Sample Filing FERC-716A

20081105-5071 FERC PDF (Unofficial) 11/5/2008 1:55:47 PM

UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
POWEREX CORP.

)

Docket No. TX09-___-000

APPLICATION FOR AN ORDER DIRECTING
THE PROVISION OF TRANSMISSION SERVICE
Pursuant to Section 211 of the Federal Power Act ("FPA") and Section 5.2 of
Nevada Power Company's ("Nevada Power") Open Access Transmission Tariff
("OATT"), Powerex Corp. ("Powerex") hereby applies for an order from the Federal
Energy Regulatory Commission ("Commission") requiring Nevada Power to provide
transmission service. Powerex requests Commission action on this application no later
than March 1, 2009 in light of the April 1, 2009 service commencement date.
Powerex is authorized to state that Nevada Power does not object to providing
the requested transmission service, but that a Commission order is necessary to
preserve Nevada Power's local furnishing bonds. Nevada Power has informed Powerex
that it will waive its rights to a request for service under Section 213(a) of the FPA and
to the issuance of a proposed order under Section 212(c) of the FPA.
I.

DETAILS OF REQUESTED SERVICE
On August 11, 2008, Powerex submitted the following request for transmission

service:
Transmission Provider:

Nevada Power

Transmission Customer:

Powerex

Request Date:

August 11, 2008

Transmission Service Type:

Long Term Firm Point-to-Point

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II.

Point of Receipt:

REDB (Red Butte)

Point of Delivery:

MEAD230 (Mead)

Path Name:

W/NEVP/PACE-WALC/REDB-MEAD230/

Capacity Requested:

100 MW

Start and Stop Date:

Full Period, Sliding from April 01, 2009
until April 01, 2010

Term:

One Year

OASIS Reference:

72418106

BACKGROUND
A.

Local Furnishing Bonds

Sections 142(a)(8) and 142(f) of the Internal Revenue Code of 1986 (the "Code")
provide an exemption, for federal income tax purposes, for the interest on certain debt
issued by local governmental units to provide financing for eligible transmission,
distribution, or generation facilities that are part of a system for the "local furnishing" of
electric energy.

The Code and Treasury Regulations have generally defined "local

furnishing" to mean providing service to the general public in an area not exceeding two
contiguous counties, or one city and a contiguous county ("two-county area").

In

general, the IRS takes the position that the "local furnishing" exemption does not apply
to electric properties that are part of a system any component of which is (a) built
sooner, larger or of a different design than reasonably was expected to be needed to
provide service to retail customers within that two-county area, or (b) not held on a
priority basis to provide service to retail customers in the permitted two-county area.
The utility owning or operating a "local furnishing" system is generally referred to as a
"local furnishing utility."

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The Energy Policy Act of 1992 (P.L. 102-486) amended Sections 211 and 213 of
the FPA to broaden significantly the power of the Commission to order electric utilities to
transmit power upon the request of others, including neighboring utilities and
independent power producers. Recognizing that such orders otherwise could adversely
affect the qualification of interest on certain debt for the "local furnishing" exemption,
Section 1919(a) of the Energy Policy Act of 1992 amended Section 142(f) of the Code
to provide that the transmitting utility's "local furnishing" status could be preserved if (a)
electricity is transmitting through the utility's system "pursuant to an order of the
Commission under Section 211 or 213 of the FPA, and (b) the portion of the cost of the
facility that is "financed with tax-exempt bonds is not greater than the portion of the cost
of the facility which is allocable to the local furnishing of electric energy (determined
without regard to this paragraph)." Thus, Section 142(f)(2), as amended, provides a
limited "safe harbor" for transmission service performed pursuant to Section 211, so
long as the portion of the cost of any facility financed with tax-exempt bonds is not
greater than the cost allocable to the local furnishing of electric energy.
B.

Section 5 of the OATT

In Order Nos. 888, et seq., the Commission adopted pro forma tariff provisions
specifically intended to avoid, or minimize, the loss of tax-exempt status for local
furnishing debt due to open access transmission service.1 Specifically, Section 5 of the

1

Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission
Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting
Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC Stats. & Regs. ¶ 31,036
(1996), order on reh’g, Order No. 888-A, 62 Fed. Reg. 12,274 (Mar. 14, 1997), FERC Stats. &
Regs. ¶ 31,048 (1997), order on reh’g, Order No. 888-B, 81 FERC ¶ 61,248 (1997), order on
reh’g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff’d in relevant part sub nom. Transmission
Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New York v.
FERC, 535 U.S. 1 (2002). The revised pro forma tariff adopted in Order No. 890, as modified in
Order No. 890-A, did not revise Section 5 of the Commission's pro forma tariff.

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pro forma tariff provides that a local furnishing utility that receives a transmission
request that would jeopardize the tax-exempt status of bonds used to finance its
facilities must so advise the requesting party; if that party tenders a Section 211
application for such service, the local furnishing utility must waive its rights to oppose
the application (as well as the right to a proposed order), and, upon issuance of the
Commission's order, must provide the service. This provision has been adopted in
Section 5.2 of Nevada Power's OATT.
III.

THE REQUESTED ORDER IS NEEDED TO PRESERVE NEVADA POWER'S
LOCAL FURNISHING BONDS
On August 11, 2008, Powerex submitted a request for 100 MW of Yearly Firm

Point-to-Point Transmission, Full Period, Sliding from April 01, 2009 until April 01, 2010,
assignment reference number – 72418106. Point of Receipt of REDB (Red Butte) and
a Point of Delivery of MEAD230 (Mead).
In response to this transmission service request, Nevada Power informed
Powerex that it needs the Commission to order that Nevada Power is obligated under
Section 211 of the FPA to provide the requested transmission service in order to
preserve Nevada Power's local furnishing bonds. Powerex therefore requests that the
Commission issue an order requiring Nevada Power to provide the requested
transmission service to Powerex under Section 211 of the FPA.

As noted above,

Powerex is authorized to state that Nevada Power does not oppose this request. As
required by Section 5.2 of its OATT, Nevada Power has informed Powerex that it will

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waive its rights to a request for service under Section 213(a) of the FPA and to the
issuance of a proposed order under Section 212(c) of the FPA.2
IV.

THIS APPLICATION MEETS THE REQUIREMENTS OF FPA SECTIONS 211
AND 212
As discussed below, this application meets the requirements set forth in Sections

211 and 212 of the FPA.3
A.

Jurisdiction

Under Section 211(a) of the FPA, any electric utility, federal power marketing
agency, or any other person generating electric energy for sale for resale may apply to
the Commission for an order requiring a transmitting utility to provide transmission
services to the Powerex. Powerex is eligible to request an order requiring Nevada
Power to provide it with transmission services.
B.

Good Faith Request

Because Nevada Power has waived its rights under Sections 211 and 2134 to a
request for service and is willing to provide the transmission service requested by
Powerex, compliance with this requirement is not necessary here.

2

Powerex notes that Nevada Power has reserved all of its rights under the OATT with respect
to how Powerex's request is processed, to require Powerex's compliance with the OATT, and if
necessary, to condition its obligation to provide service on the construction of any necessary
facilities.
3

See generally Nevada Power Co., 110 FERC ¶ 61,029 at PP 14-22 (2005) (discussing and
applying these requirements).

4

16 U.S.C. § 824l (2000).

5

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C.

Public Interest

Section 211(a) of the FPA provides that the Commission may issue an order
directing transmission service if the order meets the requirements of Section 212 and
would otherwise be in the public interest. In Florida Municipal Power Agency v. Florida
Power & Light Co.,5 the Commission determined that, as a general matter, the
availability of transmission service enhances competition in power markets by
increasing power supply options of buyers and sales options of sellers, and that this
should result in lower costs to consumers.

The same principles apply here.

Accordingly, the public interest will be served by directing Nevada Power to provide the
requested transmission service to Powerex.
D.

Reliability

Section 211(b) precludes a transmission order that would unreasonably impair
the continued reliability of affected electric systems.

Ordering the requested

transmission service will not unreasonably impair the continued reliability of the affected
electric systems.
E.

Effect on Contracts or Rate Schedules

Section 211(c)(2) provides that no order may be issued under Section 211(a) that
requires the transmitting utility subject to the order to transmit, during any period, an
amount of electric energy that replaces any amount of electric energy that is required to
be provided to Powerex pursuant to a contract during such period or that the utility
subject to the order currently provides to the Powerex pursuant to a rate schedule on
file with the Commission. Nevada Power is not selling to Powerex the energy that is to

5

65 FERC ¶ 61,125, reh'g dismissed, 65 FERC ¶ 61,372 (1993), final order, 67 FERC ¶ 61,167
(1994), order on reh'g, 74 FERC ¶ 61,006 (1996), order on reh'g, 96 FERC ¶ 61,130 (2001).

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be shipped under the transmission service agreement, and therefore Section 211(c)(2)
of the FPA does not preclude an order for transmission service in this case.6
F.

Rates

Section 212(a) requires that the transmitting utility subject to an order under
Section 211 provide wholesale transmission services at rates, charges, terms and
conditions which permit the recovery of such utility of all the costs incurred in connection
with the transmission services and necessary associated services.

Section 212(a)

further provides, to the extent practicable, for the recovery of such costs from the
Powerex for such order and not from a transmitting utility's existing wholesale, retail,
and transmission customers. The order requested here would not shift costs to other
customers because transmission service will be provided under the rate, terms, and
conditions of Nevada Power's OATT. This satisfies the requirements of Section 212(a).
G.

Applicability

An order under Section 211 cannot be made effective prior to the date of a final
order.7 Therefore, the Commission may grant Powerex's request in this Application
effective 10 days after the date of issuance of its Order in this proceeding granting this
Application.
V.

COMMISSION ACTION BY MARCH 1, 2009 REQUESTED
Powerex requests that the Commission act on this application no later than

March 1, 2009 to allow Powerex to make the necessary arrangements in order for
service to commence on April 1, 2009. Powerex notes that no parties intervened in
opposition to Powerex's prior application for an Order directing Nevada Power to
6

See Nevada Power Co., 110 FERC ¶ 61,029 at PP 11-13 (2005).

7

See City of College Station, Texas, 76 FERC ¶ 61,138 at 61,743 (1996), final order, 86 FERC
¶ 61,165 at 61,583 (1999).

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provide transmission service pursuant to FPA Section 211 in Docket No. TX08-1-000,
which was granted by the Commission on September 24, 2008,8 and Powerex does not
expect opposition to the instant application. Accordingly, Powerex requests that the
Commission issue an Order by March 1, 2009 directing Nevada Power, pursuant to
section 211 of the FPA, to provide transmission service, pursuant to Powerex's
transmission service request, under the applicable tariffs and rate schedules.
V.

CONCLUSION
For the foregoing reasons, Powerex respectfully requests the Commission to

order Nevada Power under Section 211 of the FPA to provide the requested
transmission. Powerex also requests that the Commission issue such Order no later
than March 1, 2009.
Respectfully submitted,

/s/ Teresa Conway
Teresa Conway
Powerex Corp.
1400 - 666 Burrard Street,
Vancouver, British Columbia, Canada V6C 2X8
(604) 891-1500
Tracey L. Bradley
Energy Regulatory Consultant
Bracewell & Giuliani LLP
2000 K Street, N.W., Suite 500
Washington, D.C. 20006
(202) 828-5800

Deanna E. King
Bracewell & Giuliani LLP
111 Congress Avenue, Suite 2300
Austin, Texas 78701-4061
(512) 472-7800

On Behalf of
POWEREX CORP.
November 5, 2008
DC/246504.1

8

Powerex Corp., 124 FERC ¶ 61,286 (2008).

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ATTACHMENT A
(Form of Notice)

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UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Powerex Corp.

Docket No. TX09-__-000

NOTICE OF APPLICATION FOR TRANSMISSION SERVICES
(

)

Take notice that on November 5, 2008, Powerex Corp. filed an application for an
order directing the provision of transmission service from Nevada Power Company,
pursuant to section 211 of the Federal Power Act and section 5.2 of Nevada Power
Company’s Open Access Transmission Tariff.
Any person desiring to intervene or to protest this filing must file in accordance
with Rules 211 and 214 of the Commission’s Rules of Practice and Procedure (18 CFR
385.211, 385.214). Protests will be considered by the Commission in determining the
appropriate action to be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of intervention or
motion to intervene, as appropriate. Such notices, motions, or protests must be filed on
or before the comment date. On or before the comment date, it is not necessary to
serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions
in lieu of paper using the “eFiling” link at http://www.ferc.gov. Persons unable to file
electronically should submit an original and 14 copies of the protest or intervention to
the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C.
20426.
This filing is accessible on-line at http://www.ferc.gov, using the “eLibrary” link
and is available for review in the Commission’s Public Reference Room in Washington,
D.C. There is an “eSubscription” link on the web site that enables subscribers to
receive email notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email [email protected],
or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.
Comment Date: 5:00 pm Eastern Time on ________, 2008.

Kimberly D. Bose,
Secretary.

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Document Content(s)
ApplicationNP.PDF.....................................................1-11