FERC Denies Preference for Reservation of Transmission Capacity on Merchant Transmission Line for Renewable Energy Resources

Rock Island Clean Line LLC is proposing to build a 500-mile, 600 kV HVDC merchant transmission line and associated facilities capable of delivering up to 3,500 MW of capacity and associated energy from generation projects in eastern South Dakota, eastern Nebraska, western Iowa and western Minnesota to customers in Illinois and other states.  In a November 2011 application to the Federal Energy Regulatory Commission (FERC), Rock Island sought authorization to sell up to 75% of the capacity in its transmission line to credit-worthy anchor tenants at negotiated rates, with the remainder of the capacity to be sold through an open season.

Rock Island noted in its application that its transmission line was intended to facilitate the delivery of energy from renewable energy resources in the Midwestern United States to major load centers, and asserted that use of the line for that purpose would reduce potential opposition to construction of the transmission line.  It therefore proposed  to give a preference during the open season to entities seeking to reserve capacity for delivery of energy from renewable energy resources by scoring proposals premised on the transmission of electricity from renewable resources more highly than proposals to transmit energy from non-renewables.

In an order issued on May 22, 2012, the FERC authorized Rock Island to allocate 75% of the planned capacity in the project to anchor customers in order to foster development of the project.  However, the FERC rejected Rock Island’s proposal to grant a preference in its open season to entities proposing to transmit energy from renewable resources.  In so doing, the FERC concluded that Rock Island had not provided a sufficient explanation of how distinctions between renewable energy resources and other types of generators justified the preferential treatment of renewable energy resources in an open season for reservation of transmission capacity.

Also in the order, the FERC denied a request by Rock Island for waiver of the obligation to comply with Parts 41 and 101 of the FERC’s regulations, relating to the maintenance of books and records in accordance with the Uniform System of Accounts.  The FERC explained that although it had previously waived the applicability of those regulations to other merchant transmission line developers, denial of Rock Island’s request for a waiver was appropriate in order to facilitate its regulatory oversight.  The order was issued in Rock Island Clean Line LLC, 139 FERC ¶ 61,142 (2012), and is available on the FERC’s website.