On October 20, 2020, Voltus, Inc. (“Voltus”) filed a complaint with FERC against the Midcontinent Independent System Operator, Inc. (“MISO”) and requested fast track processing pursuant to the Commission’s regulations. The complaint asked FERC to: (1) find that MISO tariff provisions prohibiting third party demand response providers from participating in MISO’s wholesale markets are inconsistent with jurisdictional provisions of the Federal Power Act (“FPA”) and are unjust, unreasonable, unduly discriminatory, and preferential; (2) find that certain electric retail regulatory authorities (“RERRAs”) in MISO issued prohibitions against third party demand response providers in a manner inconsistent with the terms of 18 C.F.R. § 35.28(g)(iii) and that such prohibitions are therefore void; and (3) issue a notice of proposed rulemaking to repeal the provisions in 18 C.F.R. § 35.28(g)(iii) that allow RERRAs to bar third party demand response aggregators from participating in wholesale markets.
FERC Proposes PURPA Amendments to Permit Solid Oxide Fuel Cell Systems to Qualify as Cogenerators
On October 15, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to revise its regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”) to permit Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment to be certified as cogeneration qualifying facilities (“QFs”). FERC proposed the changes in response to what it termed the “technical evolution of cogeneration,” and in response to Bloom Energy Corporation’s (“Bloom Energy”) petitioning FERC for such revisions.
FERC Sustains PJM and ISO-NE Immediate Need Reliability Project Exemption Orders
On September 29, 2020, in response to a request for rehearing, FERC issued an order modifying the discussion in, while sustaining the result of, a prior order finding that PJM Interconnection, L.L.C. (“PJM”) was not in compliance with three of the five criteria of Order No. 1000’s immediate need reliability project exemption (“Immediate Need Exemption”). Concurrently, in a separate order, FERC modified, while sustaining the result of, an order where it found that ISO New England Inc.’s (“ISO-NE”) implementation of the Immediate Need Exemption was not unjust, unreasonable, or unduly discriminatory or preferential.
FERC Opens Door for Participation of Distributed Energy Resource Aggregations in Wholesale Electric Markets
On September 17, 2020, FERC issued a final rule (“Order No. 2222”) amending its regulations to require Regional Transmission Organizations and Independent System Operators (“RTO/ISO”) to revise their tariffs to facilitate the participation of distributed energy resource (“DER”) aggregations in organized wholesale electric markets. In the order, FERC found current RTO/ISO DER aggregation market rules to be unjust and unreasonable, established new definitions for DERs and DER aggregations, and detailed RTO/ISO tariff revisions that will allow DER aggregations to participate in RTO/ISO markets. Commissioner Danly dissented from the order, contending that FERC was overextending its jurisdictional authority and that, through the order, FERC was imprudently encouraging “resource development by fiat.” RTO/ISOs are required to file the tariff changes needed to comply with Order No. 2222 within two hundred seventy (270) days of publication of the order in the Federal Register.
FERC Proposes to Modify Water Quality Certification Waiver Period for Natural Gas Projects
On September 9, 2020, FERC issued a Notice of Proposed Rulemaking (“NOPR”) proposing updated regulations that will establish a one-year period for state agencies or other certifying authorities (“Certifying Agencies”) to act on requests for water quality certifications related to sections 3 and 7 of the Natural Gas Act (“NGA”). Under the Clean Water Act (“CWA”), should a Certifying Agency fail to act on such a request within one year, they are deemed to have waived the certification requirements.
FERC Issues Second Notice of Technical Conference on Carbon Pricing in Organized Wholesale Electric Markets
On August 28, 2020, FERC issued a supplemental Notice of a Commission-led Technical Conference on state pricing for carbon dioxide emissions, commonly referred to as carbon pricing, in FERC-jurisdictional wholesale electric markets (“Conference”). The Conference is free and will take place online on Wednesday, September 30, 2020 from 9:00 a.m.
Divided FERC Permits Mystic to Recover Operating Costs of Non-Jurisdictional LNG Terminal
On July 17, 2020, FERC issued three orders relating to the executed cost-of-service agreement (“Mystic Agreement”) among Constellation Mystic Power, LLC (“Mystic”), Exelon Generation Company, LLC (“Exelon”), and ISO New England Inc. (“ISO-NE”). The Mystic Agreement provides for cost-of-service compensation to Mystic for the continued operation of two gas-fired generating units. In the first two orders, FERC addressed requests for rehearing of its 2018 orders accepting the Mystic Agreement (the “July 2018 Order” and the “December 2018 Order”), including its conclusion that Mystic should recover from ratepayers 91% of the operating costs of the Everett Marine Terminal (“Everett”), a non-jurisdictional liquified natural gas import terminal. In its third order, FERC accepted in part a Mystic compliance filing submitted in response to the December 2018 Order. Commissioner Glick issued dissents to each of the July 17 orders. Commissioner Glick concluded that FERC was forcing consumers to pay the full cost of service for Mystic in order to “bail out” Everett, and that each of the orders exceeded FERC’s jurisdiction under the Federal Power Act (“FPA”).
FERC Issues Federal Power Act “Exemption” in Lieu of Relicensing to Colorado Hydropower Project
On July 2, 2020, FERC staff issued an order granting an exemption from licensing to the City and County of Denver, Colorado, through its Board of Water Commissioners (“Denver Water”) for its Strontia Springs Hydroelectric Project (“Project”). Prior to FERC issuing the exemption order, Denver Water held an original minor license for the Project, which is located on the South Platte River in Douglas and Jefferson counties, Colorado.
Federal Hydropower Legislative Proposals Introduced on Capitol Hill
Throughout June 2020, a number of legislative proposals poised to impact hydropower resources have been introduced in Congress. On Monday, June 22, Democratic members of the House of Representatives released H.R. 2, the Moving Forward Act, which aims to encourage investment in infrastructure and includes several provisions on hydropower and dam safety. On Monday June 29, Congresswoman Cathy McMorris Rodgers (WA-05) introduced the Hydropower Clean Energy Future Act which includes updates to the licensing process for non-federal hydroelectric projects and promotes innovation of new generation technologies that would protect the environment and natural resources while providing additional reliability services to the nation’s electric grid. Finally, on June 30, Democratic members of the House Select Committee on the Climate Crisis released a Climate Crisis Action Plan, which includes provisions on hydropower and marine energy facilities.
Supreme Court Determines that Area in Northeastern Oklahoma Constitutes a Reservation
On Thursday, July 9, 2020 the Supreme Court, in a 5-4 decision, held that a large swath of northeastern Oklahoma, including most of the city of Tulsa, remains part of the Muscogee (Creek) Reservation and, as a result, that the state lacks jurisdiction to prosecute a major crime involving a tribal member within the reservation. Justice Gorsuch delivered the opinion for the Majority, confirming the durable principle of tribal sovereignty, despite significant efforts throughout history to dismantle tribal reservations and governments. Chief Justice Roberts filed a dissenting opinion, in which Justices Alito and Kavanaugh joined, and in which Justice Thomas joined, except as to one footnote. Some analyses have raised the possibility that this decision could have a significant impact on taxation and natural resources management in Indian Country throughout the United States, as discussed more fully below. However, because the direct holding of the Court is quite narrow, the full impact of this decision remains to be seen.