Duke, Southern file SEEM proposal with FERC as North Carolina regulators mull authority

UPDATE: Feb. 16, 2021: The Southest Energy Exchange Market (SEEM) members filed on Friday with the Federal Energy Regulatory Commission for the approval of an intra-hour energy exchange in the region, an extension of the existing bilateral energy trading market.

The founding members of SEEM expect to have the platform operational by early 2022, pending regulatory approval, according to a joint statement on behalf of SEEM from Duke Energy, Associated Electric Cooperative, Southern Company and ElectriCities of North Carolina. Other participants are expected to include Dominion Energy South Carolina, Santee Cooper, Tennessee Valley Authority, MEAG Power and more.

Dive Brief:

Duke Energy on Wednesday said that North Carolina regulators do not need to approve its proposal to form a centralized energy exchange market before the utility brings it to federal regulators.
The utility made its case to the North Carolina Utilities Commission (NCUC) during a hearing that followed protests by environmental groups arguing Duke's proposal is subject to state regulation. The NCUC in December responded by issuing an order that prevents Duke from filing its proposal with the Federal Energy Regulatory Commission until the North Carolina regulators allow it to do so.
Duke notified North and South Carolina regulators of its plan to form a Southeast Energy Exchange Market (SEEM) and file with FERC, alongside Southern Company, Dominion Energy and the Tennessee Valley Authority, Dec. 11. Some environmental groups fear the effort could undermine the region's broader efforts to open up its markets to more competition.

Dive Insight:

Stakeholders in the Carolinas were exploring ways to open up the Southeast to greater competition before Duke and Southern's plans to create SEEM were reported in July.

Duke called its filing with state regulators "a courtesy preview," in line with its argument that state approval would not be needed in order to file the plan with FERC.

Subsidiaries Duke Energy Progress and Duke Energy Carolinas "have followed the Commission's own procedure under the regulatory conditions and have followed the General Assembly's own procedure ... neither of which ... require this commission to pre approve the agreement prior to filing it at the FERC," Kendrick Fentress, associate general counsel at Duke said during the hearing Wednesday. She and Associate General Counsel Molly Suda argue that because the arrangement is not a power pool arrangement, wherein joint operation, dispatch or planning is happening, state approval is unnecessary.

"There is no separate legal SEEM entity," said Suda. "This is a … multi-party agreement, setting up how this group of companies will build, develop and operate a platform that they can trade over."

But Maia Hutt, a staff attorney with the Southern Environmental Law Center, argued that the proposal meets the definition of a "loose power pool," defined by FERC as "a multilateral arrangement that explicitly or implicitly contains discounted and/or special transmission arrangements."

"It doesn't matter what the SEEM looks like from far away, because when you get into this on a technical level, it does exactly that," said Hutt. She and Peter Ledford, general counsel and director of policy at the North Carolina Sustainable Energy Association, argue further that FERC has consistently left the question of whether a utility can join a loose power pool or similar arrangement to state regulators.

SEEM is proposed as a centralized, automated, intra-hour energy exchange intended to optimize renewable energy use and lower costs to customers, according to Duke and the 14 other utilities that have agreed to the arrangement. It would allow utilities to buy and sell power closer to real-time consumption, enabling more efficient use of transmission lines, according to the utilities.

SEEM members had originally hoped to file with FERC by the start of the year and begin operations as early as the fourth quarter of 2021. NCUC in its December order said the utility may not file with FERC "until further order of the Commission."