In Texas, specter of FERC jurisdiction stirs concern
Invoking the Federal Energy Regulatory Commission in Texas is a good way to prompt a reaction, especially when discussing the state’s main power grid.
“You just need to be aware that FERC is a four-letter dirty word around here,” Craven Crowell, chairman of the Electric Reliability Council of Texas, quipped at ERCOT’s last board meeting.
Crowell’s remarks to a visiting presenter were in jest, but the sentiment is both real and relevant. State regulators, not FERC, carry the primary responsibility for overseeing the ERCOT region. That setup gives Texas a measure of control it cherishes — and worries it could lose.
DeAnn Walker, chairwoman of the Public Utility Commission of Texas (PUC), sounded the alarm in a Nov. 16 memo describing concerns associated with ties between the United States and Mexico. Now the PUC and ERCOT are mulling jurisdictional questions, with power companies also involved. During a PUC meeting this month, Walker mentioned talks with utilities and a need for Texas to be proactive in seeking a solution.
“I’ve tried to stress to them how seriously I take this,” she said. “I’m very, very concerned about it.”
ERCOT has five notable connections to other grids totaling about 1,250 megawatts, including three to Mexico that comprise over 400 MW. Two existing ties to locations in the United States already have FERC’s blessing, but new questions are surfacing about the connections to Mexico. That’s because developments outside Texas could create the potential to commingle power with other states through Mexico’s national grid.
For example, Nogales Transmission LLC, an indirect subsidiary of Hunt Power LP, is involved in a proposed transmission line to interconnect the grid between Arizona and Mexico. At the same time, Mexico could move ahead with interconnecting its national grid with a Baja California, Mexico, transmission system that is already connected to Southern California.
Texas leaders are proud of the ERCOT region, which features a competitive wholesale power market and certain areas with both retail competition and regulated wires coverage. Commissioner Brandy Marty Marquez of the PUC called ERCOT’s independence a source of pride that helps the market work.
“We have to explore every opportunity to preserve and protect our jurisdiction,” Marquez said.
FERC staff wasn’t available to comment to E&E News on the outlook for ERCOT, but Walker’s memo indicated that the federal commission’s staff had contacted PUC staff to discuss the Nogales proposal and what it could mean in terms of jurisdiction.
Several companies mentioned by Walker as being part of talks — including CenterPoint Energy Inc., Oncor Electric Delivery Co. and Sharyland Utilities LP — didn’t provide a comment to E&E News on the FERC-ERCOT question. Nogales also didn’t comment.
A unit of American Electric Power Co. (AEP) did offer a statement on the Walker memo.
“We share the concerns voiced by the chairman in her memo and we support her efforts to seek a resolution to those concerns,” said Larry Jones, a spokesman for AEP Texas, which owns two of the three notable connections between ERCOT and Mexico. “We are actively engaged in discussions with commission staff and other parties to work through this issue.”
Walker’s memo outlined how the ERCOT grid is both confined to Texas and not synchronously interconnected to the rest of the U.S. power system. The result, the chairwoman said, is that transmission of power within ERCOT’s region generally isn’t subject to FERC’s jurisdiction. But federal jurisdiction could be established, Walker said, via the Commerce Clause of the U.S. Constitution if there’s “commingling of power” between the rest of the country and ERCOT.