A transmission project to link the nation's three major electric grids won an initial approval Thursday from federal regulators, but fell short on its bid to resolve a thorny jurisdiction issue.

The so-called Tres Amigas superstation planned for New Mexico would allow power to flow among the eastern, western and Texas electric grids. Linking the regions could give wind and solar generation greater access to customers and back up power, while eliminating often wide disparities in wholesale prices between different areas.

"Tres Amigas is a prime example of the creativity and pioneering thinking that our country needs to expand the ability of the transmission grid," said FERC Chairman Jon Wellinghoff before the votes.

The commission gave the project the authority to sell transmission access at negotiated rates to generators and other firms that would move power through the proposed facility, while including provisions to protect consumers.

At the same time, FERC declined to wave its authority over transmission connections the facility would have with the Electric Reliability Council of Texas, or Ercot. The jurisdictional issue is critical to Ercot's involvement because the commission doesn't have jurisdiction over the Texas grid. The commission said it didn't have enough information to make a decision, but recommended a future filing by the project to resolve the jurisdictional issue.

Winning FERC approvals are important to move the project forward as Tres Amigas looks to raise additional funding and reach agreement with transmission companies that would connect into the facility. The project's developers are talking with a range of high-voltage line builders including American Electric Power Co. (AEP), ITC Holdings Corp. (ITC) and Xcel Energy Inc. (XEL), said David Raskin, a partner at the law firm Steptoe & Johnson LLP who represents Tres Amigas in an interview Wednesday.

He said the project could be operational as early as 2013, but the timeline largely depends on the transmission companies connecting to the facility.

The project would use super-conductor technology to synchronize power among the three major interconnections. A mismatch exists among the grids preventing power from flowing among states such as Texas and Arizona.

-By Mark Peters, Dow Jones Newswires; 212-416-2457; mark.peters@dowjones.com
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