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
Comprehensive $1.2 Trillion Infrastructure Bill to Provide Critical Support for Clean Energy
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.
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Natural Gas Pipeline Development
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.
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FERC Rejects Net Metering Petition, But Fight Is Far From Over
On July 16, 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) dismissed a petition filed by the New England Ratepayers Association (“NERA”) requesting that the Commission declare that certain sales of energy by net-metered, behind-the-meter generators are exclusively subject to federal jurisdiction. If granted, the petition would have resulted in the rates for such sales being set at an avoided cost rate in accordance with the Public Utility Regulatory Policies Act of 1978 (“PURPA”) or wholesale market prices under the Federal Power Act (“FPA”), as applicable, rather than the interconnected utility’s retail rate. The Commission declined to address the legal issues raised by the petition. Instead, it determined that the issues presented in NERA’s petition do not warrant a generic statement from the Commission at this time because NERA failed to identify a specific controversy or harm that the Commission should address. However, concurring opinions from two commissioners suggest that future fights may be imminent over the scope of FERC’s authority to regulate net metering transactions and the rates for such transactions.
Continue Reading FERC Rejects Net Metering Petition, But Fight Is Far From Over
FERC Issues Regulation Prohibiting Construction of Newly Approved Natural Gas Pipeline Facilities Until Resolution of all Rehearing Requests
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
FERC Issues Revised Guidance Regarding Return on Equity Calculations
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