E9-5167. Application to Export Electric Energy; Midwest Independent Transmission System Operator, Inc.

AGENCY:

Office of Electricity Delivery and Energy Reliability, DOE.

ACTION:

Notice of application.

SUMMARY:

The Midwest Independent Transmission System Operator, Inc. (Midwest ISO) has applied for authority to transmit electric energy from the United States to Canada pursuant to section 202(e) of the Federal Power Act.

DATES:

Comments, protests, or requests to intervene must be submitted on or before April 10, 2009.

ADDRESSES:

Comments, protests, or requests to intervene should be addressed as follows: Office of Electricity Delivery and Energy Reliability, Mail Code: OE-20, U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, 20585-0350 (Fax [phone]).

FOR FURTHER INFORMATION CONTACT:

Ellen Russell (Program Office) 202-586-9624 or Michael Skinker (Program Attorney) 202-586-2793.

SUPPLEMENTARY INFORMATION:

Exports of electricity from the United States to a foreign country are regulated by the Department of Energy (DOE) pursuant to sections 301(b) and 402(f) of the Department of Energy Organization Act (42 U.S.C. 7151(b), 7172(f)) and require authorization under section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)).

On July 11, 2008, DOE received an application from Midwest ISO for authority to transmit electric energy from the United States to Canada. Midwest ISO does not own or operate electric generation, transmission or distribution facilities nor does it have a franchised electric power service territory. Midwest ISO is a not-for-profit, non-stock corporation, a “public utility” under Part II of the FPA, and a “Regional Transmission Organization” (RTO) approved by the Federal Energy Regulatory Commission (FERC) under Order No. 2000, 18 CFR 35.34 et seq.

As an RTO, Midwest ISO has authority (referred to as “functional control”) to direct the use of transmission facilities owned, operated, and maintained by transmission owning members of Midwest ISO for the purpose of providing open access non-discriminatory transmission service. In addition, Midwest ISO has administered day-ahead and real-time energy markets with financial transmission rights since April 2005. In its application, Midwest ISO indicated that beginning September 9, 2008 (this was later changed to January 6, 2009) it would administer a market for operating reserves under its Energy and Operating Reserves Markets Tariff (Tariff). In so doing, Midwest ISO became a Balancing Authority registered with the North American Electric Reliability Corporation (NERC) and is responsible for meeting NERC reliability standards applicable to Balancing Authorities, including the requirement to enter into agreements with neighboring Balancing Authorities for coordination and emergency assistance. These agreements may require Midwest ISO to exchange emergency energy with Canadian counterparties, including Manitoba Hydro and the Independent Electric System Operator (IESO).

Prior to Midwest ISO's commencing to administer the market for operating reserves, emergency energy had been transmitted into Canada from the Midwest ISO region by one or more Balancing Authorities or Market Participants operating under the Midwest ISO Tariff, pursuant to bilateral agreements between the buyer and seller and pursuant to the terms and conditions of various export authorizations issued by DOE, using international transmission facilities authorized by Presidential permits. Not all of the international transmission facilities at the Canadian border subject to Presidential permits have been transferred to the functional control of Midwest ISO by their owners. Such facilities are not subject to the authority of Midwest ISO as an RTO. However, Midwest ISO, in its capacity as Reliability Coordinator, has the authority to direct actions necessary to preserve the safety and reliability of the Eastern Interconnection, which includes Manitoba Hydro and IESO. To the extent such direction affects such international transmission facilities, it takes into account, and is subject to, the conditions of the applicable Presidential permit.

Effective January 6, 2009, Midwest ISO will be the responsible Balancing Authority for implementing the payback of unscheduled energy flows to the Eastern Interconnection. Unscheduled, or “inadvertent,” energy is the difference between the actual metered energy interchange and the scheduled energy interchange between two adjacent Balancing Authority Areas (previously called “control areas”). Consequently, Midwest ISO may from time to time initiate unilateral payback of unscheduled energy resulting in energy flows across border facilities with the Canadian Balancing Authorities, or Midwest ISO may enter a bilateral schedule for energy exports directly to Manitoba Hydro or the IESO to affect the payback of unscheduled energy to those entities.

Midwest ISO does not take title to electric energy in its market, or to energy transmitted out of its market, including electric energy exported to Canada. Even pursuant to its role as a Balancing Authority, Midwest ISO will not take title to electric energy under any circumstances, but will buy or sell such energy “for and on behalf of” its Market Participants (as defined in the Midwest ISO Tariff) and will distribute revenues or collect the costs of such energy as set forth in the Tariff.

In addition, in operating as a Balancing Authority, Midwest ISO will be a member of a contingency reserve sharing group that includes Manitoba Hydro and proposes to export emergency energy to Manitoba Hydro under the terms of the contingency reserve sharing agreement.

Traditionally, DOE has required that the last entity to hold title to the electricity inside the U.S. obtain export authority. The rationale being that such an entity could affect the transfer and, therefore, impact the operational reliability of the system. Although Midwest ISO is not the title holder of the electricity bring exported, DOE believes that as a Balancing Authority, Midwest ISO occupies the position of affecting the export and as an RTO, has the legal responsibility for the reliable operation of the electric system.

Based on the above, DOE believes that Midwest ISO must obtain authorization to export electricity under section 202(e) of the FPA. However, because of the fairly recent introduction of different types of entities, like RTOs, ISOs, Balancing Authorities, and similarly situated entities, each of whom may affect the transmission of electric energy from the United States to a foreign country and be responsible for the reliable operation of the electric system, DOE is inviting comments on the appropriateness of issuing export authorizations to entities like Midwest ISO. For the time being, DOE will address the question of whether a particular entity needs an export authorization on a case-by-case basis. DOE intends to initiate a proceeding in the near future to explore the more general question of what types of entities need an electricity export authorization from DOE. In that proceeding, DOE will be looking for ways to reduce the administrative burden on entities engaged in the international electricity market, while continuing to satisfy our statutory obligations.

The electric energy which Midwest ISO proposes to export to Canada would be transmitted over the international transmission facilities owned by International Transmission Co., Minnesota Power, Inc., Minnkota Power Cooperative, Inc., and Northern States Power Company/Xcel.The construction, operation, maintenance, and connection of each of these international transmission facilities to be utilized by Midwest ISO has previously been authorized by a Presidential permit issued pursuant to Executive Order 10485, as amended.

On December 22, 2008, Midwest ISO submitted an application for emergency temporary authorization to export electric energy to Canada in this docket, asserting that FERC had issued a final order on December 18, 2008, authorizing Midwest ISO to begin operating its Ancillary Services Market on January 6, 2009. The application requested that DOE issue an emergency temporary export authorization pending completion of this proceeding. On December 24, 2008, DOE granted Midwest ISO the temporary authority to export electric energy to Canada beginning January 6, 2009 as requested, until final resolution of the matter in this proceeding.

Procedural Matters: Any person desiring to become a party to these proceedings or to be heard by filing comments or protests to this application should file a petition to intervene, comment, or protest at the address provided above in accordance with §§ 385.211 or 385.214 of the Federal Energy Regulatory Commission's Rules of Practice and Procedures (18 CFR 385.211, 385.214). Fifteen copies of each petition and protest should be filed with DOE on or before the date listed above.

Comments on the Midwest ISO application to export electric energy to Canada should be clearly marked with Docket No. EA-343. Additional copies are to be filed directly with Gregory A. Troxell, Assistant General Counsel, Midwest ISO, P.O. Box 4202, Carmel, Indiana 46082-4202. A final decision will be made on this application after the environmental impacts have been evaluated pursuant to the National Environmental Policy Act of 1969, and a determination is made by DOE that the proposed action will not adversely impact on the reliability of the U.S. electric power supply system.

Copies of this application will be made available, upon request, for public inspection and copying at the address provided above, by accessing the program Web site at http://www.oe.energy.gov/​permits_​pending.htm, or by e-mailing Odessa Hopkins at [e-mail].

Issued in Washington, DC, on March 4, 2009.

Anthony J. Como,

Director, Permitting and Siting, Office of Electricity Delivery and Energy Reliability.