In a memo in advance of today's open meeting, Texas PUC Chairman DeAnn Walker warned that changes to the topology of the Mexican and U.S. grid could expose ERCOT to FERC jurisdiction, due to new links between various Mexican grids as well as the U.S. WECC and Mexico.

Currently, there are no situations in which, for regulatory purposes, power commingles between ERCOT and the rest of the United States by way of the national Mexico grid. Furthermore, because an interconnection between Baja California and the U.S. State of California (in the WECC) is electrically separated from the rest of Mexico, the power flowing between Texas and Mexico cannot commingle with the power flowing between California and Mexico

However, there are two recent developments that may place the electrical separation between ERCOT and the rest of the United States in jeopardy by allowing electricity to flow between ERCOT and the rest of the United States by way of the national Mexico grid. The first situation is a proposed transmission line to be built by Nogales Transmission, LLC, an indirect subsidiary of Hunt Power, LP. that will interconnect the electric grid between Arizona and Mexico. The second is Mexico's plan to interconnect its systems, including connecting the national Mexico grid with the Baja California grid.

Walker wrote, "Nogales Transmission and Nogales Frontier Operations, LLC, a subsidiary of Shary Holdings, LLC (Nogales Frontier), have filed a request for a Presidential Permit to deliver power from Nogales, Arizona, to the national Mexico grid at Nogales, Sonora, Mexico. To date, Nogales Transmission has not filed a request for a FERC disclaimer of jurisdiction. FERC staff contacted the Commission Staff last month to convey FERC staff's concern that the Nogales interconnection into Mexico could affect FERC jurisdiction over ERCOT. Specifically, FERC issued an order in 2007 disclaiming jurisdiction over the Sharyland Utilities tie in a very narrow manner, noting that the electric energy generated within ERCOT and transmitted across the Sharyland DC Tie could not flow into the WECC interconnection, because the Baja California system is not interconnected with the national Mexico grid."

"Because the Nogales Transmission line will be transmitting electricity from Arizona to the Mexico national transmission system to which Sharyland is already connected, the change of circumstances suggests that Sharyland, ERCOT, and other market participants should seek an order from FERC that they will retain their non-public utility status under the FPA, prior to Nogales Transmission obtaining a Presidential Permit," Walker wrote

"The second issue relates to the fact that Mexico has announced plans to interconnect its national grid with the Baja California transmission system, thereby creating the possibility of electricity flowing from California into Texas through Mexico. The plans are still in the development stage and are expected to be completed in the next few years. These plans, when completed, will affect the current status of the DC ties between ERCOT and Mexico," Walker wrote

Walker continued, "The DOE staff has stated that there are no other applications for Presidential Permits currently on file for ties between the United States and Mexico, but DOE staff has heard that other projects are being considered between the United States and Mexico, which pose the same issue as the Nogales project. ERCOT and Commission Staff are continuing to evaluate the status of the Nogales project, the Mexico interconnection, and future unknown projects into Mexico on ERCOT's other interconnections with Mexico."

"Therefore, even if the Commission and utilities obtain a specific order related to the Nogales interconnection to Mexico, there continues to be issues related to the current interconnections between ERCOT and Mexico due to potential interconnections between other states and Mexico. However, my greater concern is connections between Baja California and the remainder of Mexico, because those are issues that will occur outside of the United States for which the Commission will likely have no notice or participation opportunities. Therefore, I believe that the Commission and the affected utilities must find a solution that addresses the current and future connections between ERCOT and Mexico in order to ensure the continued separation of jurisdiction between the State of Texas and FERC," Walker wrote

Walker wrote that her memo was intended to address the background of the situation, and not address any specific legal recommendations on how to address the situation. However, Walker stressed that the legal issues, "will be addressed."

"I have made it clear to all of the utilities that I believe this issue must be addressed as soon as practicable, so that future projects will not impact the jurisdictional issues between the State of Texas and FERC," Walker wrote

Tags:
Texas   ERCOT   FERC  

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