Bates White: Economic Consulting

Nicolas Puga plays key role in FERC US-México electricity interconnection case

12 October 2007—A ruling in a recent FERC case clears the way for the development of wholesale electricity trade between the ERCOT and Mexican electricity markets. Bates White′s Nicolas Puga served as a expert in the case.

On August 24, 2007, Mr. Puga submitted an affidavit that provided the basis for a Petition for Declaratory Order filed with the FERC on behalf of US distribution and transmission company Sharyland Utilities, L.P. The Petition, filed by Sutherland, Asbill, and Brennan, L.L.P., asked FERC to disclaim jurisdiction over ERCOT electric utilities and market participants in connection with Sharyland’s High Voltage Direct Current (HVDC) interconnection, known as a “DC Tie,” linking ERCOT with México’s power grid.

The matter arose as a result of an agreement between Sharyland Utilities and Comisión Federal de Electricidad (CFE) to build a 150 MW High Voltage Direct Current (HVDC) interconnection linking Texas with northern and northeastern México. (An HVDC system converts electrical current from AC to DC at the transmitting end, and from DC to AC at the receiving end. Such systems provide for asynchronous interconnection and control of power flows between electrical systems.)

At the formative stages of the project, Mr. Puga testified before the Public Utility Commission of Texas as to the benefits that would accrue to consumers and businesses on both sides of the border. The operation of the tie was put on hold by ERCOT pending FERC’s ruling, which came October 1, 2007, and affirmed ERCOT’s electric utilities and market participants’ status as a nonpublic utility under the Federal Power Act. (ERCOT had not previously been subject to FERC authority, because it has operated exclusively within Texas and was not engaged in interstate commerce.)

As a result of FERC’s ruling, electricity trade over the multimillion-dollar 150 MW HVDC interconnection can proceed. This facility, which is owned and operated by Sharyland Utilities, will provide, for the first time, large-scale commercial and emergency bidirectional power transfer and voltage control between Texas and México, and it will improve the stability of both grids.

“This DC Tie is an energy bridge between our two great nations and we hope it is one of many to come,” Sharyland Utilities president Hunter Hunt said at a ceremonial commissioning of the new facility on October 10, 2007. “It has the potential to foster an international wholesale market that could bring together power generators and commercial customers on both sides of the border,” according to a statement released by Sharyland.

Nicolas Puga, MSc, has more than 20 years of experience as a senior energy advisor and executive of energy consulting services in international marketing, business development, and operations. Mr. Puga has worked as a technical advisor on energy infrastructure project development, energy end-use efficiency, renewable energy technology policies and marketing. He is an expert in US–México cross-border energy trade and in the market, regulatory, and commercial aspects of energy project development in México. Mr. Puga has advised numerous private and public sector clients in the United States, Canada, México, Argentina, Chile, Venezuela, Colombia, the Philippines, and Australia.