Once upon a time, Don Quixote Skelly had an idea. He envisioned a company that would build transmission lines to move wind generation across the country. Skelly had left the wind industry to become an electric transmission magnate. Skelly would no longer sell the wind generation upon which he'd built his career, he would now be an independent transmission owner selling transmission capacity to wind developers. Skelly planned to use the Federal Energy Regulatory Commission's Negotiated Rate Authority to sell transmission capacity to generation owners. Negotiated rate authority allows the transmission owner to sell service to unaffiliated companies essentially at auction. All companies desiring service would submit a bid for service. FERC requires the selection of customers to be fair, setting the criteria for the transmission owner's selection of customers. A transmission owner wishing to sell service to itself or its affiliate has a very high bar to jump to prove to FERC that it did not give its affiliate undue preference. All bids, including those from a transmission owner's affiliate, must be evaluated using the same criteria. The transmission owner must provide open access to its merchant line, allowing all bidders to receive equal treatment. If an unaffiliated generation owner offers more for service, the transmission owner cannot turn it down in order to provide service for its own affiliate at a cheaper price. But, because Skelly did not own any generation, there was no way he could give his own affiliates any preference. FERC's Negotiated Rate Authority worked perfectly for Clean Line's business plan.
But Skelly's business plan didn't work in reality. He couldn't find any companies willing to pay for service on his transmission line. Eventually, Skelly's company went broke and sold its failed projects to other companies. Funny that... all the new owners of Skelly's projects were renewable energy generators. How was the project's negotiated rate authority going to work for these new generation-owning companies? Were these new owners really going to build transmission lines and sell service on the line to their competitors? Remember, under negotiated rate authority, the line must be open access for all bidders. The new owner could not restrict its competitors from bidding on service on the new line, and the new owner cannot give preference to its own generation. Why in the world would a renewable energy company want to build transmission that allowed its competitor's generation to be sold in higher priced markets? You never actually believed that the new owner was planning to enable its competitors, did you? Of course not!
The new owners needed to jettison Skelly's negotiated rate authority so they could keep the transmission they built for their own use. The new owners want to use Skelly's transmission project to connect the stranded generation they own. The new owners needed a new rate scheme!
Pattern Energy, the new owner of Clean Line's Western Spirit transmission project, wanted to use the project to connect its future wind farm sites to a strong point in New Mexico's existing transmission grid so that it could sell that generation, perhaps for export to other states. New Mexico's RETA had already been "partnered" with Western Spirit to realize Skelly's negotiated rate business plan. Clean Line had been "making contributions" to RETA for years in order to use RETA's eminent domain authority to take private property for its "public use" negotiated rate project. RETA used its eminent domain authority to force landowners to sell, believing that the project would be open access for all renewable generators who wanted to connect and purchase service.
But, Pattern didn't want to share. It wanted to use all of Western Spirit's transmission capacity for its own new wind farms. That's a private use, not a public use. An apt comparison could be made using roads... a public road or highway allows anyone to use it, therefore taking private property to build it is a "public use." However, a private driveway is only for its owner's use, it's a private use. It's not a "public use" to enable eminent domain. Clean Line wanted to build a public road. Pattern wants to build a driveway.
The use of eminent domain in this country is limited to situations where the land taken is put into public use. We don't use eminent domain to take private property from one person for the private use of another. There was considerable outcry when the Supreme Court ruled that private property could be taken from one person and given to a private company if "economic development" happened as a result. SCOTUS decided that economic development was a "public use." In the wake of that awful decision, many states made changes to their eminent domain laws to prevent its use for purely economic development reasons.
But not New Mexico. New Mexico invented a quasi-governmental authority to build and own electric transmission for the purposes of promoting economic development in the state, and it gave its creation eminent domain authority. It also took authority away from its Public Regulation Commission and allowed RETA to call the shots on the building of new transmission in the state.
Maybe RETA thought it was providing a public service by taking private property for Clean Line's "public use" project? That seemed to be settled. But what happened when Pattern bought the project and the "public use" became a private driveway? Did RETA ever consider how this change upended its justification for using its eminent domain authority?
Pattern Energy came up with a new business plan for Skelly's old project. Pattern Energy will build the transmission project using RETA's eminent domain authority and then sell the project to New Mexico's incumbent public utility, Public Service Company of New Mexico. That way they could pretend the project was still a "public use" worthy of eminent domain. But what about Western Spirit's legacy negotiated rate authority? Could Public Service Company auction off service on the line to other companies? No, Public Service Corporation applied for a new rate scheme from FERC -- Incremental rates, whereby a generator would pay a transmission service provider its costs to build new transmission to serve the new generator. No sharing required. Under federal laws, a transmission owner must allow a new generator to connect to its system, as long as the generator pays the cost of the new connection. This scheme allows Pattern to sign a transmission service agreement with Public Service Company to use the new line. It allows a generator to make exclusive use of a new private driveway to connect its own generation because the generator is paying all the costs. This kind of transmission line is a generation tie line. It does not allow public access because other companies are not paying for it.
A company proposing a generation tie line is treated much differently from an open-access transmission line. While an open-access "public use" transmission line is like a public roadway, a generation tie line is a private driveway. A generation tie line would not meet the definition of "public use" under the laws of many states and therefore is not an appropriate use of eminent domain. For example, if another Clean Line project, say Grain Belt Express, had applied to the Missouri Public Service Commission for a generation tie line across the state, it would have virtually no chance of approval and being awarded eminent domain authority. But Grain Belt Express was approved as an open-access "public use" project that would sell service to voluntary customers, like MJMEUC. GBE is still pretending to use the negotiated rate authority rate scheme, but it doesn't have enough customers to make the project economically feasible. Invenergy, GBE's owner, is planning to sell service on the line to its competitors who want to move their generation from western Kansas to Indiana. You believe that, right, even though Invenergy has done nothing to apply for a permit in Illinois while it is going hammer and tongs to acquire property in Missouri under the threat of eminent domain?
There's this bridge in Brooklyn...
Anyhow, Pattern Energy has completely changed Don Quixote Skelly's business plan for the Western Spirit transmission project in New Mexico. The formerly independent open-access transmission roadway has now become Pattern's private driveway. Isn't it time for New Mexico to pause and give adequate consideration to Western Spirit's changed business and rate plan before it takes property from its citizens and gives it to a for-profit corporation for its private use?
But Skelly's business plan didn't work in reality. He couldn't find any companies willing to pay for service on his transmission line. Eventually, Skelly's company went broke and sold its failed projects to other companies. Funny that... all the new owners of Skelly's projects were renewable energy generators. How was the project's negotiated rate authority going to work for these new generation-owning companies? Were these new owners really going to build transmission lines and sell service on the line to their competitors? Remember, under negotiated rate authority, the line must be open access for all bidders. The new owner could not restrict its competitors from bidding on service on the new line, and the new owner cannot give preference to its own generation. Why in the world would a renewable energy company want to build transmission that allowed its competitor's generation to be sold in higher priced markets? You never actually believed that the new owner was planning to enable its competitors, did you? Of course not!
The new owners needed to jettison Skelly's negotiated rate authority so they could keep the transmission they built for their own use. The new owners want to use Skelly's transmission project to connect the stranded generation they own. The new owners needed a new rate scheme!
Pattern Energy, the new owner of Clean Line's Western Spirit transmission project, wanted to use the project to connect its future wind farm sites to a strong point in New Mexico's existing transmission grid so that it could sell that generation, perhaps for export to other states. New Mexico's RETA had already been "partnered" with Western Spirit to realize Skelly's negotiated rate business plan. Clean Line had been "making contributions" to RETA for years in order to use RETA's eminent domain authority to take private property for its "public use" negotiated rate project. RETA used its eminent domain authority to force landowners to sell, believing that the project would be open access for all renewable generators who wanted to connect and purchase service.
But, Pattern didn't want to share. It wanted to use all of Western Spirit's transmission capacity for its own new wind farms. That's a private use, not a public use. An apt comparison could be made using roads... a public road or highway allows anyone to use it, therefore taking private property to build it is a "public use." However, a private driveway is only for its owner's use, it's a private use. It's not a "public use" to enable eminent domain. Clean Line wanted to build a public road. Pattern wants to build a driveway.
The use of eminent domain in this country is limited to situations where the land taken is put into public use. We don't use eminent domain to take private property from one person for the private use of another. There was considerable outcry when the Supreme Court ruled that private property could be taken from one person and given to a private company if "economic development" happened as a result. SCOTUS decided that economic development was a "public use." In the wake of that awful decision, many states made changes to their eminent domain laws to prevent its use for purely economic development reasons.
But not New Mexico. New Mexico invented a quasi-governmental authority to build and own electric transmission for the purposes of promoting economic development in the state, and it gave its creation eminent domain authority. It also took authority away from its Public Regulation Commission and allowed RETA to call the shots on the building of new transmission in the state.
Maybe RETA thought it was providing a public service by taking private property for Clean Line's "public use" project? That seemed to be settled. But what happened when Pattern bought the project and the "public use" became a private driveway? Did RETA ever consider how this change upended its justification for using its eminent domain authority?
Pattern Energy came up with a new business plan for Skelly's old project. Pattern Energy will build the transmission project using RETA's eminent domain authority and then sell the project to New Mexico's incumbent public utility, Public Service Company of New Mexico. That way they could pretend the project was still a "public use" worthy of eminent domain. But what about Western Spirit's legacy negotiated rate authority? Could Public Service Company auction off service on the line to other companies? No, Public Service Corporation applied for a new rate scheme from FERC -- Incremental rates, whereby a generator would pay a transmission service provider its costs to build new transmission to serve the new generator. No sharing required. Under federal laws, a transmission owner must allow a new generator to connect to its system, as long as the generator pays the cost of the new connection. This scheme allows Pattern to sign a transmission service agreement with Public Service Company to use the new line. It allows a generator to make exclusive use of a new private driveway to connect its own generation because the generator is paying all the costs. This kind of transmission line is a generation tie line. It does not allow public access because other companies are not paying for it.
A company proposing a generation tie line is treated much differently from an open-access transmission line. While an open-access "public use" transmission line is like a public roadway, a generation tie line is a private driveway. A generation tie line would not meet the definition of "public use" under the laws of many states and therefore is not an appropriate use of eminent domain. For example, if another Clean Line project, say Grain Belt Express, had applied to the Missouri Public Service Commission for a generation tie line across the state, it would have virtually no chance of approval and being awarded eminent domain authority. But Grain Belt Express was approved as an open-access "public use" project that would sell service to voluntary customers, like MJMEUC. GBE is still pretending to use the negotiated rate authority rate scheme, but it doesn't have enough customers to make the project economically feasible. Invenergy, GBE's owner, is planning to sell service on the line to its competitors who want to move their generation from western Kansas to Indiana. You believe that, right, even though Invenergy has done nothing to apply for a permit in Illinois while it is going hammer and tongs to acquire property in Missouri under the threat of eminent domain?
There's this bridge in Brooklyn...
Anyhow, Pattern Energy has completely changed Don Quixote Skelly's business plan for the Western Spirit transmission project in New Mexico. The formerly independent open-access transmission roadway has now become Pattern's private driveway. Isn't it time for New Mexico to pause and give adequate consideration to Western Spirit's changed business and rate plan before it takes property from its citizens and gives it to a for-profit corporation for its private use?
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