Energy Legal Blog

FERC Approval of Sea Breeze Merchant Cable Project May Open Door to More Transmission

In a move intended to induce development of new or upgraded transmission, FERC has approved the proposal of Sea Breeze Pacific Juan de Fuca Cable LP to run a merchant transmission line between Washington State and Vancouver, British Columbia.  As the first merchant line approved that will not be part of an existing RTO or ISO, the approval signals that FERC has become more receptive to such projects.

Sea Breeze is comprised of two phases.   The first, set for completion in winter 2007, connects a British Columbia Transmission Corp. substation in Victoria, B.C. with a Bonneville Power Authority substation in Port Angeles, WA.  A second and longer line, planned to go online in 2008, would connect Vancouver and Fairmount, WA.  Both lines will have the capacity to transmit 540 MW.

In addition to allowing the project to go forward outside of an organized market (even if one eventually forms in the region), FERC also showed flexibility with regard to the ten criteria it uses to evaluate merchant proposals.  FERC will not require the project to employ a market monitor, having determined both that requiring a monitor for a single project would not "advance the public interest" and that the need for a monitor was negated by "the fact that [the project's] single goal would be to leverage the assets in the most efficient way" possible. 

While FERC authorization for Sea Breeze to operate as a merchant clears a major milestone for the Sea Breeze sponsors ― Sea Breeze Power Corp. and Boundless Energy LLC― FERC approval is not the end of the road.  The results of a currently-underway open season that will auction capacity on the proposed lines, a step that has defeated other merchant projects, will determine whether the project will turn a profit.  But the Sea Breeze project sponsors have momentum working for them.  Sea Breeze Power has a wind project in the works for British Columbia that will need new transmission capacity to get its wind generation to market, and has received financing from a group that was involved in the successful financing of the Path 15 upgrade in California.  In addition, sponsor Boundless Energy proved successful in securing a purchaser for the capacity on its Neptune merchant line between New Jersey and Long Island.  The next few months will tell if the combination of this management team, together with a more-receptive FERC, will bring Sea Breeze to fruition as the first merchant transmission project outside of an RTO or ISO.  [Sea Breeze Pacific Juan de Fuca Cable, LP, 112 FERC ¶ 61,295 (2005)]  [NEW MATTER]