On July 23, 2020, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) granted FERC’s motion for a ninety-day stay of the court’s mandate in Allegheny Defense Project v. FERC. In Allegheny, the D.C. Circuit rejected FERC’s long-used practice of issuing “tolling orders” to grant itself more time to consider

Executive Summary of FERC Order No. 872: Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978 [1]

I. Overview

On July 16, 2020, the Federal Energy Regulatory Commission (FERC or the Commission) issued Order No. 872, the Commission’s final order revising its regulations implementing Sections 201 and 210

On July 7, 2020, the PJM Interconnection, L.L.C. (“PJM”) Planning Committee held an informational session on its State Agreement Approach, a transmission planning process that allows one or more states to request the studying and funding of new transmission projects within the PJM footprint to address identified public policy needs. The State Agreement Approach could help accommodate the anticipated growth in offshore wind generation by allowing states to submit transmission expansion or extension projects in the Regional Transmission Expansion Plan (“RTEP”) so long as the states agree to assume responsibility for project costs.
Continue Reading PJM Planning Committee Holds Stakeholder Meeting About Process for States to Fund New Transmission Projects

On June 18, 2020, FERC denied rehearing, but granted partial clarification, of a 2019 order addressing certain market power mitigation reforms proposed by the California Independent System Operator Corporation (“CAISO”). In particular, FERC again rejected CAISO’s “Net Export Limit” proposal to enhance local market power mitigation in the western energy imbalance market (“EIM”). As FERC reiterated in its order, the Net Export Limit proposal could allow EIM resource owners to limit dispatch during periods of market power mitigation, resulting in unjust and unreasonable market outcomes.
Continue Reading FERC Denies CAISO’s Rehearing Request, and Grants Limited Clarification, Regarding CAISO’s EIM Net Export Limit Proposal

In an order issued June 9, 2020, FERC accepted a proposal from the Midcontinent Independent System Operator, Inc. (“MISO”) to require certain solar generating facilities to respond to real-time dispatch signals by registering as Dispatchable Intermittent Resources (“DIRs”). Through MISO’s proposal, all solar resources entering commercial operation on or after March 15, 2020 must register as DIRs and become dispatchable by March 15, 2022, whereas solar resources in operation before March 15, 2020 have the option, but are not required, to obtain DIR registration. In accepting the proposal, FERC rejected arguments from one protestor that the proposal unduly burdened solar projects in late-stage development, finding that MISO’s proposed two-year transition period for such resources was reasonable.
Continue Reading FERC Accepts MISO Proposal to Require Dispatchable Intermittent Resource Registration for Solar Projects

On June 1, 2020, FERC issued an order on remand from the United States Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”) directing the Bonneville Power Administration (“Bonneville”) to return to Chehalis Power Generating, L.P. (“Chehalis”) refunded payments for reactive power supplied to Bonneville from August 1, 2005 through September 30, 2005. While FERC declined to require Bonneville to return the entire refund amount requested by Chehalis, it did provide interest calculated according to FERC’s interest regulation.
Continue Reading FERC Directs Bonneville to Pay Partial Refunds to Chehalis in Drawn-Out Reactive Power Dispute

On May 21, 2020, FERC reversed, on rehearing, an earlier determination from October 2017 that the Commission has the authority to require the Midcontinent Independent System Operator, Inc. (“MISO”) to revise its Transmission, Energy and Operating Reserve Markets Tariff (“Tariff”) to include refund commitments by non-public utility transmission owning members. FERC found that although it has authority to review non-public utility rates included in jurisdictional rates (such as MISO’s), it was neither necessary nor appropriate to impose the refund commitment contemplated on non-public transmission owners in MISO. FERC also dismissed, as moot, MISO’s compliance filing submitted in response to the October 2017 Order, and terminated various related proceedings.

Continue Reading On Rehearing, FERC Decides Not to Require Prospective Refund Commitment from Non-Public Utility Transmission Owners

On May 21, 2020, FERC issued Opinion No. 569-A, which revised the Commission’s methodology for determining whether an established rate of return on equity (“ROE”) is just and reasonable under section 206 of the Federal Power Act (“FPA”). Among other things, Opinion No. 569-A accepts the use of a third financial model for establishing just and reasonable ROE for Transmission Owners (“TOs”)—the “Risk Premium Model” (which was rejected in an earlier opinion)—in addition to the previously accepted two-step discount cash flow (“DCF”) model and capital asset pricing model (“CAPM”). Commissioner Richard Glick dissented in part, arguing that FERC was “once again changing course and revamping [its] ROE methodology” to the detriment of regulatory certainty among TOs and investors. In a related action, FERC contemporaneously issued a Policy Statement clarifying that the newly revised ROE methodology in Opinion No. 569-A applies to natural gas and oil pipelines, with certain exceptions.
Continue Reading FERC Revises Public Utility ROE Methodology; Sets Policy for Natural Gas, Oil Pipelines

On May 1, 2020, the U.S. Department of Energy (“DOE”) issued a Notice of Proposed Rulemaking (“NOPR”) to update its National Environmental Policy Act (“NEPA”) implementing regulations concerning applications to import to, or export from, liquid natural gas (“LNG”) terminals. In particular, DOE has previously determined that the transportation of natural gas by marine vessels normally does not pose the potential for significant environmental impacts, and accordingly, exports of LNG should be considered a “categorical exclusion” from NEPA review.  Comments are due June 1, 2020. 
Continue Reading DOE Proposes to Limit NEPA Review for LNG Export Applications