The Federal Energy Regulatory Commission (FERC) took swift action to respond to the recent United Airlines v. FERC decision regarding income tax allowances, as well as to implement changes stemming from the Tax Cuts and Jobs Act “to ensure that the economic benefits related to the reduction in the Federal corporate income tax rate are passed through to customers.” Specifically, FERC revised its income tax allowance policy for Master Limited Partnership (MLP) pipelines, with implications for other pass-through entities. In addition, it acted to implement federal income tax rate reductions and ordered changes affecting all FERC regulated entities.
On January 8, 2018, the Federal Energy Regulatory Commission (FERC or the Commission) issued an Order terminating the rulemaking proceeding that it established to address DOE Secretary Rick Perry’s proposed Grid Resiliency Pricing Rule. The proposed rule directed FERC to provide special compensation to certain coal and nuclear power plants (for a full summary of the proposal, refer to Husch Blackwell’s client alert). In response, FERC found that Secretary Perry’s proposal did not meet “clear and fundamental legal requirements[.]” FERC stated that Comments from Regional Transmission Operators (RTOs) and Independent System Operators (ISOs) did not indicate that the grid is threatened by the retirement of coal and nuclear power plants.
FERC none-the-less emphasized the importance of grid reliability and resilience, and determined that it has consistently taken action to address the issue, including: (i) extensive reliability planning and standard setting through NERC, (ii) examination of fuel assurance methods during the 2014 Polar Vortex, (iii) certain capacity market reforms, and (iv) coordination of wholesale gas and electricity market scheduling. To continue its reliability work, FERC initiated a new proceeding in Docket No. AD18-7 “to specifically evaluate the resilience of the bulk power system in the regions operated by regional transmission organizations (RTO) and independent system operators (ISO).” In the new proceeding, FERC directs each RTO and ISO to submit information on certain resilience issues and concerns identified by the Commission to enable it to examine holistically the resilience of the bulk power system. FERC stated that this new proceeding will provide further information on whether further action is warranted. Continue Reading FERC Rejects DOE Proposal for Special Compensation for Coal and Nuclear Generators
FERC Holds its First Meeting in Nearly Two Years with a Full Slate of Commissioners.
At the December 21, 2017 FERC open meeting, the first with the agency’s new Chairman, Kevin McIntyre and a full slate of Commissioners, several major new orders and policy initiatives were announced that are important to the energy industry, including initiating a more RTO-specific approach to fast-start resource pricing policies, new reporting requirements for cyber security incidents and a preliminary announcement of FERC’s intent to review the current pipeline certificate procedures. Continue Reading FERC Off to a “Fast Start”
FERC recently reviewed its regulations to determine if they “potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources,” as required Executive Order 13783.
In conducting this review, FERC focused on the following four jurisdictional areas:
- Hydropower Licensing
- Liquid Natural Gas (“LNG”) Facility and Natural Gas Pipeline and Storage Facility Siting
- Centralized Electric Capacity Market Policies in PJM, ISO-NE, and NYISO
- Generator Interconnection Policies
On September 29, the Department of Energy (DOE) issued a notice that may impact wholesale rates in all federally regulated wholesale markets (not including ERCOT), possibly affecting: (i) merchant plant owners, (ii) wholesale market customers, (iii) renewable and gas fired generation, (iv) coal and nuclear power plant owners, and (v) power traders. Husch Blackwell energy regulatory attorneys Linda Walsh, Chris Reeder and Sylvia Bartell issued a detailed client alert on the Notice of Proposed Rulemaking (NOPR) issued by DOE requiring regional transmission organizations (RTOs) and independent system operators (ISOs) “to ensure that certain reliability and resilience attributes of electric generation resources are fully valued.” The proposed market reform would provide Continue Reading DOE Proposes Special Compensation to Coal and Nuclear Generators
In an article by Keith Goldberg of Law360, Husch Blackwell attorney and former FERC Chairman, Jim Hoecker, discuss the role of FERC Order 1000 in regional transmission planning. He and other experts provide insight on how Order 1000 has initiated the long-term planning process but failed to spur the significant development necessary to provide regional electricity solutions.
The abrupt resignation and departure (effective February 3, 2017) of former FERC Chairman Norman Bay will leave the Commission without the minimum 3-commissioner quorum needed for the Commission to act. Regulated entities can expect a flurry of activity at the Commission this week, while Commissioner Bay is still voting. As a former FERC Chairman, I believe Acting Chairman Cheryl LaFleur, a Democrat, will do her best to conduct the agency’s business after Bay’s departure, but there are limits to what she and remaining Commissioner, Collette Honorable, can do.
The first order of business will be to Continue Reading FERC Acting Chairman LaFleur Expected to Try and Minimize FERC’s Quorum Problem
Today we highlight the Quadrennial Energy Review’s (“QER”) focus on grid security recommendations in the context of the newly adopted Fixing America’s Surface Transportation Act (“FAST Act”) and the Federal Power Act (“FPA”). It discusses FERC role in grid security and suggests that FERC utilize its regional entities to assist in security planning. Continue Reading “Transforming the Nation’s Electricity System.” Part IV: Grid Security
On December 15, 2016,the Federal Energy Regulatory Commission (FERC) proposed broad regulatory changes to enhance the interconnection processes first developed in 2003, prior to the proliferation of new generation resources and transmission investments. FERC issued a Notice of Proposed Rulemaking (NOPR) that proposes to modify many aspects of the large generator interconnection process. The full client alert is available on Husch Blackwell’s Energy and Natural Resources page.
The Federal Energy Regulatory Commission (“FERC”), in a recent Notice of Inquiry (NOI), is exploring whether to revise its current approach to identifying and analyzing market power in the context of Federal Power Act Section 203 (utility mergers and acquisitions) and 205 (market based rate authorizations). Currently, FERC uses separate methodologies when analyzing an entity’s market power when an entity seeks prior-approval of a merger or similar jurisdictional transaction under Section 203, and when an entity applies for authority to sell energy products in FERC-regulated wholesale energy markets under Section 205. Through this NOI, FERC seeks comments on whether it should “harmonize” and “streamline” these two market-power analysis methods. Continue Reading FERC Considers “Streamlining” Analysis of M&A Approval and MBR Authority