On September 29, 2023, FERC accepted part of Arizona Public Service Company’s (“APS”) proposed interconnection queue reforms to transition from a first come, first served cluster study process to a first ready, first served cluster study process. Generally, FERC accepted APS’s proposals that would prevent speculative projects from moving through the queue, while rejecting proposals that were not consistent with or superior to the pro forma Large Generator Interconnection Procedures (“LGIP”). APS’s interconnection queue reform proposal was submitted before FERC issued Order No. 2023; the approved reforms do not constitute APS’s Order No. 2023 compliance filing and are based on FERC’s currently effective pro forma LGIP.
FERC Approves CAISO Revisions to Wheeling Through Priority Tariff Provisions, Amending ATC Calculations to Account for Transmission Capacity Needed to Serve Native Load
On October 30, 2023, FERC accepted the California Independent System Operator Corporation’s (“CAISO”) revisions to its wheeling tariff provisions. The revised provisions allow external load serving entities to obtain, in advance, on a monthly and daily basis, rights to transmit electricity (also known as “wheeling”) through self-schedule priorities equal to the scheduling priority of CAISO demand. The revised provisions also update CAISO’s calculation of Available Transfer Capability (“ATC”).
FERC Directs PJM to Use a Historical Simulation Model with a 99% Confidence Level for its FTR Credit Requirement
On September 21, 2023, the Commission approved, in part, PJM Interconnection L.L.C.’s (“PJM”) proposed tariff revisions regarding the calculation of the Financial Transmission Right (“FTR”) credit requirement (“September Order”). PJM’s revisions, among other things, would calculate collateral based on a historical simulation model (“HSIM”) instead of a historical value model. FERC accepted the proposal with the exception of PJM’s proposed 97% confidence interval in the HSIM model, and instead required PJM to use a 99% confidence interval.
Ninth Circuit Finds that PURPA Gives FERC Broad Implementation Discretion, But Remands New Qualifying Facility Rules for Lack of NEPA Review
On September 5, 2023, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), in Solar Energy Industries Association v. FERC, held that the Public Utility Regulatory Policy Act (“PURPA”) gives FERC broad discretion to evaluate which implementation rules are needed to encourage the development of qualifying small-scale renewable generating facilities. While the Ninth Circuit did not vacate FERC’s decision, it remanded the decision back to FERC for failing to conduct the proper National Environmental Policy Act (“NEPA”) review. The decision stems from the Solar Energy Industries Association and several environmental organizations’ (collectively, “Petitioners”) challenge to Order Nos. 872 and 872‑A (collectively, “Order 872”), which were rules adopted by FERC that altered which small-scale renewable facilities qualify for benefits under PURPA and how those facilities are compensated (see July 20, 2020 edition of the WER).
FERC Reverses Course, Rejects SPP Byway Cost Allocation Proposal for Second Time
On July 13, 2023, FERC on rehearing set aside its prior order that had accepted Southwest Power Pool, Inc.’s (“SPP”) proposal to establish a case-by-case process to allocate, on a regional, postage-stamp basis, all of the costs of a transmission facility with a voltage level between 100 kV and 300 kV (“Byway facility”). In setting aside its prior approval, FERC found that SPP’s Proposal granted the SPP Board too much discretion in allocating the costs of Byway facilities. Commissioners Mark Christie and James Danly each concurred with separate statements. FERC’s rejection marked the second time SPP’s proposal failed to obtain Commission approval.
House Subcommittee Holds FERC Oversight Hearing on Improving Reliability Through Energy Expansion, Interregional Transmission, and Backing Renewables with Fossil Fuels
On June 13, 2023, the House of Representatives Subcommittee on Energy, Climate, and Grid Security held a hearing on the “Oversight of FERC: Adhering to a Mission of Affordable and Reliable Energy for America.” The hearing focused on reliability and the transition from fossil fuel generation to renewable resources.
FERC Commissioners Answer to Senate Committee on Fleet Transformation and Other Pressing Issues
On May 4, 2023, the Senate Energy and Natural Resources Committee hosted all four FERC Commissioners for an oversight hearing to focus on reliability in the face of (1) cyber-attacks, (2) coal and natural gas plant retirements, (3) severe weather, and (4) subsidies, climate policies, and market signals that encourage more intermittent resources to come online.
Biden Issues Executive Order Increasing Agency Requirements on Environmental Justice
On April 21, 2023, the President Biden issued an “Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All.” The new Executive Order provides that “each [federal] agency should make achieving environmental justice part of its mission.” To that end, it provides that agencies shall:
FERC Approves Extending Risk Management Practices to Low-Impact Cyber Systems
On March 16, 2023, FERC approved a new cybersecurity reliability standard, CIP-003-9 (along with associated violation risk factors and violation security levels), proposed by the North American Electric Reliability Corporation (“NERC”). CIP-003-9 focuses on supply chain risk management for low impact Bulk Electric System (“BES”) Cyber Systems and requires: (1) responsible entities to include the topic of “vendor electronic remote access security controls” in their cyber security policies; (2) entities with low impact BES facilities to have methods for identifying and disabling vendor remote access; and (3) entities with low impact BES facilities to have methods for detecting malicious communications for vendor remote access. The new standard aims to prevent compromises to cyber systems in the event of a known or suspected malicious communication and will become effective 36 months after FERC’s approval.
On Rehearing, FERC Accepts MISO’s Seasonal Resource Adequacy Construct
On February 16, 2023, FERC addressed arguments raised on rehearing of its August 31, 2022, order accepting Midcontinent Independent System Operator, Inc.’s (“MISO”) proposal to establish a seasonal resource adequacy construct with availability-based resource accreditation (“August 2022 Order”). In doing so, FERC continued to find that MISO’s proposed transition from an annual planning resource auction to an independent auction to meet seasonal requirements is just and reasonable.