The FERC is Asked a Simple Question: Can Electric Energy be Transmitted in Interstate Commerce Without Use of Wires?

Alternative Transmission Inc. (ATI) recently asked the Federal Energy Regulatory Commission (FERC) to assert jurisdiction over the transfer of electric energy from one state to another that does not involve the use of transmission wires or wire corridors. ATI also asked that it be treated as a “public utility” under Parts II and III of the Federal Power Act (FPA).

Section 201 of the FPA confers jurisdiction upon the FERC over the transmission of electric energy for resale in interstate commerce and over all transmission facilities used for that purpose. The FPA says simply that electric energy is deemed to be transmitted in interstate commerce if it is “transmitted from a State and consumed at any point outside thereof” but does not discuss how such transmission is to be accomplished.

ATI is proposing to construct what it characterizes as “electric energy transfer stations” at various locations in the United States. According to ATI:

At the charging stations electric energy generated by unaffiliated entities will be transferred to a mobile medium—e.g., a shippable container of an electrically chargeable, dischargeable, and rechargeable medium. The charged mobile medium then will be transported across state lines by rail (and possibly tractor-trailer, boat or airplane, or any combination of these) to discharging stations at different locations. At the discharging station the medium in the containers will be available for instantaneous dispatch as instructed, until the charge is depleted, and the medium becomes available for recharge.

A supporting affidavit submitted by ATI further explained that:

The service ATI proposes in the Petition involves taking electric energy at one location and delivering electric energy at another location. As with high-voltage direct-current (HVDC) transmission, the energy is converted from conventional alternating current (AC) power at one location in the electric grid into another type of energy and then converted back to AC power at another location. In the case of HVDC transmission, the energy is converted into DC power, whereas in the case of ATI’s proposed service it is converted into the chemical bonds in an “electrolyte” solution. Both cases involve transmitting electric energy from one location to another.

ATI stated that the wireless service it envisions might be used to deliver electric energy into geographic areas with insufficient transmission import capability. Such service might also be useful if existing transmission facilities have been damaged or destroyed by extreme weather events, cyber security attacks, or improper maintenance, or are otherwise not in service. ATI explained that it is seeking to be declared a “public utility” under the FPA “so that it can invest in alternative modes of transmission with the Commission’s assurance that it will be able to compete fairly with traditional wire and wire corridor modes of transmission,” and to participate in regional transmission expansion plans.

ATI argues that the service it intends to provide will be akin to transmission service because it will receive electric energy at one location and deliver electric energy to another location. However, the service proposed by ATI involves the use of electric storage facilities, which FERC has determined may fit into more than one of the traditional asset functions of generation, transmission, and distribution.

The FERC will need to determine whether the transaction described by ATI involves transmission of electric energy, as ATI contends, or is simply transportation of an energy storage device such as a battery that is fully charged. If the transaction is deemed to be transmission service, the FERC will need to determine whether it has jurisdiction over movement of electricity through mediums other than wires, which were the sole means of transmission in 1935, when Parts II and III of the FPA were enacted. Moreover, the unbundled transmission of electric energy required by FERC Order No. 888 involves non-discriminatory access to interstate transmission wires. However, the language of the FPA does not specify that transmission of electric energy in interstate commerce necessarily requires use of wires.

The FERC may also consider the potential effects of designating the service proposed by ATI a FERC-jurisdictional transmission service, including the following:

• In Order No. 1000, the FERC sought to expand the ability of non-incumbent transmission providers to compete for the right to develop new transmission facilities. The rulings sought by ATI may enable it to contribute to efficient or cost-effective solutions to regional transmission needs.
• ATI is proposing to move electric energy primarily by rail, but also by tractor-trailer, boat, or airplane. Each of these modes of conveyance is already regulated by a regulatory authority; e.g., the Coast Guard, the Surface Transportation Board, the Department of Transportation, or the Federal Aviation Administration. A ruling in favor of ATI may give rise to conflicts in jurisdiction between the FERC and each of these other regulatory authorities.
• Electric utilities within the Electric Reliability Council of Texas currently are not FERC-jurisdictional public utilities because they are not engaged in the transmission or sale of electric energy for resale in interstate commerce. Such utilities may become subject to regulation by the FERC if charging energy supplied by generation resources in Texas is transported by rail and discharged in another state. Similarly, utilities in Alaska may become subject to regulation by the FERC if charging energy supplied to ATI from generation resources in Alaska is transported across Canada by rail (or transported by ship along the Pacific Coast) and discharged in the lower 48 states.

Because there is nothing in the FPA or in FERC precedent to guide the FERC, the FERC may appreciate any advice or insights regarding the issues raised by ATI that it receives from interested parties. The deadline for filing of motions for leave to intervene and protests in the ATI proceeding is June 3, 2019. We will watch with interest to see how the FERC acts on the Petition.