By Jason Fordney
FERC on Wednesday approved negotiated rate authority for a proposed 515-mile transmission project intended to carry renewable output from Arizona and New Mexico to “key interconnections” capable of serving markets farther west.
In its decision, the commission reissued and revised the rate authority it had initially granted the SunZia transmission project in 2011 (ER17-522).
As proposed, the SunZia project consists of up to two 500-kV lines in Arizona and New Mexico, running more than 500 miles to high-voltage interconnections within those states. The first phase would include an AC line with 1,500 MW of capacity, and a second phase consisting of another AC circuit with the same rating or a 3,000-MW DC line. The project’s current owners are SouthWestern Power Group, ECP SunZia, Shell WindEnergy and Tuscon Electric.
After originally obtaining rate authority in 2011, SunZia Transmission entered talks to sign on First Wind Energy as an anchor customer for up to 1,500 MW of capacity on the line. First Wind was subsequently acquired by SunEdison, which last year declared bankruptcy.
That prompted SunZia to apply for revised negotiated rate authority as transmission provider on behalf of its merchant owners. The company also sought permission to enter into an agreement with an anchor customer for up to 100% of the project’s merchant capacity. Half of the capacity of the line was to be allocated to one or more anchor customers, and the remainder made available through open season auctions. Anticipated development costs up to the beginning of construction are estimated to be as high as $75 million.
SunZia had to demonstrate that service on the project would not show preference to any particular bidder. The company held an open solicitation for the first phase of the project, selecting wind developer Pattern Energy Group as the preferred customer. SunZia said it expects Pattern will become a co-owner of the line, and majority merchant owners would become co-owners of the Pattern project.
“We find here that SunZia Transmission’s selection process was transparent and not preferential neither toward Pattern Development nor unduly discriminatory against other potential customers,” FERC said. “Notably, SunZia Transmission has demonstrated that all interested parties were treated comparably, provided with the same information and given opportunities to discuss the Project with SunZia Transmission.”
FERC in 2013 changed its approach to evaluating applications for rate authority, retaining its current “four factor” analysis, but said that anchor customers could be allocated 100% of the capacity and could be an affiliate of the transmission developer.
SunZia said the line is “likely to serve renewable resources predominantly. At all times, the merchant capacity and interconnections have been available without preference for any particular kind of resource.”
The company is targeting the first quarter of 2018 to commence construction on the first line, which is expected to go into service in 2020. The U.S. Bureau of Land Management last year granted a right of way for the project.
