Federal Energy Regulatory Commission (FERC)

FERC recently issued a Notice of Proposed Rulemaking (NOPR) that would eliminate the need for electric power sellers with market-based rate authority who sell into certain independent system operator (ISO) and regional transmission organization (RTO) capacity markets to file two screens—the pivotal supplier screen and wholesale market-share screen—with FERC, which would simplify the horizontal market

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.
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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.   
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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.
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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:

  1. Hydropower Licensing
  2. Liquid Natural Gas (“LNG”) Facility and Natural Gas Pipeline and Storage Facility Siting
  3. Centralized Electric Capacity Market Policies in PJM, ISO-NE, and NYISO
  4. Generator Interconnection Policies


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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
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Lafleur photo
Acting FERC Chairman, Cheryl A. LaFleur

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
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