Texas regulators last week denied Grid United’s request to build an intertie between ERCOT and the Western Interconnection, saying they did not have the authority to approve the application.

The Public Utility Commission cited state law Thursday in rejecting a partial certificate of convenience and necessity for Pecos West, a proposed 280-mile, 525-kV HVDC intertie connecting the Lower Colorado River Authority’s (LCRA) system with El Paso Electric (EPE), which sits in the Western Interconnection (53758).

Commissioners Will McAdams (left) and Peter Lake during PUC’s open meeting. | Admin Monitor

PUC staff argued in a preliminary order that state law prohibits the commission from granting Grid United’s request. They said only LCRA and EPE, as owners of the facilities that would be interconnected, can be granted the CCN.

“Grid United Texas does not qualify under [Texas’ Public Utility Regulatory Act] as an entity that could be designated by El Paso Electric or LCRA to exercise the CCN rights reserved to them,” staff said. “Thus, under no circumstance can the commission legally grant Grid United Texas a CCN or any rights emanating from a CCN for the proposed interconnection.”

Houston-based Grid United had sought “partial authorization” from the commission. It said its application was limited to the intertie and not the right to construct or operate the line. Intervening parties supporting the application said state law should not apply because the proposed line is not a transmission facility, but staff rejected that argument.

“Only the owners of the existing facilities to which the proposed interconnection will directly interconnect can be certificated for the proposed interconnection,” they said. Staff pointed out that, as Grid United is not a utility under Texas law, it can’t be designated by either LCRA or EPE to exercise their respective rights to “build, own or operate a new transmission facility.”

Initial ERCOT studies last year determined Pecos West would offer “significant” reliability benefits to the Texas grid, providing new markets for producers and reduced curtailment of renewable resources with “negligible” impact on prices.

At issue, however, is Texas’ right-of-first-refusal law, which was passed in 2019 and is now before the U.S. Supreme Court. Texas last year asked the high court to review an appeals court’s remand back to a district court over the latter’s claim that the ROFR law violates the U.S. Constitution’s dormant Commerce Clause. (See Texas Petitions SCOTUS to Review ROFR Ruling.)

Commissioner Jimmy Glotfelty said he would have preferred to set the docket aside and wait for the Supreme Court’s ruling or further ERCOT studies, but he indicated his hands were tied.

“I think the law, unfortunately, tells me that a right of first refusal is a right of first refusal. And according to this docket at this time, I would have to support the staff’s position,” he said.

Jimmy Glotfelty reads his statement on Grid United’s CCN application. | Admin Monitor

Glotfelty, who has worked with Grid United founder Michael Skelly in the past, said he struggled with the decision. (See related story, Skelly’s Grid United Quickly Making Waves.) He noted the HVDC tie would provide the state with resilience, reliability and low prices, “three things that our citizens need and that our [legislative] leadership has directed us to improve.”

“There are numerous points in the filings that in my opinion are right on target, and we should be able to permit these types of lines,” he said. “The biggest barrier to HVDC in this case is the [ROFR] law that the legislature has passed. … I want to push this line and other lines, but this law was passed and it’s our job to implement the statute.”

“We’re always looking for ways to increase competition in the market. Competition delivers great results, and we’ve seen that historically,” Commissioner Lori Cobos said. “At this time, the law is just not written to allow this type of construct.”

Grid United withdrew the application on Friday, asking that it be dismissed without prejudice. Spokesperson Ally Copple said the company remains committed to developing Pecos West. It has identified preliminary corridors and hoped for regulatory approvals in 2024. Under that scenario, Pecos West could be operational as early as 2029, Copple said.

“We have reviewed the preliminary order and the relevant statute, and we are confident there are other paths to move the project forward,” she said.

PUC Joins Lawsuit vs. EPA

The PUC agreed to join Texas’ lawsuit before the 5th U.S. Circuit Court of Appeals over the EPA’s rejection of the state’s proposed plan to control emissions that drift into neighboring states. Texas Attorney General Ken Paxton says the agency had “no good reason” to reject the plan (23-60069).

The state is one of more than 20 that, under EPA’s Cross-State Air Pollution Rule (CSAPR) plan, must establish NO_x emissions budgets beginning with the 2023 ozone season (May 1-Sept. 30). The agency says the reductions are necessary to address upwind states’ interstate transport obligations. (See “Staff Defer Comment on CSAPR,” ERCOT Technical Advisory Committee Briefs: July 27, 2022.)

The PUC also agreed to join with the Texas Commission on Environmental Quality in its comments to EPA over its process for developing state plans to reduce greenhouse gas emissions.

Cobos, McAdams Step up at RTOs

Cobos, the PUC’s liaison with MISO, will serve as president of the Entergy Regional State Committee. Comprising state regulatory commissioners from Arkansas, Louisiana, Mississippi and Texas, and members of the New Orleans City Council, the committee provides input on Entergy’s transmission system operations and upgrades in MISO South.

Cobos is also the secretary for the Organization of MISO States, the RTO’s state regulatory body, and sits on the grid operator’s Advisory Committee.

“I can’t say ‘no’ to really big challenges,” she said.

PUC Chair Peter Lake complimented Cobos and Commissioner Will McAdams, the commission’s representative on SPP’s Regional State Committee. McAdams was recently selected to lead the grid operator’s newly created Resource and Energy Adequacy Leadership team and appointed as the RSC’s treasurer.

“You’re both clearly gluttons for punishment,” Lake said.