By Tom Kleckner
NextEra Energy subsidiaries last week appealed a federal court ruling that upheld a Texas law giving incumbent transmission companies the right of first refusal to build new power lines.
The companies asked for expedited treatment to prevent “irreparable harm.”
NextEra Energy Capital Holdings and four other NextEra transmission owner/developer entities took their case to the 5th U.S. Circuit Court of Appeals in New Orleans (20-50160) after the U.S. District Court for the Western District of Texas last month refused to overturn Texas Senate Bill 1938. (See District Court Dismisses Texas ROFR Repeal.)
The law essentially allows only incumbent transmission companies to build new power lines in Texas by granting regulatory certificates of convenience and necessity to the owners of the endpoints of a new transmission line.
The NextEra units said the Feb. 26 ruling means NextEra Energy Transmission (NEET) Midwest could lose its “lawfully won right” to build the $115 million Hartburg-Sabine transmission project in MISO’s East Texas footprint. NEET Midwest won the project’s rights in 2018 through a competitive bidding process. (See NextEra Wins Bid to Build MISO’s 2nd Competitive Project.)
“Accordingly, without expedited decision on the merits from this court, NextEra will be imminently and irreversibly deprived of its lawfully won right to build and operate a major transmission project,” NextEra said in its appeal.
NextEra’s filing on Friday said the company recently learned that MISO is using its established variance analysis process to study the project and developments around it. The RTO uses the analysis to study projects already approved under its Transmission Expansion Plan that are later disrupted by circumstances that affect the project’s cost, schedule or “the ability of selected developers and transmission owners to complete.”
NextEra said MISO indicated it anticipates a decision reassigning or canceling the project by March 31. MISO would then seek FERC approval of the change, with the commission ruling by June, NextEra said.
MISO told RTO Insider that it continues to plan for the project but wouldn’t say under which developer it will proceed. Should the project revert to the incumbent, it would become Entergy’s responsibility.
Spokesperson Allison Bermudez said in an email that MISO is aware of the recent court action, but confidentiality restrictions limit its ability to talk publicly about the project. Bermudez said MISO will make a further statement once the RTO completes the variance analysis.
NextEra did not respond to a request for comment.
The legislation also affects NEET Southwest’s application with the Public Utility Commission of Texas to transfer ownership of 30 miles of 138-kV facilities from Rayburn Country Electric Cooperative in SPP’s region of East Texas.
NextEra said SB 1938 violates the U.S. Constitution’s dormant Commerce Clause because it allows only the incumbent Texas owners of the end points to build, own and operate new lines. Should the incumbent decline to build the line, it can assign the right only to another Texas entity, NextEra said.
“In effect, Texas has closed its borders to new out-of-state companies from doing this type of business in the state,” NextEra said.
The company also asserted that the law violates the Constitution’s Contracts Clause “because it abridges the ‘existing contractual relationship’” for the Hartburg-Sabine project. It cited the Department of Justice’s “statement of interest” filed last year in NextEra’s appeal of SB 1938 that said the law placed Texas’ deregulated retail electric market “at risk.” (See DOJ Weighs in on Texas ROFR Lawsuit.)
The NextEra companies on March 2 also filed an injunction with the district court asking that its proposed transmission projects be shielded from the new law while they appeal to the 5th Circuit.
“In opposing the preliminary injunction, Texas identified only an amorphous threat to its sovereignty that might result from an injunction,” NextEra said. “An injunction pending appeal will temporarily prevent the imminent, irreversible loss of a $100 million-plus project for NextEra while the 5th Circuit considers the substantial constitutional issues presented here.”
