ERCOT Files Language For NPRR To Ensure Mexican Grid Changes Do Not Result In FERC Jurisdiction
ERCOT has filed Nodal Protocol Revision Requests (NPRR) 861, Clarification of ERCOT’s Authority to Protect Its Jurisdictional Status, which would clarify ERCOT may take actions to ensure the ERCOT region does not become subject to FERC jurisdiction, including as a result of sought imports or exports over DC Ties.
Among other things, NPRR861 would add language to the protocols stating, "Notwithstanding any other provision in these Protocols, ERCOT shall take any action, and shall direct any Market Participant to take any action, that ERCOT deems necessary to ensure that any Entity in the ERCOT Region that is not a 'public utility' as defined in the Federal Power Act, 16 U.S.C. § 824(e)(2005), including ERCOT, does not become such a public utility. ERCOT’s authority includes, but is not limited to, the authority to order the disconnection of any Transmission Facilities connecting the ERCOT Region to another Control Area and the authority to deny or curtail e-Tags over any Direct Current Tie (DC Tie). A Market Participant shall comply with any ERCOT directive provided under this section. ERCOT shall provide notice of any action pursuant to this provision by posting an operations message to the Market Information System (MIS) Public Area and issuing a Market Notice."
As previously reported, at the PUCT’s December 14, 2017 meeting, the Commissioners instructed ERCOT to submit an NPRR to clarify that ERCOT will take action—including denying transactions across high voltage Direct Current Ties (DC Ties) between the ERCOT Region and Mexico or ordering disconnection of Transmission Facilities -- to prevent a change to the jurisdictional status quo of ERCOT and Market Participants with respect to the Federal Energy Regulatory Commission (FERC) by such transactions.
FERC’s jurisdiction is derived from the Federal Power Act (FPA). Under the FPA, entities subject to FERC’s plenary jurisdiction are known as “public utilities.” The FPA gives FERC broad authority to regulate the activities of public utilities, including authority to ensure that public utility rates are just, reasonable, and non-discriminatory. ERCOT and its Market Participants are generally not subject to the plenary jurisdiction of FERC, and are therefore not considered public utilities under the FPA. FERC does not have plenary jurisdiction over ERCOT because electric energy generated in the ERCOT Region is not transmitted in “interstate commerce,” as defined by the FPA, except for certain interconnections ordered by FERC that do not give rise to broader FERC jurisdiction.
Three DC Ties presently connect the ERCOT Region to Mexico. The transmission of electric energy from the ERCOT Region over the existing DC Ties with Mexico does not alter ERCOT’s non-jurisdictional status based on the scope of FERC’s jurisdiction under the FPA and the current structure of the electric grids in the United States and Mexico. The principal Mexican national electric grid is not presently interconnected with any state in the United States other than Texas. Therefore, electric energy does not pass between Texas and any other state in the United States through Mexico on a regular basis.
At least two proposed interconnections involving the Mexican national grid and other states in the United States would allow the transfer of electric energy between Texas and other states in the United States. The first is the planned interconnection by Nogales Transmission, L.L.C. and Nogales Frontier Operations, L.L.C. of the UNS Electric, Inc. system near Nogales, Arizona with the Mexican national electric grid near Sonora, Mexico. The second is Mexico’s planned interconnection of the Baja California, Mexico system, which is already synchronously connected to the state of California, with the mainland Mexico national electric grid. The interconnections would asynchronously connect the ERCOT Region with Arizona and California, respectively, via the mainland Mexico national electric grid. Certain decisions of FERC suggest that either project could alter ERCOT’s non-jurisdictional status.
ERCOT submitted the NPRR in order to clarify that it can and will take all actions necessary to preserve the jurisdictional status quo and avoid causing any Entity that is not a public utility under the FPA to become such a public utility. ERCOT’s possible actions include but are not limited to ordering the disconnection of Transmission Facilities and denial or curtailment of an Electronic Tag (e-Tag).