High-Voltage Lawsuit Filed as SMUD Prepares to Sue FERC

The Sacramento Municipal Utility District will take the Federal Energy Regulatory Commission to the Washington, D.C., District Court of Appeals in about a week. SMUD attorney Laura Lewis said the muni wants to reverse FERC?s decision that denies the utility a right of first refusal on an extension of its long-term transmission contract with Pacific Gas & Electric. The long-term deal, signed in 1967 and set to expire in less than a year, is for 200 MW of extra-high voltage?that above 500 kV. The district needs to nail down the arrangement so it can continue to receive power under contract and line up future long-term supplies, SMUD asserts. The clash represents where municipal power agencies and the restructured energy world collide. FERC keeps pushing open access, and the firm transmission contracts are also considered problematic because they are a source of phantom congestion. Meanwhile, munis want transmission security. ?The CAISO tariff does not give SMUD the right of first refusal,? said PG&E spokesperson Ron Low. He added that FERC?s December 2003 decision ?said it best.? It states that the ?Order No. 888 right of first refusal provision does not contemplate contract extension beyond the term of the relevant contract, as SMUD requests.? Lewis said the cost impact to SMUD of FERC?s rehearing denial has not yet been determined and the district is currently exploring alternative transmission arrangements. Last December, FERC held that its right-of-first-refusal order, which aims to protect continued firm service, does not apply to contract extensions. It also concluded it is inapplicable to SMUD because CAISO offers only day-ahead and hour-ahead service. At the end of last week, federal regulators unanimously rejected SMUD?s petition for a rehearing. SMUD acknowledged that the right of first refusal does not mean it would get a contract extension on the same terms that currently exist, but the district would be required to match the terms and price of a competing bid for firm capacity. It also will argue that FERC?s carve-out to its order was procedurally flawed because an exception?in this case, an exclusion?must be accomplished through an adjudication, or, at a minimum, that the commission?s ?new interpretation? of the rule cannot be applied retroactively. CAISO is following the case but is not a direct party to it at this time, said Gregg Fishman, grid operator spokesperson. ( FERC Docket Number El04-2 )

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High-Voltage Lawsuit Filed as SMUD Prepares to Sue FERC

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