Powering Strong Communities

FERC Rejects Bid To Require TVA To Provide Open Access Transmission Service

The Federal Energy Regulatory Commission (FERC or Commission) on Oct. 21 denied a request by local power companies (LPCs) that the Commission require the Tennessee Valley Authority (TVA) to provide open access transmission service to the LPCs pursuant to section 211A of the Federal Power Act (FPA).

In January 2021, Tennessee-based Athens Utilities Board, Gibson Electric Membership Corporation, Joe Wheeler Electric Membership Corporation and Volunteer Energy Cooperative filed a request seeking a Commission order requiring TVA to provide transmission service under section 211A of the FPA and interconnection service under section 210 of the FPA (Docket Nos. EL21-40-000, TX21-1-000).

In late August 2021, Joe Wheeler Electric Membership Corporation filed a notice seeking to withdraw its participation in the petition and indicating that it had reached an agreement on a new power supply arrangement with TVA. It is therefore no longer a petitioner in the proceeding.

The LPCs currently purchase their full power supply and delivery requirements from TVA under bundled full requirements power supply contracts.

They said in their petition that they were seeking unbundled transmission service from TVA, which they said is the only transmission provider that can feasibly serve them, in accordance with the Commission’s longstanding open access principles.

In response, TVA argued that that the Commission lacks statutory authority under section 211A of the FPA to grant the request of the LPCs. TVA said that while section 211A authorizes the Commission to require government-owned utilities to provide the type of service the LPCs sought, TVA asserted that FERC’s authority to require TVA to provide transmission service under section 211A is limited by another provision of the FPA – section 212(j).

TVA further argued that section 211A gives the Commission discretionary authority to oversee the rates and non-rate terms and conditions for transmission service that is already being provided, but not to order new wheeling service.

TVA also said that the interpretation of section 211A by the LPCs would destroy TVA’s ability to meet its broad statutory mandate to support the physical, economic, and social welfare of the TVA region and balance its varied missions to achieve that mandate.

Moreover, TVA argued that the Commission’s exercise of its authority under section 211A is discretionary, extremely rare, and must advance the public interest. TVA therefore asserted that there is no basis for exercising any such authority in the LPC proceeding.

In considering the public interest, TVA asserted that, due to a statutory “Fence,” stranded costs resulting from the loss of LPC load could not be mitigated and would shift to remaining LPCs.

The TVA Fence refers to the non-physical boundary that the U.S. Congress placed around TVA’s service territory in 1959.

FERC Order

In an order approved at its Oct. 21 open meeting, FERC noted that Section 211A of the FPA provides that “the Commission may, by rule or order, require an unregulated transmitting utility to provide transmission services.” Thus, FERC’s authority under section 211A is discretionary.

“In this case, we decline to issue a rule or order requiring TVA to offer unbundled transmission service to petitioners or to outside power suppliers to serve load within the TVA Fence under section 211A, and thus we deny the petition,” FERC said.

FERC clarified that, contrary to claims that unregulated transmitting utilities must “abide by” section 211A, there are no established requirements under section 211A that an unregulated transmitting utility must meet, so there can be no “violation” of section 211A by an unregulated transmitting utility.

The Commission’s jurisdiction under section 211A(b)(1) is not invoked automatically upon action by an unregulated transmitting utility, it said.

Rather the Commission “has the discretion to choose to exercise, or as relevant here to instead choose to not exercise, this authority.”

FERC Chairman Richard Glick issued a separate statement concurring in the decision, as did Commissioners Mark Christie and James Danly.  Commissioner Allison Clements dissented from the order.