Energy Legal Blog

FERC Preserves ERCOT Independence, Even as Texas Congressman Pushes for FERC Regulation

Finding that two proposed transmission lines did not jeopardize the jurisdictional arrangement that keeps ERCOT outside of FERC regulation, on March 15, the Commission approved new transmission lines proposed by Cottonwood Energy Co. and Brazos Electric Power Cooperative.  Cottonwood plans to build an approximately 100-mile high voltage transmission line from a 1200 MW natural gas-fired generating facility in Deweyville, Texas (on the Texas-Louisiana border), which Cottonwood will interconnect with CenterPoint Energy Houston.  FERC's order disclaimed jurisdiction of the new line, because it would not interconnect with any non-ERCOT utilities and would not intermingle any ERCOT electricity with electricity from the Eastern Interconnection.

In a separate order issued the same day, FERC also approved Brazos's proposed transmission project.  Late last year, Brazos had proposed to construct a 345 kV, 70-mile alternating current transmission line from a planned new 750 MW coal-fired generating unit in Hugo, Oklahoma (which it originally planned to co-own with the Western Farmers Electric Coop ("WFEC")).  Brazos also planned to build a 375 MW high voltage direct current line to provide a connection between the Hugo generating unit and the Southwest Power Pool.  FERC's March 15 order approved the new intertie, directed interconnection of the Brazos line with local utility TXU, and directed TXU and CenterPoint Energy to provide transmission services to Brazos.  FERC made clear that its order would not make TXU, CenterPoint, or ERCOT a FERC-jurisdictional "public utility."  Interestingly enough, Brazos filed just a few days later asking FERC essentially to rescind these authorizations and terminate the proceeding.  Brazos explained that after continued negotiations with WFEC, the parties determined that Brazos will no longer own any part of the Hugo generating unit, and thus, Brazos no longer plans to build the approved transmission line.

Meanwhile, Texas Congressman Joe Barton (R), former chairman and current ranking member of the House Committee on Energy and Commerce, continued on his warpath that FERC should have jurisdiction over ERCOT.  Congressman Barton's concerns about ERCOT's independence arose in the wake of a proposed buyout of TXU.  Barton had posed several questions to FERC Chairman Joseph Kelliher (a former Barton Capitol Hill staffer) regarding the TXU buyout, many of which Kelliher stated he was unable to answer because no information has been filed with FERC regarding the proposed transaction.  Kelliher stated that FERC currently has only limited jurisdiction over utilities like TXU whose operations are confined to ERCOT, but made clear that he does not believe any expansion of FERC’s jurisdiction is needed.  If Congress did grant FERC authority to regulate ERCOT utilities, Kelliher stated he envisioned that FERC would have much the same jurisdiction over those utilities as it currently exercises over utilities that transmit and sell power across state lines — namely, regulating all rates, terms, and conditions of transmission and wholesale rates by investor-owned utilities, and overseeing certain corporate transactions, including mergers and acquisitions of jurisdictional facilities.  Whether Barton will continue to demand FERC jurisdiction over ERCOT remains to be seen.