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VEA, NV Energy agree on Mercury upgrades

Valley Electric Association came to a stipulated agreement on improvements to the Nevada National Security Site at Mercury, called the Innovation Substation, in an agreement with NV Energy, dba Nevada Power, and the U.S. Department of Energy.

The agreement, filed Dec. 20, comes after a feud erupted between VEA and NV Energy, which protested a $36.6 million contract awarded to Valley Electric by the Defense Logistics Agency to purchase, operate and maintain the Creech Air Force Base distribution system and filed a petition for a declaratory order that would require VEA to pay an exit fee and obtain a Certificate of Public Convenience and Necessity on a five-year, $61.6 million contract awarded VEA to provide electrical service to the NNSS.

As part of the NNSS contract, Valley Electric was required to build upgrades, including a 5.3-mile, 138-kilovolt transmission line between the DOE switching center at Mercury and the VEA Innovation Substation, which will connect with the new VEA 230-kilovolt northwest transmission line.

In a statement, Valley Electric Association officials said, “VEA’s relationship with NV Energy has improved significantly as a result of NV Energy’s recent merger with Mid American Energy Holdings Company. VEA anticipates that this relationship will continue to improve. At VEA we believe it is imperative to build strong relationships amongst all utilities in the region.”

The announcement NV Energy would join Mid American, a division of billionaire investor Warren Buffett’s Berkshire Hathaway, was made May 29, 2013, a $5.6 billion cash deal with a $10 billion enterprise value. The merger was completed Dec. 19.

The upgrades were deemed essential to the public interest by improving the reliability of electrical service to the national security missions conducted at the NNSS, formerly known as the Nevada Test Site. Specifically the upgrades will:

— Provide assurance a single or double contingency transmission outage won’t interrupt the power supply;

— Increase outage flexibility required to maintain existing, aging transmission facilities;

— Include new steel poles much less susceptible to failure;

— Increase fault currents for enhanced system protection through improved relay coordination and isolation of faults by being closer to the new VEA 230-kilovolt line;

— Increase delivery capacity of existing transmission facilities serving the NNSS which will permit the development of new programs.

NV Energy previously complained Valley Electric didn’t provide information to NV Energy demonstrating the expansion wouldn’t create reliability impacts to the operation of their system.

“NV Energy is concerned with the continued lack of regard for coordinated planning demonstrated by VEA in its development of interconnection projects,” the company said in a previous filing.

VEA began work on the Innovation Substation after the U.S. Bureau of Land Management gave the notice to proceed on Sept. 17 and completed wire installation, including fiber optics on Oct. 25.

The different parties agreed the Public Utilities Commission should determine whether it’s in the public interest to approve the project. In the amended agreement, NV Energy agreed the Innovation Project was in the public interest because it doesn’t adversely impact the reliability of their transmission system. VEA agreed the project would be constructed, operated and maintained in accordance with North American Electric Reliability Corporation and Western Electricity Coordinating Council standards.

VEA, NV Energy and the DOE intend to enter into an interconnection agreement establishing ownership, switching, operating and maintenance responsibilities for each party.

The Public Utilities Commission also issued a declaratory order finding the additional reliability interconnection didn’t require PUC approval. That was another sticking point last year, amid complaints VEA was operating within the NV Energy service territory without a Certificate of Public Convenience and Necessity in signing the Creech AFB contract.

Valley Electric said the interconnection agreement between VEA, NV Energy and the DOE is subject to the jurisdiction of the Federal Energy Reliability Commission (FERC) and the Western Electricity Coordinating Council (WECC) but all parties didn’t request the Public Utilities Commission approve the interconnection agreement.

The PUC order does ask Valley Electric to file a copy of the interconnection agreement once it is filed with FERC.

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