The United States is broadening the scope and diversity of its energy mix at a rate and to an extent not seen in a century, if ever. The changes underway provide both important opportunities and critical challenges for owners seeking to repurpose existing assets in a market governed by overlapping federal, state and local regulations.Continue Reading Six Key Considerations for Transitioning Existing Fossil Fuel Transport, Storage and Electricity Generation Assets to New Uses
Introduction: On November 18, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a notice of inquiry seeking comments on various aspects of currently accepted reactive power compensation mechanisms and alternative compensation methodologies, including for those resources that interconnect at the distribution level but offer reactive power capability in support of transmission. The NOI may foreshadow FERC’s adoption for the first time of a uniform standard for reactive power compensation, displacing the current fragmented reactive power federal pricing environment.
Continue Reading FERC Seeks Comments on Potential Alternative Reactive Power Compensation Mechanisms in Reactive Power Capability Compensation, 177 FERC ⁋ 61,118 (2021) (“NOI”)
On November 15th, 2021, President Biden signed the highly anticipated $1.2 trillion infrastructure bill. Among other infrastructure-related incentives, the bill includes billions in funding to help fight climate change and support clean energy technologies. Specifically, the bill allocates approximately (1) $65 billion for power infrastructure, of which nearly $29 billion is devoted to bolstering the electric grid (including transmission), (2) $47.2 billion to address critical cyber and climate resilience and (3) $7.5 billion to build out a national network of electric charging infrastructure.[1] These incentives are critical for facilitating broader proliferation of renewable energy projects and the transmission assets needed to carry their output to load centers, which is expected to help the nation achieve stated climate change goals.
Continue Reading Comprehensive $1.2 Trillion Infrastructure Bill to Provide Critical Support for Clean Energy
On February 18, 2021, the Federal Energy Regulatory Commission (FERC or Commission) issued a renewed Notice of Inquiry (NOI)[1] seeking input on potential revisions to its current Policy Statement on the certification of new natural gas transmission facilities.[2] The NOI supplements FERC’s 2018 NOI issued on the same topic.[3] Citing changes following receipt of comments in its 2018 NOI proceeding (e.g., the Council on Environmental Quality’s promulgation of updated regulations under the National Environmental Policy Act of 1969 (NEPA) for implementation by all federal agencies[4] and Executive Order 14008[5]) FERC is seeking to refresh the record and provide “additional viewpoints.”
Continue Reading FERC Issues Second NOI Concerning Its Certificate Policy
With the change in administration in Washington, D.C., President Biden elevated Federal Energy Regulatory Commission (“FERC”) Commissioner Richard Glick to the position of Chairman. A Democrat, Commissioner Glick now assumes
Continue Reading Six Key Items to be Aware of Today Concerning FERC Carbon Pricing Policy
Through a Notice of Inquiry (“Notice”)[1] approved at its January 19, 2021 open meeting, the Federal Energy Regulatory Commission (“FERC”) asked whether its Uniform System of Accounts (individually, an “Account,” and for more than one, “Accounts”) should be modified to better reflect the circumstances of non-hydro renewable assets that rely on heat, or motion, of the earth or sun, such as facilities that rely on solar, wind, biomass and geothermal sources. The Notice describes how various Account categories currently do not readily correspond to renewable equipment. The Notice observes that certain types of renewable equipment (e.g., solar panels and photovoltaic (“PV”) inverters), and related maintenance expenditures (e.g., for solar panels, wind towers or their blades) do not fit well within existing descriptions of the Accounts.[2]
Continue Reading FERC Considers Whether to Modify Accounting System for Renewables
Pipeline development continues to be highly contested in Federal Energy Regulatory Commission (FERC) certificate proceedings and before trial and appellate courts. Please see our discussion of six key topics for pipeline developers to be aware of.
Continue Reading Natural Gas Pipeline Development
On July 18, 2019, the Federal Energy Regulatory Commission issued Order No. 860. The order requires entities with or seeking market-based rate authority (sellers) to submit certain data related to FERC’s market power analyses, including its indicative screens and asset appendices, into a “relational database” maintained by FERC. The order also requires the submission of information associated with long-term firm sales. When changes occur to data previously submitted, the relational database must be updated monthly by sellers. The database will be used to, among other things, develop asset appendices and indicative screens for FERC filings that require a market power analysis. Finally, Order No. 860 altered the deadline for “change in status” filings. Beginning on January 1, 2021, sellers will need to comply with the order by making a baseline submission and using the “relational database” to make future market-based applications.
Continue Reading FERC Order No. 860 Mandates New Market-Based Rate Filing and Reporting Requirements for Sellers of Electric Energy
On June 9, 2020, the Federal Energy Regulatory Commission (FERC) issued a regulation precluding construction authorization for pipelines approved pursuant to Sections 3 and 7 of the Natural Gas Act (NGA) until FERC acts on the merits of any timely-filed requests for rehearing or the time for filing a rehearing request has expired. Parties seeking to construct new interstate pipeline facilities likely will contend FERC’s regulation is overbroad and burdensome. They may contend that it imposes unnecessary delays on the construction of critical energy infrastructure already approved by FERC and found to be in the public interest. The regulation precludes the construction of the entirety of the approved pipeline regardless of whether the scope of the rehearing request includes all of the facilities. The regulation is linked to concerns that landowners will be subject to eminent domain actions, yet ostensibly bars construction activity regardless of the basis of the rehearing request, for instance regardless of whether the rehearing request has anything to do with the exercise of condemnation rights. Pipelines may contend that the regulation is inconsistent with the NGA, federal policy supporting the construction of needed energy infrastructure, and a recent executive order directing federal agencies to support the economic response to the COVID-19 outbreak.
Continue Reading FERC Issues Regulation Prohibiting Construction of Newly Approved Natural Gas Pipeline Facilities Until Resolution of all Rehearing Requests
On May 21, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) approved two orders by 3-1 votes revising its methods to estimate electric, natural gas and oil utilities’ returns on equity (“ROE”).[1] Return on equity is one of the most contentious issues in cost-of-service proceedings before FERC, and FERC’s guidance is unlikely to alter that. In many important ways, the guidance significantly deviated for electric utilities and pipelines, which raises a number of issues regarding whether such deviations are supported by each industry’s risks.
Continue Reading FERC Issues Revised Guidance Regarding Return on Equity Calculations
The Federal Energy Regulatory Commission (“FERC” or “Commission”) issued on April 16, 2020 two orders[1] largely denying requests for rehearing of its prior decisions that, among other things, subjected to minimum offer price thresholds energy resources participating in PJM Interconnection, L.L.C.’s (“PJM”) capacity market which receive so-called “State Subsidies”.[2] FERC reaffirmed that a resource within broadly-defined categories (e.g., renewable resources) receiving State Subsidies must offer capacity in PJM’s forward capacity market at or above an administratively-established price floor (i.e., the minimum offer price rule, or “MOPR”), regardless of such a resource’s actual incremental costs. Potential and likely ramifications of the Commission’s actions, arguments opponents of the April 16 Orders are likely to raise and potential paths forward for industry market participants are set forth below. Additionally, the most promising arguments that could be used to invalidate the April 16 Orders, some of which are discussed below, have not been raised before or addressed by FERC.
Continue Reading FERC Reaffirms Controversial Energy Capacity Decisions: Insights and Analysis