Daviess Co. 345 kv substation is wholly owned by E.ON and there is currently no transmission line between the Daviess Co. substation and BREC s wholly-owned 345 kv EHV substation at Reid. 6. On July 24, 2007, the FSA was executed by the Parties. [JE No. 5]. 7. On February 6, 2008, SPP posted the completed Feasibility Study Report for Cash Creek on E.ON s Open Access Same-Time Information System ( OASIS ) site. [JE No. 6]. The Feasibility Study Report analyzed two options for a looped interconnection configuration and reflected the addition of a transmission line between Daviess Co. and Reid substations; however, the report did not include the cost of such transmission line. 8. There currently is no transmission line between the proposed Cash Creek 345 kv substation and either E.ON s Daviess Co. 345 kv substation or BREC s Reid 345 kv substation. 9. On April 18, 2008, SPP tendered the pro forma System Impact Study Agreement ( SISA ) to Cash Creek. [JE No. 7]. 4

5 10. On April 21, April 25, and May 15, 2008, s between Cash Creek and SPP were exchanged regarding certain language in the SISA. [JE Nos. 8-10]. 11. On May 12, 2008, s between BREC and Cash Creek were exchanged regarding the SIS. [JE Nos ]. SPP was copied on these s. 12. On May 16, 2008, Cash Creek executed a SISA and returned it to SPP with the required $50,000 deposit. [JE No. 13]. This SISA was not executed by E.ON or SPP. 13. Following receipt of the SISA and Cash Creek s deposit, SPP initiated the system impact study ( SIS ) for Cash Creek. However, as explained in the various correspondence between SPP and Cash Creek, the study process encountered several delays due to data collection issues, technical issues, issues with the modeling of the system, and the linear nature of the generation interconnection process. [JE No. 14]. A draft SIS Report was prepared, dated October 20, 2008 [JE No. 15] and was based on the assumption that Cash Creek s generator would connect to the E.ON transmission system through a direct connection from the generator to the Daviess Co. substation. Additional analyses were undertaken between October 2008 and February 2009 to address/correct certain modeling assumptions that were reflected in the October 2008 SIS Report. This draft SIS Report was not posted. Cash Creek never received a copy of the draft SIS Report and cannot confirm when the SIS Report, or any additional analyses, was completed or that it was ever even undertaken. 5

6 14. On August 10, 2009, E.ON informed Cash Creek that we (E.ON) do not believe it is appropriate for Cash Creek to request interconnection to a line that does not exist (i.e. the Daviess to Reid 345kV). It is also our position that a generator cannot request a Transmission to Transmission (T to T) interconnection through the LGIA process. [JE No. 16]. 15. On October 8, 2009, after several conference calls and discussions of this issue, SPP, Cash Creek, and E.ON met in Louisville, KY to discuss the issues with the proposed configurations and possible solutions to advance the Cash Creek Interconnection Request to a final resolution. Further negotiations failed to achieve a resolution of the issues, at which point Cash Creek engaged Commission DRS Staff. 16. On January 22, 2010, the parties met with DRS Staff. As a result of these efforts, the parties agreed to submit this joint pleading as a way to bring the issues to the Commission s prompt attention. As part of this negotiated arrangement, the parties also agreed that SPP would proceed with the study of the following three interconnection configurations generally described below and displayed schematically, [JE Nos ] with the caveat that the import of such studies, including whether the looped configuration and proposed service qualifies under the procedures of Attachment M to the E.ON OATT and the legal determination as to the Point of Interconnection for determining credits, shall be subject to FERC s determination in this proceeding: 6

7 LIST OF CONFIGURATIONS Daviess Co. Alternative: Cash Creek 345 kv substation is connected to E.ON Daviess Co. 345 kv substation. Reid Alternative: Cash Creek 345 kv substation is connected to BREC Reid 345 kv substation. Requested Configuration: Cash Creek 345 kv substation is connected to both E.ON Daviess Co. 345 kv substation and BREC Reid 345 kv substation in a looped configuration. 7

8 III. STIPULATED STATEMENT OF ISSUES 1. Which of the configurations listed in Part II above provide(s) the basis for a valid request for generator interconnection service under the Commission s interconnection policies and the Commission s pro forma LGIP, as adopted by E.ON in its OATT in the circumstances surrounding this petition? 2. If the Requested Configuration provides the basis for a valid request, what are the construction obligations of each of the Transmission Owners? 3. With regard to determining what are Network Upgrades which may be eligible for transmission credits under any of the abovelisted alternatives, is the Point of Interconnection at the high side of the Generator bus bar as requested by the Network Customer through the interconnection process or at the point where the Interconnection Facilities meet the Transmission Providers Transmission System? IV. STATEMENT OF POSITIONS In order to provide the Commission with an explication of the different views and arguments relevant to the three (3) stipulated issues, the Parties prepared separate position statements, as set forth below. As a courtesy, the Parties shared drafts of their respective position statements prior to filing this petition and were provided an opportunity to revise their drafts, as deemed necessary, to address arguments presented 8

9 by other parties; however, no Party was authorized to revise the content of another Party s position statement. POSITION STATEMENT OF SPP ISSUE I As the ITO for E.ON, SPP submits that the "Daviess Co. Alternative," involving a proposed direct connection from Cash Creek to E.ON's Daviess Co. substation, constitutes an appropriate generator interconnection that is eligible for study under the Commission's standardized LGIP, as adopted by E.ON in Attachment M to the E.ON OATT. SPP believes that there is no dispute among the parties regarding the eligibility of the configuration of the Daviess Co. Alternative. Accordingly, SPP supports a Commission finding that Cash Creek's request to connect to the Daviess Co. substation via a 345 kv radial line qualifies as a valid request for Interconnection Service under the terms of E.ON's Attachment M. SPP further submits that the Reid Alternative involving a proposed radial tie from Cash Creek's generator site to BREC's Reid substation, falls outside the scope of E.ON's LGIP provisions and thus is ineligible for study under the E.ON OATT. Nothing in the E.ON OATT would authorize, much less require, SPP to process such a request. To the contrary, SPP understands E.ON's Attachment M, by its terms, to apply only to requests proposing to interconnect a generating facility to E.ON's transmission system, not to unaffiliated, third-party, systems. 3 Under the proposed Reid Alternative, BREC is not an 3 E.ON OATT Attachment M, Definition of Interconnection Service ( Interconnection Service shall mean the service provided by the ITO or the Transmission Owner associated with interconnecting the Interconnection Customer's Generating Facility to the Transmission Owner's Transmission System ) (emphasis added). 9

10 "Affected System" within the meaning of the E.ON OATT, but rather a host utility into which the generator proposes to interconnect. Accordingly, SPP opposes a Commission finding that Cash Creek's request to connect to BREC's Reid substation via a 345 kv radial line qualifies as a valid request for Interconnection Service under the terms of E.ON's Attachment M. With respect to the Requested Configuration, SPP maintains that such a configuration is impermissible for study under E.ON s Attachment M because it would assume interconnection to non-existent transmission facilities and would involve an interconnection between two discrete, unaffiliated, transmission systems rather than a permissible generation-to-transmission interconnection. In SPP's view, the Requested Configuration, which creates a looped transmission-to-transmission connection that will require, in part, SPP to perform a study of the connection from the proposed generator site to a transmission system owned by a third party, is not eligible for study or approval as request for interconnection service under the terms of E.ON's LGIP provisions. SPP's research has found no Commission precedent that would (i) support treating the proposed looped configuration as a valid request for interconnection service; (ii) require a transmission owner to process a request to interconnect with a third-party transmission system under the LGIP, or (iii) allow an SIS to be performed based on the assumed existence of hypothetical transmission facilities that are not included in the current planning process of either of the two connecting transmission owners. Accordingly, SPP opposes a Commission finding that Cash Creek's request to connect to E.ON's transmission system through looped transmission-to-transmission facility installations qualifies as a valid request for interconnection service within the terms of E.ON's Attachment M. 10

11 A. E.ON s Tariff Provisions Governing Requests for Interconnection Service Are Properly Applied to the Proposed Daviess Co. Alternative. Under the Daviess Co. Alternative, the Cash Creek generator would interconnect with E.ON s transmission system at the Daviess Co. 345 kv substation. This configuration is entirely consistent with, and clearly contemplated under, E.ON s Attachment M and the provisions governing requests for large generator interconnection service. 4 Under this proposal, the generator would tie into the host utility through a radial connection extending from the generator site to E.ON s substation. SPP believes that there is no disagreement among the parties concerning the study eligibility of the Daviess Alternative under E.ON s LGIP provisions. B. E.ON s Tariff Provisions Governing Requests for Interconnection Service Do Not Apply to Requests to Interconnect with Third Party Transmission Systems. Under the Reid Alternative, the Cash Creek generator would be connected to BREC s transmission system through a tie line running from the generator to the Reid substation. The generator site is approximately 11 miles northeast of the Reid substation. SPP submits that the facility configuration represented in the Reid Alternative is not eligible for study under E.ON s LGIP tariff provisions. Under E.ON s Attachment M, an Interconnection Customer, for purposes of qualifying under E.ON s LGIP, is an entity that proposes to interconnect its Generating Facility with the Transmission Owner s Transmission System. 5 The term Transmission Owner is clearly defined to refer exclusively to E.ON s two public utility operating companies, LG&E and KU, and 4 5 Id. E.ON OATT, Attachment M, Definitions. 11

12 Transmission System is defined as those facilities owned and operated by the Transmission Owner. 6 Nothing in E.ON s Attachment M suggests any right or obligation on the part of the ITO to process requests for interconnection service to non-e.on transmission systems. It is true that the tariff requires consideration of Affected Systems as part of the study process, but such term is clearly intended to refer to third-party electric systems that may be affected by a proposed interconnection and cannot be construed as expanding the LGIP study requirements to include connections into systems other than E.ON. 7 C. E.ON s Tariff Provisions Governing Requests for Interconnection Service Do Not Apply to Requests to Interconnect to Two Independent Transmission Systems. For many of the same reasons, SPP believes that the so-called Requested Configuration cannot provide the basis for a valid request for interconnection service under E.ON s Tariff. SPP acknowledges the confusion created by its initial processing of Cash Creek s request. Indeed, it is partly because of this confusion, and SPP s decision to process and study the requested configuration through the preliminary Feasibility 6 7 Id. Id. ( Affected System shall mean an electric system other than the Transmission Owner's Transmission System that may be affected by the proposed interconnection. ) See also Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, FERC Stats. & Regs., Regs. Preambles 31,146, at P 118 (2003), order on reh g, Order No A, FERC Stats. & Regs., Regs. Preambles 31,160 (2004), order on reh g, Order No B, FERC Stats. & Regs., Regs. Preambles 31,171, order on reh g, Order No C, FERC Stats. & Regs., Regs. Preambles 31,190 (2005), aff d sub nom. Nat l Ass n of Regulatory Utils. Comm rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007). 12

13 Study stage, that the parties ultimately agreed to seek the Commission s guidance through this joint petition. SPP maintains that irrespective of the scope and assumptions reflected in the preliminary Feasibility Study report, if the Requested Configuration does not provide the basis for a valid request for interconnection service, it should not be determined to be eligible for study (i.e., and processed through the SIS and Facility Study stages) under the terms of E.ON s LGIP provisions. Thus, stripped to its core, the question presented regarding the Requested Configuration is whether SPP must complete the study process for a configuration that is dependant upon (and would entail the study of) a new interconnection between two unaffiliated transmission systems and the assumed existence of transmission facilities that are not in place, planned, or needed by the host utility. 8 SPP believes that the answer to this question is no. 1. The Scope and Content of the Feasibility Study Are Not Determinative of Whether the Requested Configuration Qualifies Under the LGIP Provisions of E.ON s Tariff. Any argument that the Requested Configuration is properly processed under the LGIP provisions of the E.ON Tariff due to SPP s agreement to consider the Requested 8 The Stipulated Statement of Facts correctly indicates that SPP staff was copied on certain s between Cash Creek and BREC [JE Nos ] concerning a possible joint SIS for both the E.ON and BREC portions of the looped interconnection. To be clear, while SPP did receive a copy of these s, SPP did not participate in any such joint study nor did it ever indicate a willingness to do such a study. To the contrary, SPP proceeded with an SIS only with respect to the direct radial interconnection between the Cash Creek and Daviess substations, recognizing the possibility that electrical impacts to BREC might need to be considered under the study requirements covering "affected systems." SPP did not understand these s as suggesting SPP's acquiescence in a joint SIS on behalf of both E.ON and BREC. 13

14 Configuration as part of a Feasibility Study should be rejected by the Commission for several reasons. First, SPP s initial actions on Cash Creek s request for interconnection service and, specifically, SPP s acceptance of the Feasibility Study agreement and completion of a preliminary, non-binding, Feasibility Study on the Requested Configuration are not determinative of whether the Requested Configuration provides the basis for a valid request for interconnection service under the LGIP. Following the completion of the Feasibility Study, a new team of SPP management was installed with responsibility for all ITO study functions under the E.ON Tariff. The new staff initiated an SIS for the Cash Creek interconnection request only with regard to the Daviess Co. alternative and did not adopt the study assumptions and facility configurations reflected in the Feasibility Study. 9 Through subsequent communications, the parties disagreement over the proper scope and assumptions for the SIS became apparent and delays ensued. Among other things, SPP determined that, notwithstanding any contrary implication at the feasibility study stage, the Requested Configuration did not qualify for study under E.ON s Attachment M -- i.e., it was not a valid request for interconnection service within the terms of the LGIP provisions but, instead, constituted an improper transmission-totransmission interconnection configuration involving non-existent transmission facilities that would only be appropriate for consideration, if at all, under the E.ON planning 9 See [JE No. 13] at 3 ( The proposed generation is to be connected at Daviess County substation on the 345kV side owned by Louisville Gas and Electric (LG&E). ). 14

15 process as an economic study as described in Attachment K of the E.ON Tariff. 10 And while Cash Creek makes much of the extended time period between the execution of the SISA and the completion of the SIS, the amount of time that elapsed was primarily due to the linear nature of the generation interconnection queue and the need for the study process to account for changes in the queue due to the withdrawal of interconnection requests by higher-priority projects. 11 Thus, even if Cash Creek s requested configuration was valid under the LGIP (SPP submits that it is not), the SIS for Cash Creek would have been re-performed in each instance to account for the impact of the withdrawal of the higher priority projects. It also bears noting that the LGIP provisions clearly contemplate the potential for changes to the study assumptions between the preliminary Feasibility Study stage and the more comprehensive SIS stage. 12 Although SPP has found no case presenting similar facts, it follows that the transmission provider s undisputed right to modify certain study assumptions based on information identified at the SIS stage should likewise allow the transmission provider to pause and even abandon the study process when confronted with information indicating defects in the original request for interconnection service. Where such defects undermine the validity of the originally requested electrical configuration, the transmission provider must be authorized to take corrective action and continue to E.ON OATT, Attachment K, Section VIII ( Economic Planning Studies may also be used to evaluate network additions or upgrades necessary to integrate any new resource or load to the Transmission System ). See Part II supra at P 13. E.ON OATT, Attachment M, Sections 6.1,

16 process only those requests presenting a proper generator-to-transmission interconnection configuration. SPP acknowledges the need for flexibility in the processing of requests for interconnection service. SPP agrees that the LGIP provisions should not be rigidly interpreted, or technically applied, so as to permit a transmission provider to deny a reasonable request. As the ITO for E.ON s transmission system, SPP has no economic interest in the outcome of interconnection disputes, but merely seeks to apply the LGIP provisions in accordance with their terms, taking account of the Commission s stated policy favoring flexibility. That said, and regardless of the confusion caused by SPP s response to Cash Creeks initial feasibility study request, there must be some constraints on the types of requests that are considered eligible for processing under the pro forma terms and conditions of the LGIP. This is particularly true given the use that is typically made of SIS (and facility studies) in the determination of cost responsibility for facilities constructed in connection with a request under the LGIP and the potential precedential implications of allowing any proposed configuration to proceed under the LGIP process. 13 The Commission should therefore find that the Requested Configuration is not eligible for study under the LGIP irrespective of the scope of the completed, non-binding, Feasibility Study. To rule otherwise would require SPP to act outside of, and inconsistent with, the terms of the E.ON Tariff and to treat future requests for interconnection service 13 This is borne out by the arguments presented by Cash Creek in response to Issue III, infra. 16

17 in a comparable manner, notwithstanding SPP s view that such treatment was not compatible with the LGIP process. Accordingly, SPP requests that the Commission confirm that the provisions of E.ON s Attachment M governing requests to interconnect to the E.ON system do not extend to the Requested Configuration and do not require or provide for, inter alia, the presumed existence, for interconnection study purposes, of approximately 28 miles of transmission line that do not currently exist and are neither needed nor currently planned to be constructed by EON. 2. The Requested Configuration Is Not a Generator Interconnection Within the Meaning of Order No and E.ON s LGIP OATT Provisions. By this Joint Petition, the Commission is asked, inter alia, to determine whether the Requested Configuration proposed by Cash Creek constitutes a request for generator interconnection service that is eligible for study under the LGIP provisions of E.ON s Tariff. SPP submits that a proper understanding of the LGIP provisions, including the Commission s stated objectives and intentions in Order No. 2003, compels a finding that Cash Creek s request does not qualify as a valid request for generation interconnection service. 14 In the same manner that the Reid Alternative is not eligible for study under the E.ON OATT, SPP is not authorized under the E.ON Tariff to study requests involving proposed interconnections with systems other than E.ON except as an affected system. The Requested Configuration involves a proposed looped connection between E.ON s 14 See Order No at P 34. (LGIP specifies the steps that must be followed and deadlines that must be met when an Interconnection Customer requests interconnection of either a new Generating Facility or the expansion of an existing Generating Facility with the Transmission Provider's Transmission System. ) (emphasis added). 17

18 Daviess Co. substation and the Reid substation owned by BREC and the assumed existence of 28 miles of transmission line between the generator site and the Daviess substation. Under this transmission-to-transmission configuration, a new tie from the LG&E/KU control area to the BREC control area is created, with the Cash Creek generator sandwiched in between, and essentially hanging off of, the new interconnection between the two transmission systems. This type of configuration clearly goes beyond studying BREC as an affected system; rather, it requires that SPP study and E.ON contract with BREC as a separate and distinct transmission system. Put another way, requests for interconnection service that cannot be studied without assumptions regarding non-existent transmission facilities, -- particularly where the affected transmission owner has neither planned for nor expressed any need for such hypothetical facilities -- should not be considered as cognizable under the Commission s LGIP procedures. Similarly, requests which seek to create a looped connection between two separate transmission systems, should be deemed beyond the scope of a utility s LGIP which applies only to proposed configurations that involve interconnecting new generation to the utility s existing system. SPP has found no authority under which the Commission has endorsed, as properly within the scope of the standard LGIP provisions, a configuration comparable to the Requested Alternative. The cases cited by Cash Creek are not, in SPP s view, germane. For starters, none of the cited orders was decided under Order No or involved the application/interpretation of the Commission s pro forma LGIP and LGIA provisions. Kiowa Power Partners, LLC, 15 for example, involved a pre-order No FERC 61,251 (2002). 18

19 request for interconnection service under Section 210 of the Federal Power Act that was eventually resolved through a voluntary settlement. It provides no guidance or precedent concerning the study requirements or eligibility criteria for requests for interconnection service under the LGIP. Moreover, the interconnection configuration considered in Kiowa, in contrast to the Requested Alternative, did not create a looped interconnection between two transmission systems; rather, it created a separate direct connection through a High-Voltage Direct Current ( HVDC ) tie into ERCOT and an additional conventional interconnection into SPP. While the Kiowa settlement resulted in an interconnection between two transmission systems, it did not involve a looped configuration, did not involve application or scope of the Commission s pro forma LGIP procedures, and did not present the same or similar study-eligibility and related cost responsibility issues implicated by Cash Creek s Requested Configuration. The second cited case, involving an interconnection between Entergy Mississippi and Southaven Power, LLC ( Southaven Interconnection ) 16 is similarly inapposite. In that case, the generator in question requested interconnection service to Entergy Mississippi prior to Order No and was granted such service to a single substation that was jointly owned by Entergy Mississippi and TVA. The pre-order No interconnection was implemented pursuant to a voluntary agreement entered into by the involved parties. 17 The total looped interconnection was roughly 1000 linear feet, and Interconnection and Operating Agreement between Entergy Mississippi, Inc., and Southaven, LLC, Docket No. ER (July 13, 2000). Id. 19

20 Southaven requested a waiver of Order 888 and 889 requirements. 18 While Southaven Power assumed that the generator leads [would] be considered generation, rather than transmission, it also requested waiver because the looped configuration interconnected two utilities and thus was not purely a generation interconnection request. 19 Thus, the Southaven Interconnection, similar to Kiowa, seems to stand for the exact opposite proposition for which Cash Creek attempts to use it. Leaving aside for the moment the fact that neither case involved application of the Commission s Order No LGIP procedures, in the Southaven Interconnection and in Kiowa, the generator requested Commission action outside of the conventional interconnection process in place at the time of the request. At the very least, the cases cited by Cash Creek indicate that the Requested Configuration could not proceed under E.ON s currently effective LGIP process without prior approval or direction from the Commission. In this regard, it is clear that the relevant definitions and terms under E.ON s Attachment M do not permit an interpretation that would capture the transmission-totransmission connection proposed in the Requested Configuration. 20 The Requested Configuration undisputedly involves a connection to non-existent E.ON transmission facilities (in addition to the proposed connection to BREC s third-party transmission system). But the term transmission system, as defined in Attachment M and Order No. 2003, clearly contemplates that a proposed generator would connect to existing Southaven Power LLC, Request for Waiver of Requirements Under Order Nos. 888 and 889, Docket No. EL (June 1, 2000). Id. E.ON OATT, Attachment M, Definitions. 20

21 transmission facilities, rather than requiring that the transmission provider extend its transmission facilities to the generator s preferred location. 21 Relevant case law confirms as much. Addressing the applicability of the LGIP in the context of proposed connections to distribution facilities, the Commission made clear that consideration should only be given to proposed generator connections into existing facilities. 22 In the Commission s words: [The] pro forma LGIP and LGIA apply to interconnections to a "distribution" facility when the facility is included in a public utility's Commission-filed OATT at the time the Interconnection Request is made.[t]he revised definition of Transmission Owner should not allow the LGIP to apply to distribution facilities unless those facilities are available for Commission-jurisdictional transmission service under Midwest ISO's OATT at the time the Interconnection Request is made. 23 More recently, in Nevada Power Co., 24 the Commission confirmed that generator interconnection requests subject to the LGIP are those that propose connections into the transmission provider s existing system. Indeed, it is difficult to reconcile Cash Creek s Requested Configuration and, specifically, the hypothetical 28-mile transmission line that would be required in order to reach E.ON s Daviess Co. substation with the following excerpt from Nevada Power, which addressed cost responsibility concerns Id. Taken to its extreme, this type of request could lead to absurd results where generators are allowed to submit requests to interconnect to multiple transmission providers that are located far away from the generator site, and the transmission providers would be required to build the necessary transmission facilities interconnect to each other for the sole benefit of the generator. Midwest Indep. Transmission Sys. Operator, Inc., 108 FERC 61,027 (2004). Id. at P 87 (emphasis added). 111 FERC 61,161 (2008). 21

22 regarding the manner by which generators could site facilities and seek interconnection under Order No. 2003: The point of interconnection is typically an electrical substation or a tap into an existing transmission line. Rarely is the point of interconnection located at the generating facility itself; in virtually all cases, interconnection facilities [] must be constructed to provide an electrical connection between the generating facility and the transmission system at the point of interconnection. Thus, when we refer to interconnection facilities, we are not referring to facilities at the point of interconnection. Rather, interconnection facilities refer to all facilities and equipment from the generating facility up to (but not including) the point of interconnection. 25 Nevada Power demonstrates that the Requested Configuration does not meet the requirements for a valid request for interconnection service. The Requested Configuration presumes a looped configuration extending from BREC s transmission system, to the proposed Cash Creek generator bus bar, and into E.ON s Daviess Co. substation, located 28 miles away. Stated differently, the interconnection contemplated under the Requested Configuration assumes a transmission line that currently does not exist and would, necessarily, be sited behind the point of interconnection as defined in Order No. 2003, explained in Nevada Power, and adopted in E.ON s Attachment M. ISSUE II & ISSUE III SPP takes no position with respect to Issues II and III. These issues implicate the rights and obligations of Cash Creek and E.ON, as determined by the interpretation/implementation of Commission policy, and do not fall within the tariff administration functions of the ITO. 25 Id. at P

23 In conclusion, SPP supports a Commission finding that the Daviess Co. Alternative is eligible for consideration as a valid request for interconnection service under the E.ON OATT. For the reasons presented above, SPP opposes any Commission finding that the Requested Configuration and Reid Alternative are eligible for consideration as valid requests for interconnection service under the E.ON OATT. POSITION STATEMENT OF E.ON ISSUE I E.ON s position is that only the Daviess Alternative constitutes a valid basis for a generator to request Interconnection Service under the LGIP, as incorporated in the E.ON OATT. Analysis of the Daviess Alternative Interconnection Service under the E.ON OATT allows a generator to interconnect its facility to the E.ON owned and operated transmission system, so the request to connect Cash Creek s generating facility to E.ON s Daviess County substation constitutes a valid request for Interconnection Service under the E.ON OATT. 26 Analysis of the Reid Alternative The request to connect Cash Creek s generator to Big River s Electric Cooperative s ( BREC s ) Reid Green Substation is not a request to interconnect its facility to the E.ON Transmission System. 26 This alternative would not include an interconnection of the Cash Creek generating facility to BREC s Reid substation as part of Interconnection Service under the E.ON OATT. 23

24 Consequently, the request does not constitute a valid request for Interconnection Service to the E.ON Transmission System under the E.ON OATT. 27 Analysis of the Requested Configuration Cash Creek s Requested Configuration essentially requests E.ON and BREC to build a new 40-mile transmission line between their two systems and then interconnect the generator to this new line. This request to connect Cash Creek s generating facility to a new transmission line is not a valid request for Interconnection Service under the E.ON OATT as it is not a request to connect a generator to E.ON s Transmission Facilities. Moreover, this configuration request does not qualify as a request for interconnection under the LGIP as it is not a request to connect to facilities used either to transmit electric energy in interstate commerce or to sell electric energy at wholesale in interstate commerce under a Commission-filed OATT at the time of the interconnection request, as required under Order No et. seq. A. Regulatory Background Regarding Interconnection. The process of physically connecting a generating facility to a transmission system is referred to as interconnection and is governed by the standardized interconnection procedures adopted by the Commission in Order No. 2003, referred to as the Large Generator Interconnection Procedures ( LGIP ). 28 The LGIP only apply to 27 Cash Creek did submit an interconnection request to BREC to connect its generating facility to Reid, and E.ON takes the position that requesting interconnection from BREC was the appropriate means to connect Cash Creek generating facility to the BREC transmission system. On its own, as a request to BREC for interconnection solely with the BREC Transmission System, E.ON would have no objection to this alternative. 28 See Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, 104 FERC 61,103 (2003), order on reh g, Order No A, (continued) 24

25 interconnections to the facilities of a public utility s Transmission System that, at the time the interconnection is requested, is used either to transmit electric energy in interstate commerce or to sell electric energy at wholesale in interstate commerce under a Commission-filed OATT. 29 An LGIP that conforms with the Commission s pro forma LGIP is incorporated into the E.ON OATT. 30 The OATT defines Interconnection Service as the service provided by the ITO or the Transmission Owner associated with interconnecting the Interconnection Customer's Generating Facility to the Transmission Owner's Transmission System 31 and defines Transmission System as the facilities owned and operated by the Transmission Owner. 32 B. Analysis of Configurations. Based on the above description of Interconnection Service from the E.ON OATT, only the Daviess Alternative qualifies as a valid request for Interconnection Service under the E.ON OATT. As explained below, the Reid Alternative and the Requested Configuration do not meet the requirements found there for Interconnection Service. (continued) 106 FERC 61,220 (2004), order on reh g, Order No B, 109 FERC 61,287 (2004), order on reh g, Order No C, 111 FERC 61,401 (2005) See Order No A at P 6; see also Order No C at P 51 (emphasis added). See E.ON U.S. Servs., FERC Electric Tariff, Fourth Rev. Vol. 1 (hereinafter OATT ) at Attachment M. Attachment M, LGIP 1 (Original Sheet No. 188). See OATT, Section 1.57 (First Revised Sheet No. 23) (definition of Transmission System ). 25

26 C. Daviess Alternative. The Daviess Alternative qualifies as a valid request for Interconnection Service because it is a request to connect the Cash Creek generating facility to the Daviess County 345 kv Substation ( Daviess County ), which is owned and operated by E.ON. Daviess County is a 345 kv Substation that is currently used to provide transmission service under E.ON s OATT and was used in this manner at the time that Cash Creek requested interconnection. Since the Daviess Alternative meets the requirements for interconnection under the LGIP as incorporated in the E.ON OATT, it qualifies as a valid request for Interconnection Service. D. Reid Alternative. The Reid Alternative does not qualify as a valid request for Interconnection Service from E.ON under the E.ON OATT because it is a request to interconnect the Cash Creek generating facility to a transmission facility that is neither owned nor operated by E.ON. Instead, the Reid Substation is owned and operated by BREC. Since Interconnection Service under the E.ON OATT only provides a means to connect a generator to E.ON s transmission system, the Reid Alternative fails to meet the requirements for Interconnection Service. Instead, E.ON asserts that if Cash Creek seeks to interconnect to the BREC system, it should continue to pursue the interconnection request it made to BREC under BREC s OATT. E. Requested Configuration. As background, Cash Creek requested a configuration where the Cash Creek Generating Station is interconnected to both the Daviess Co. 345 kv substation and the Reid 345 kv substation with the breaker closed between Daviess Co. and Reid. This Requested Configuration physically locates the generator between two existing 26

27 substations, E.ON s Daviess County and BREC s Reid substation, which are approximately 40 miles apart. Currently, there is no transmission line between the two substations to which Cash Creek can interconnect. 33 The Requested Configuration is fatally flawed as a request for Interconnection Service in several respects. First, the Requested Configuration does not qualify as a valid request for Interconnection Service because the request fails to connect the Cash Creek generating facility to an existing E.ON Facility, as required in the OATT. The proposed new 40-mile transmission line is not a facility that was used to transmit electric energy in interstate commerce or make sales at wholesale covered under E.ON s OATT at the time of the request. Currently, E.ON does not own or operate a line between the Daviess and Reid substations. Indeed, no such line exists. So, at the time of the request for interconnection to this facility, the proposed facility was not a facility that was already used to transmit electric energy in interstate commerce or to make wholesale sales under E.ON s OATT, a threshold requirement for interconnection service under the LGIP as explained in Order No et seq. 34 Also, the tariff language providing the right to interconnect to the Transmission Owner s Transmission System must be read together with the tariff definition of Transmission System (i.e. facilities owned and operated by the Transmission Provider). This tariff language would be rendered meaningless if the facilities were not required to be owned and operated by the Transmission Provider prior Cash Creek argues that the project has the support of the state government and cites the Incentives for Energy Independence Act. E.ON notes, however, that though this act passed the legislature, it was not signed by the governor and will not become law. See supra note

28 to the interconnection request, instead of being owned and operated by the Transmission Provider as a result of the very request to interconnect. 35 Admittedly, once constructed to accommodate a request, Network Upgrades become part of the Transmission Owner s Transmission System. However, a request to build a new 40-mile transmission line between two different Transmission Owners is not consistent with the tariff provisions allowing generator interconnections to a Transmission Owner s system. 36 Second, while it can be stated that Cash Creek is, in fact, requesting interconnection to two existing facilities (namely, the Daviess and Reid substations), this would be the case only if Cash Creek were requesting two isolated radial lines to each transmission system. Nothing in the LGIP allows a generator to request two such Tariff construction requires that tariffs be read in a manner that does not render the tariff language meaningless. See, e.g., Cen. Me. Power Co., 128 FERC 61,143 at P 31, n.29 (2009); MMC Energy, Inc. v. Cal. Indep. Sys. Operator Corp., 123 FERC 61,251 at P 81 (2008)( a tariff must be interpreted to give meaning to all provisions of the tariff )(internal citations omitted); Nicole Gas Production, Ltd., 105 FERC 61,371 at P 9 (2003)( Like a contract, a tariff must be interpreted to give meaning to all provisions of the tariff ). Cash Creek cites to a petition for a waiver of Order No. 888 as support for its argument that the Commission has approved looped interconnections between two different transmission owners. Request for waiver of requirements under Order Nos 888 and 889 of Southaven Power LLC, Docket No. EL (June 1, 2000). This case is distinguishable from the facts here, however, inasmuch as it predated Order No and the establishment of the current pro forma LGIP/LGIA. Additionally, in Southaven, the generator was building its facility adjacent to an existing substation that was jointly owned by TVA and Entergy. The loop was a 3,000-linear foot line connecting from one side of the substation to another. The generator represented that the loop was a sole use facility but noted that waiver of Order No. 888 was required because the loop was a transmission-to-transmission interconnection. The letter order granting waiver does not provide any discussion and merely notes that no protests were received. This case does not support the 40-mile transmission-to-transmission interconnection proposed here or for Cash Creek s position that such line be considered a Network Facility. 28

29 interconnections to different transmission owners transmission systems. But even if it did, only the radial interconnection to Daviess County would constitute an interconnection to an existing E.ON transmission facility. However, by asking that the breaker be closed between Daviess and Reid, what Cash Creek is proposing is not to be interconnected to Daviess, but rather to be interconnected to a new transmission line between Daviess and Reid. Again, this line does not exist and is not part of E.ON s Transmission System. Third, the requested configuration is not a valid request for Interconnection Service because it essentially requires a wires-to-wires interconnection of two transmission systems to accommodate an interconnection of the generation facility. If the Requested Configuration were built as proposed, with the breaker closed between Daviess County and Reid, the result would be a wires-to-wires interconnection between the transmission systems of E.ON and BREC, an interconnection that neither E.ON nor BREC planned on their own or desires to establish. Thus, the request to interconnect between the two stations with a closed breaker between them is tantamount to requesting two transmission providers to establish a new transmission-to-transmission interconnection. Nothing in the LGIP grants a generator the right to request this type of interconnection service between two transmission systems. 37 The LGIP was established 37 Cash Creek cites to Kiowa Power Partners, LLC, 99 FERC 61,251 (2002) to support its argument that the Commission has allowed the interconnection of two transmission systems under FPA Sections 210 and 211 and should allow it under the LGIP. This case is distinguishable because it predates Order No. 2003, involves a settlement, and relates to interconnection in ERCOT under the ERCOT procedures. The generator in that case was to be interconnected to SPP in Oklahoma and to ERCOT. Paragraph 39 notes that there could be reliability concerns with this type of configuration for regional planners in ERCOT and SPP because the generator could decide to sell its capacity into either market (continued) 29

30 to accommodate generation interconnections, not to mandate unnecessary transmission interconnections. Fourth, Cash Creek s requested double interconnection with two transmission systems is certainly not required to establish an outlet for the energy from the facility, to access more than one market or for reliability reasons. 38 Cash Creek does not need to be electrically interconnected to both the E.ON and the BREC transmission systems to sell power into both the Midwest ISO and E.ON markets. Once Cash Creek is interconnected to either transmission system, it can request transmission service to the other transmission system under the tariff of the transmission provider it is interconnected with. Moreover, there is no need to connect to two different transmission providers to receive reliable interconnection service. Fifth, the only reason for requesting this configuration appears to be that Cash Creek seeks to construe all of the facilities being built to interconnect its generating facility as Network Upgrades, rather than Interconnection Facilities. Cash Creek s position appears to be that because it is requesting a looped configuration, all of the facilities being built (i.e. from the generating facility to E.ON s Daviess substation and from the generating facility to BREC s Reid substation) are Network Upgrades for which it is entitled to receive Network Credits. This would include the cost of nearly 40 miles of transmission between the two substations, which E.ON has estimated would cost (continued) depending upon economic conditions and noted that the Commission would take into consideration such reliability concerns in any future similar requests. 38 E.ON disagrees with Cash Creek s unsupported claim that there is a reliability reason that requires interconnection with two different transmission owners systems. 30