Steptoe & Johnson LLP Submits Novel FERC Filing For Groundbreaking Tres Amigas Superstation

(December 9, 2009, Washington, DC) - Steptoe & Johnson LLP, a leading international law firm with broad experience in the electric power industry, made two regulatory filings with the Federal Energy Regulatory Commission (FERC), in support of the proposed Tres Amigas Superstation.

Tres Amigas, which has gained wide acclaim, represents a new vision for bringing electric markets together and is the first facility proposed to interconnect all three of America's power grids – or “interconnections” – known as the Eastern Interconnection, the Western Interconnection and the Texas Interconnection (also known as the Electric Reliability Council of Texas, or ERCOT).

The Tres Amigas Superstation will serve as the nation's first renewable energy transmission hub, enabling a significant increase in wind, solar and geothermal power that is currently limited by the boundaries between the nation's three transmission interconnections.

According to David Raskin, head of Steptoe & Johnson’s Electric Power practice who led the regulatory filings on behalf of Tres Amigas, LLC, the filings are intended to achieve FERC approval on two seminal issues:

1.  Providing Tres Amigas with negotiated rate authority over the sale of transmission rights vs. traditional cost-of-service (COS) pricing.

The first is a request for the right to price service based on the market. The services that Tres Amigas will provide are unlike traditional services that FERC regulates. Although they are categorized as “transmission services,” Tres Amigas will be used differently than typical transmission lines and, therefore, the pricing rules applicable to this service must be different. The filing asks FERC to allow the sponsors of the project to hold periodic auctions of transmission rights on a long, medium and short-term basis, with the prices determined by the demand for service through Tres Amigas rather than on a traditional “cost-of-service” basis as is traditional in the industry. FERC has approved requests for negotiated transmission pricing in a few prior cases, but the anticipated use of Tres Amigas as a “trading hub” will require that the Tres Amigas sponsors have more pricing flexibility in order for the project to be economically successful.

2.  Preserve the Status Quo by Disclaiming Jurisdiction over ERCOT, which raises unique legal issues for FERC to consider.

Most of the State of Texas has always operated outside of FERC jurisdiction for most purposes. The Texas grid, known as “ERCOT” (Electric Reliability Council of Texas), is regulated by the Public Utility Commission of Texas (PUCT). One of the benefits of Tres Amigas is that it will allow power produced in ERCOT to be delivered to the interstate grid regulated by FERC and vice versa, and for power in the interstate grid to be delivered to ERCOT. However, Texas regulatory authorities, while generally supportive of Tres Amigas, are not likely to support the project unless FERC makes clear that it will not assert jurisdiction over ERCOT as a result of ERCOT’s interconnecting with the project. Therefore, this filing asks FERC to disclaim any jurisdiction over ERCOT once Tres Amigas is in operation, preserving the jurisdictional status quo. 

Read more about Tres Amigas and Steptoe's involvement in the filing in the following publications:

• Tres Amigas applies for federal approvals, The Associated Press
• Start-up aims to move green power by connecting grids, Reuters
• Tres Amigas asks FERC for negotiated rates at the SuperStation, Restructuring Today