Generators Required to Comply with Transmission Reliability Requirements

by Eversheds Sutherland (US) LLP
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The Federal Energy Regulatory Commission (FERC) has found that two wind farm generators must comply with reliability requirements applicable to transmission owners and operators because of the tie-lines that interconnect their generating facilities to the transmission grid. FERC identified specific requirements under the North American Electric Reliability Corporation’s (NERC) mandatory and enforceable Reliability Standards with which the generators must comply, but directed them to negotiate with NERC to determine if other requirements should also apply. FERC’s decision opens the door for other owners/operators of generator tie-lines to renegotiate the extent to which they must comply with the transmission owner/operator reliability requirements.

Background

FERC issued its decision in the context of appeals by two wind generators—Cedar Creek Wind Energy, LLC (Cedar Creek) and Milford Wind Corridor Phase I, LLC (Milford)—of NERC’s decisions to approve the registration of the generators as “Transmission Owners” (TOs) and “Transmission Operators” (TOPs). Both generators were registered by their Regional Entity, the Western Electricity Coordinating Council (WECC), as TOs and TOPs due to their ownership and operation of high-voltage tie-lines that interconnect their generating facilities to the transmission grid. In accordance with the applicable NERC rules, both generators appealed WECC’s registration decisions to NERC. NERC denied their challenges, finding that both generators’ tie-lines constituted “integrated transmission elements,” that they could materially impact the Bulk Electric System, and that TO/TOP registration and compliance were necessary to avoid a “reliability gap.” The generators then appealed to FERC. In its June 16, 2011 order, FERC denied their appeals.

FERC’s Decision

FERC found that both generators were properly registered as TOs and TOPs. FERC reaffirmed NERC’s “plenary authority” to register entities that own and/or operate assets that are material to the reliability of the Bulk-Power System. The Cedar Creek and Milford tie-lines were found to be material to the Bulk-Power System because the improper protection coordination and operation of the tie-lines and related facilities could impact not only the Cedar Creek and Milford wind facilities and tie-lines, but also larger generators connected to the same substations with which the tie-lines were interconnected. FERC specifically noted that failure to coordinate the tie-line relays could affect other, adjoining facilities, “potentially turning an otherwise localized system fault into a region-wide disturbance.”

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