Sunday, February 2, 2014

Highlights of ComEd Brief to the ICC Regarding RICL



Highlights of ComEd Brief to the ICC Regarding RICL

Below are some highlights from ComEd’s brief to the ICC.

Introduction

Ambitiously labeled the “Project,” it is currently more akin to a business plan.  Page 5.

It is incompletely designed, funded, and studied. Its success depends on highly speculative future developments and conditions, and RICL does not begin to have the funds to construct it. Page 7.

This proposal does not qualify RICL as an Illinois utility. Nor is such a plan entitled to a Certificate of Public Convenience and Necessity (“CPCN”), the state’s final regulatory approval for a major utility asset proven to meet a public need at least cost. Page 3.

The risks and costs of proceeding with a speculative and indefinite project like this are real, significant, and of concern to ComEd.  Page       4

The approval by the Commission of a project of this scope and size that may never operate as requested creates market uncertainty and sends confusing messages, including to developers of potential Illinois-based generation. Page 4.

That RICL’s plans are aimed at serving hypothetical customers and generators that do not exist makes that concern all the greater.  Page 4.

And, where, as here, the developer has already filed and withdrawn one prior Commission petition seeking premature approval to operate as a utility, has chosen not to participate in the PJM and MISO Regional Transmission Organizations’ public transmission expansion planning process, and pushes for Certification in advance of completing the interconnection process, the concern is even more acute.  Page 5

Finally, from a policy perspective, the Commission should not create new utilities out of shell companies and venture far down the road toward authorizing private developers’ use of eminent domain over a wide swath of land absent, at a minimum, certainty, proof, and commitment.

Entertaining speculative and premature requests for Certification confuses the markets and legally and politically complicates the approval and, when necessary, use of eminent domain by urgently needed public utility projects. Page 5.

ComEd “Heart of the Matter”

RICL’s Petition seeks unprecedented relief. RICL asks to be immediately declared an Illinois public utility. But, an entity like RICL that has no customers, actual or subscribed, and does not commit to owning and operating utility assets, is no utility. Page 6.

 RICL has not and cannot meet that burden. It cannot prove that the market will support the Project, that generators will be built to use it, or that those generators will bear the necessary costs. The Project is “a Field of Dreams,” and while RICL may hope that “if we build it, they will come,” that is not what the law requires.  Page 7.

RICL also has little relevant experience and acknowledges that it cannot currently finance the Project. And, in critical respects, RICL’s plan itself remains incompletely designed and assessed, speculative, and in flux.  Because of these doubts, and its admitted absence of capital, even RICL will not commit to the Project. RICL’s response that all concerns will be resolved with time, even could it be proven, does not warrant certification of the Project now…. Because of these doubts, and its admitted absence of capital, even RICL will not commit to the Project. RICL’s response that all concerns will be resolved with time, even could it be proven, does not warrant certification of the Project now.  Page 7.

RICL will not commit to construct the Project, even if its Petition is granted in full.  Page 7.

No entity has committed to become a customer of RICL or the Project. Page 8.

The Project is promoted and studied as a means to deliver 100% wind energy from new generators to Illinois and points eastward. Those wind generators, however, do not exist and there is no proof that they will. Page 8.

RICL cannot demonstrate that the Project cost can be recovered as it proposes.  RICL will not commit that it will not later try to charge Illinois customers for the costs of the Project’s construction and operation.  Page 8.

RICL, however, must rely on currently undeveloped operating procedures in order for the line to reliably operate at above 1,192 MW.  Page 9.

RICL’s essential operating procedures have not yet been defined, developed, tested, finally approved by PJM Interconnection or reviewed by FERC.   Page 9.

RICL has no interconnection agreement with PJM or Midcontinent Independent System Operator, Inc. (“MISO”). The Interconnection Studies are not complete. And, the final terms of the interconnections at either end of the DC line remain in flux.  Page 9.

There is no clear eastern interconnection design.  Page 10.

The Project addresses no deficiency or inadequacy in the transmission system. Page 10.

RICL is not capable of financing the Project. It is a thinly capitalized shell entity. Even its parent, Clean Line, is a lightly capitalized private venture vehicle that also lacks the capital or lending power required.  The full resources of the entire Clean Line family amount to less than 2% of the required capital.  Page 11.

RICL has no relevant experience constructing major cross-country transmission lines, and no experience with DC transmission.  Page 11.

RICL offers no credible explanation why the ICC must approve this line now or why it must be declared a utility years before it could offer any service.  Page 11.

RICL’s request for a finding that the Project must be built and for an order under Section 8-503 directing RICL to construct the Project is irreconcilably inconsistent with its own refusal to commit to build the Project.  Page 12.

RICL offers no credible explanation why it requests a Section 8-503 order now. Yet, with a Section 8-503 order in hand, all that will stand between landowners and condemnation for this private merchant project is a finding of impasse – which appears to already exist.  Page 12.

Recommended Action

RICL has failed to carry its burden of proving that it qualifies as a utility, that its proposed Project should be certified, or that the Commission should issue a Section 8-503 order directing construction of the Project. The Commission has never issued a CPCN for a project, let alone to establish a new public utility, under circumstances like these. Nor has the Commission ever approved an order under Section 8-503, functionally placing Illinois landowners on the brink of condemnation proceedings, for a project that the proponent of which has not even committed to build. The Commission should, therefore, dismiss the Petition in its entirety. If, in the future, RICL’s plans become complete, fully vetted, and supported by actual customers and the market, and if RICL acquires the financial and technical capability to build and operate a DC line project of this magnitude, there is no reason RICL should not present that proposal to the Commission at that time, along with evidence of those essential facts. Page 12-13



ComEd on RICL’s desire for Eminent Domain

Second, RICL seeks an order under Section 8-503 to use as leverage in negotiations with private landowners whose land RI will need to acquire for the Project. Should its voluntary negotiations with the landowners fail, RI will use its 8-503 order as the legal precursor for exercising the power of eminent domain to involuntarily acquire the property rights necessary for the speculative Project. Page 37.

RICL’s Primary Objective in Seeking an Order Under Section 8-503 Is To Facilitate Its Ability To Acquire Eminent Domain Authority And Initiate Condemnation Lawsuits To Obtain The Property Interests It Requires.

RICL recognizes that negotiating easement transactions with several dozen landowners could be time consuming and acrimonious, and having a Section 8-503 order in hand will strengthen its negotiating position with landowners and add credibility to RI’s claim that it can acquire the necessary property one way or the other.   Page 40.

Similarly, when voluntary negotiations with landowners reach an impasse, having a Section 8-503 order will streamline RI’s ability to obtain eminent domain authority and pursue condemnation actions to acquire the property interests that the Project requires.  Page 40.

In light of the record in this case, filled as it is with various contingencies that will delay or even prevent construction of the Project, the Commission should not take the extraordinary, precedent-setting step of arming RI with an order that will permanently impact private property rights, whether used as leverage in easement negotiations or as the legal predicate to allowing RI to take private property in condemnation proceedings.  Page 40.

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