• PUCT Denies Kelson's Unconventional Bid to Interconnect SERC and ERCOT
  • July 7, 2009
  • Law Firm: Bracewell & Giuliani LLP - Austin Office
  • The Public Utility Commission of Texas (PUCT) on June 10, 2009, issued its final order denying Kelson Transmission Company, LLC’s (Kelson) application for a certificate of convenience and necessity to construct and operate a 95-mile 345 Kilovolt open-access transmission line, for which Kelson initially sought certification in August of 2007.  The transmission line was planned to connect the 1,160 Megawatt Cottonwood electric generation facility located in the Southeast Reliability Council (SERC) to a substation in the Electric Reliability Council of Texas (ERCOT) located on the CenterPoint Houston Electric Company, LLC transmission grid.

    Kelson attempted to justify the public need for the transmission line based primarily on economics rather than operational considerations.  Historically, the PUCT has equated public need with the reliable operation of the transmission line - prevention of system outages, protection from overloads, and meeting increased customer demands.  Kelson, however, did not argue that the line was needed for reliability purposes, only that it would benefit economically ERCOT ratepayers.  In fact, Kelson did not submit its project to ERCOT’s Regional Planning Group for review; as a result, the project never received ERCOT’s endorsement.  The PUCT typically relies upon ERCOT’s findings to support a finding that any project is necessary for the service, accommodation, convenience, or safety of the public.

    Kelson claimed that the public need for the transmission line was justified because injection of the of the Cottonwood generation capacity (and possibly other generation located in SERC) to ERCOT would reduce the cost of electricity in ERCOT.  However, given uncertainty associated with the assumptions used by Kelson and other factors that Kelson did not analyze - including whether disconnecting the line from the Entergy system in order to provide the power to ERCOT would affect prices for consumers in non-ERCOT areas - the PUCT found Kelson’s claims of economic benefit to be unsubstantiated.  The PUCT also found that Kelson did not provide adequate evidence of its financial qualifications and of its operational resources to construct, own, and operate the proposed transmission line.