Valley Electric Association’s nearly $200 million sale of its high-voltage system to Chicago-based GridLiance Holdco will likely be delayed from its original closing date due to “political change in Washington, D.C.,” the cooperative announced last week.
On Friday, VEA announced that the closing of the agreement to sell its 230 kV transmission assets will likely be delayed at least a month, perhaps more, from the originally planned March 1 date due to political change in Washington, D.C.
According to VEA, GridLiance’s purchase of the transmission assets requires a number of regulatory approvals by the Federal Energy Regulatory Commission (FERC) before the transaction can close.
“Immediately after the Trump administration took power, one of the FERC commissioners resigned,” according to the release. “FERC had already been operating with only three commissioners, rather than the usual five, because political gridlock prevented Senate confirmation of commissioners to fill existing vacancies in 2016. When the third commissioner resigned effective Feb. 3, with only a week’s advance notice, FERC lost its quorum.”
Former energy regulatory commission chairman Norman Bay left when Cheryl LaFleur was appointed by Trump as acting chairman. Bay said he had told the Trump transition team he would resign if demoted. LaFleur was chair from 2013 to 2015.
“VEA does not know how long it will take to get final approval and close after a FERC commissioner is appointed, but there is reason to hope that the process will move quickly at that time,” the cooperative said in a statement.
Nevada U.S. Senator Dean Heller said he was disappointed at Bay’s departure, saying it was “effectively paralyzing the commission,” according to RTO Insider, an e-newsletter following the organized energy markets.
Until Trump appoints and the Senate confirms at least one commissioner, the purchase cannot be approved.
“The FERC Chair has assured the industry in public comments that staff is continuing to work on all affected filings to position FERC to act quickly as soon as the new commissioner(s) are in place,” VEA said in a statement.
On Tuesday, Tom Husted, VEA chief executive officer, held a day-long “Coffee with Tom” forum at the Valley Conference Center.
“We know how important this sale is to our members, so we want to address all their questions,” Husted said.
The sale would include 164 miles of high-voltage transmission lines VEA owns throughout Southern Nevada for an estimated $190 million. The transaction would net the cooperative almost 2.4 times the initial $82 million it invested in constructing the transmission lines.
In December, GridLiance Holdco was approved as a participating transmission owner by the California Independent System Operator, sending the sale to the Federal Energy Regulatory Commission for consideration.
California Independent System Operator, also called CAISO, manages VEA’s regional transmission market.
VEA, GridLiance, and CAISO were required to make nearly a dozen filings with the energy regulatory commission in order to close the transaction. Most of these filings only require a letter order from commission staff, and VEA and CAISO have already received a number of these staff letter orders.
A second energy regulatory commission action making GridLiance’s new rate effective is also needed to close, but staff can issue this order.
“As is standard practice, a number of parties have intervened in the case (which is a separate case from GridLiance’s request for permission to make the purchase), arguing that the requested rate is too high,” VEA said in a statement.
The cooperative said the commission typically accepts the rate subject to refund, letting the parties litigate afterward what the rate should be.
“Importantly, closing the transmission sale is NOT contingent on GridLiance getting the rate filed, only on FERC accepting that rate and starting the process. The staff could delay closing by suspending effectiveness for the maximum period allowed by law – five months – but maximum suspensions are rare and not expected in this case.”
In anticipation of the sale, VEA’s board approved a 9.9 percent rate reduction, which took effect Jan. 1, 2017. The board passed the rate reduction at its November meeting. A $579 sales premium will be paid to VEA members after the close.
Other benefits from the sale will include the largest capital credit retirement in the cooperative’s five-decade history and rate stability through 2024. The sale is to close in the first quarter of 2017.
Arnold M. Knightly is the editor of the Pahrump Valley Times