The Federal Energy Regulatory Commission (FERC), in an order dated Nov. 17, 2011 (Nov. 17 Order), reaffirmed on rehearing that the owners and operators of two wind farms can be required to comply with mandatory electric reliability standards for transmission facilities, because they own and operate tie-lines that connect their generators to the transmission grid. FERC stated that this determination was fact-specific and not meant to apply the industry generally, but it is difficult to see how FERC’s ruling here would not impact future analyses in other generator tie-line situations.

Pursuant to the broad statutory language of section 215 of the Federal Power Act, “[a]ll users, owners and operators of the bulk-power system” must comply with mandatory electric reliability standards. The North American Electric Reliability Corporation (NERC) and FERC established procedures to specify which entities are required to comply. NERC developed categories of entities that are subject to the standards, including, for example, transmission owners and operators (TO/TOPs) and generator owners and operators (GO/GOPs). Entities that fall within NERC’s criteria for a category are placed on a Compliance Registry that signifies they are subject to at least some of the reliability standards. Each category has a specific set of reliability standards that must be complied with.

Ever since the mandatory standards were implemented, there has been a debate about whether GO/GOPs that own sole-use radial transmission lines to deliver power to a grid interconnection must also register as TO/TOPs, and thus be subject to the additional reliability standards applicable to the transmission category. For the most part, generators have resisted the additional compliance burden, arguing that their radial tie-lines were not part of the integrated grid. In its first decision on this issue in 2008, FERC upheld NERC’s decision to register New Harquahala Generating Company as a TO/TOP based on its ownership of a 500 kV interconnection line for its 1,092 MW gas-fired plant. In that case, the interconnecting substation for this large generator was a major hub where over 10,000 MW were connected, including the largest nuclear power plant in the U.S., and there had been a past incident where a fault at the interconnecting substation caused units of the nearby nuclear station to trip. Therefore, FERC found, based on these specific facts, that the tie-line had the potential to impact reliability.