On August 20, 2024, the Federal Energy Regulatory Commission (“FERC”) issued an order rejecting, without prejudice, a contested proposal from Basin Electric Power Cooperative (“Basin”) to establish special wholesale power sales rate schedules for cryptocurrency (“crypto”) operations and other new large loads.  While FERC expressed sympathy for Basin’s concerns regarding its ability to serve expected load growth reliably and economically, FERC found that Basin failed to justify its proposal to treat crypto currency mining loads differently from other large loads and therefore rejected the differential rate proposal.Continue Reading FERC Rejects Basin’s Special Rate for Crypto and Large Load Customers, Sparking Further Interest in “Large Load” Policy Discussions at FERC

On July 25, 2024, FERC issued an order granting in part and denying in part a complaint raised by American Municipal Power, Inc., the People’s Counsel for the District of Columbia, and the PJM Industrial Customer Coalition (collectively, “Complainants”) against PJM Interconnection, L.L.C. (“PJM”) arguing, principally, that PJM violated Schedule 6 of the PJM Operating Agreement by failing to execute Designated Entity Agreements in all situations with each “Designated Entity,” or the entity designated to build transmission projects that PJM selects in the PJM Regional Transmission Expansion Plan (“RTEP”). FERC also granted in part and denied in part a separate request by PJM under section 206 of the Federal Power Act to revise Schedule 6 of the PJM Operating Agreement (the “PJM 206 Filing”) governing the RTEP process and associated requirements for Designated Entity Agreements. FERC established paper hearing procedures to develop a record to determine PJM’s responsibilities concerning Designated Entity Agreements for certain RTEP projects already in process and whether remedial actions are required to address the Operating Agreement violations.Continue Reading FERC Faults PJM for Failing to Execute Designated Entity Agreements, Establishes Hearing on Whether Remedial Actions Warranted

On July 9, 2024, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) vacated orders issued by the FERC that required six wholesale power sellers (the “Sellers”) to issue refunds to customers for power sales made above FERC’s “soft” price cap during the 2020 heatwave in California.  The court held that FERC “should have conducted [a] Mobile-Sierra analysis prior to ordering refunds,” and therefore remanded the orders so that FERC could “change its refund analysis for above-cap sales going forward.”Continue Reading Court Vacates FERC “Soft” Cap Refund Order Issued After 2020 California Heat Wave

On March 21, 2024, FERC proposed to prohibit transmission providers from being compensated through their transmission rates charges for reactive power that is within the standard power factor range from generating facilities.  Similarly, FERC proposed to revise both the large generator interconnection agreement (“LGIA”) and small generator interconnection agreement (“SGIA”) to remove the requirement that a transmission provider pay an interconnection customer for reactive power within the standard power factor range if the transmission provider pays its own or affiliated generators for the same service.  If the Notice of Proposed Rulemaking (“NOPR”) becomes final as proposed, transmission providers would only be required to pay an interconnection customer for reactive power when the transmission provider asks the interconnection customer to operate its facility outside the standard power factor range set forth in its interconnection agreement.Continue Reading FERC Proposes to Largely Eliminate Compensation for Reactive Power

Executive Summary

On March 21, the Federal Energy Regulatory Commission (FERC or the Commission) issued Order No. 2023-A (Final Rule), which reaffirmed aspects of Order No. 2023 — the Commission’s landmark order updating its generator interconnection procedures. As detailed further in this summary, the Commission largely upheld Order No. 2023, including some of the more controversial aspects of the order, such as penalties and the transmission capacity “heat map,” and provided further clarity on other aspects.Continue Reading Troutman Pepper Summary of FERC Order No. 2023-A on Generator Interconnections

On December 12, 2023, FERC staff offered information and recommendations to help registered entities (i.e., users, owners, and operators of the bulk electric system) improve their compliance with mandatory Critical Infrastructure Protection (“CIP”) reliability standards and their overall cybersecurity postures (the “Report”).  The recommendations are based on FERC staff’s non-public CIP audits of U.S.-based North American Electric Reliability Corporation (“NERC”) registered entities during Fiscal Year 2023, which included the participation of NERC and the regional entities.  FERC staff found that registered entities generally met the mandatory requirements of the CIP Standards, although potential noncompliance and security risks remained. FERC staff also identified and made recommendations concerning other voluntary best practices that could improve cybersecurity.  FERC staff explained that the CIP standards aim to mitigate cybersecurity and physical security risks to the bulk electric system’s facilities and equipment.  The Commission approved the first set of eight mandatory CIP standards on cybersecurity on January 28, 2008, and has since revised the standards to respond to emerging cybersecurity issues.  FERC began its CIP standards audit program for registered entities in 2016 and has conducted CIP audits each year since.  Continue Reading FERC Staff Issues Report on Lessons Learned from 2023 CIP Audits

On November 27, 2023, Troutman Pepper’s award-winning Energy Group published a white paper titled, Unlocking U.S. Transmission Upgrades – Are We On the Cusp of Real Progress?  The white paper offers perspectives from a range of transmission experts and examines the latest regulatory and legal changes that could lead to much-needed upgrades to the U.S. transmission grid.  Specifically, the report discusses why transmission grid upgrades are needed, identifies four main obstacles to upgrading the transmission system, provides solutions and benefits to overcoming these obstacles, and concludes with reasons for optimism for the future of the U.S. transmission system.Continue Reading Troutman Pepper Releases White Paper on Transmission Upgrades

On October 20, 2023, the U.S. Department of Energy (“DOE”) released the National Transmission Needs Study, a triennial report that assesses electric transmission capacity constraints and congestion on a national scale. While similar to previously issued triennial reports, the 2021 Bipartisan Infrastructure Law expanded the study’s scope to also consider anticipated future transmission constraints and congestion. The study assessed needs through 2040 and revealed a pressing need for additional transmission infrastructure to promote reliability in the face of a shifting resource mix, with the largest benefits stemming from increases to interregional transfer capacity.Continue Reading Department of Energy Releases Triennial National Transmission Needs Study

On October 19, 2023, FERC accepted ISO New England Inc.’s (“ISO-NE”) proposal to allow electric storage facilities to be planned and operated as transmission-only assets (“SATOAs”) to address system needs identified in the regional system planning process. FERC determined that the ISO-NE’s proposal established a just and reasonable framework for electric storage resources to be considered a transmission asset for regional planning purposes and thus be eligible for cost-based rate recovery. Continue Reading FERC Accepts ISO-NE’s Proposal to Treat Electric Storage Facilities as Transmission-Only Assets

On September 21, 2023, the Commission issued separate orders on show cause proceedings finding that the existing tariffs of the California Independent System Operator Corporation (“CAISO”), ISO New England Inc. (“ISO-NE”), and the New York Independent System Operator, Inc. (“NYISO”) remain just and reasonable as to their collateral requirements for financial transmission rights (“FTR”) market participants. On the contrary, the Commission continued to find that Southwest Power Pool, Inc.’s (“SPP”) tariff appears to be unjust, unreasonable, and unduly discriminatory and therefore directed further briefing on a list of specific questions or for SPP to explain what changes to its tariff it believes would remedy the concerns identified by the Commission, within 60 days of the order.Continue Reading After Initiating Credit Risk Show Cause Proceedings in 2022, FERC Finds that CAISO’s, ISO-NE’s, and NYISO’s Tariffs Remain Just and Reasonable but Directs Further Briefing on SPP’s