On November 17, 2022, FERC issued three orders intended to address the reliability impacts of the rapid integration of inverter-based resources (“IBRs”), including solar, wind, fuel cell, and battery storage resources, on the Bulk-Power System (“BPS”). Specifically, in the first proceeding, FERC directed the North American Electric Reliability Corporation (“NERC”) to develop a plan to register the entities that own and operate IBRs so that NERC may monitor their compliance with NERC’s Reliability Standards. In the second proceeding, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to direct NERC to develop new or modified Reliability Standards that address reliability gaps related to IBRs. Lastly, in the final proceeding, FERC approved revisions to two of NERC’s Reliability Standards.

Continue Reading FERC Issues Proposals Regarding Inverter-Based Resources to Improve Grid Reliability

On October 28, 2022, FERC conditionally accepted Southwest Power Pool, Inc.’s (“SPP”) region-wide transmission cost allocation proposal. The revisions alter Attachment J of SPP’s Open Access Transmission Tariff (“Tariff”) and establish a waiver process through which, on a case-by-case basis, entities may request the costs of a specific transmission facility with a voltage level between 100 kV and 300 kV (“Byway Facility”) to be fully allocated to the SPP region on a postage-stamp basis—i.e., pursuant to a uniform regional rate. Commissioners James Danly and Mark Christie each dissented, respectively arguing that the revisions provide SPP too much discretion to allocate Byway Facilities on a regionwide basis and that the record did not show strong consensus among SPP states for the change in cost allocation.

Continue Reading FERC Accepts SPP Region-Wide Transmission Cost Allocation Proposal

On September 16, 2022, a panel of three judges on the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a decision in United Power, Inc. v. FERC affirming FERC’s exclusive jurisdiction over exit fees charged by Tri-State Generation and Transmission Association, Inc. (“Tri-State”), a Colorado generation and transmission cooperative.

Continue Reading D.C. Circuit Holds that FERC Has Exclusive Jurisdiction Over Exit Fees Charged by a Colorado Electric Cooperative

Introduction

On September 22, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Proposed Rulemaking to establish rules providing incentive-based rate treatment for utilities making certain voluntary cybersecurity investments (“Cybersecurity NOPR” or “NOPR”).[1] According to FERC, the Cybersecurity NOPR seeks to benefit consumers and national security by encouraging investments in advanced cybersecurity technology and participation by utilities in cybersecurity threat information sharing programs, as directed by Congress in the Infrastructure Investment and Jobs Act of 2021 (“Infrastructure and Jobs Act” or “Act”).[2] While the Cybersecurity NOPR supersedes FERC’s December 2020 cybersecurity NOPR (whose docket is being terminated), the instant Cybersecurity NOPR generally retains the incentive provisions outlined in the December 2020 NOPR. Under the Cybersecurity NOPR, FERC proposes that:

Continue Reading FERC Proposes to Offer Rate Incentives for Voluntary Cybersecurity Investment

On August 30, 2022, the U.S. Court of Appeals for the Fifth Circuit issued an order in NextEra Energy Capital Holdings, Inc. v. Lake, a case raising dormant Commerce Clause challenges to a 2019 Texas law that bans new entrants from building transmission lines that are part of a multistate electricity grid.  The majority reversed the lower court’s Rule 12(b)(6) dismissal of NextEra’s petition, thereby allowing the case to proceed to trial in district court.
Continue Reading 5th Circuit Holds that Texas Law Permitting Blocking of Competitive Transmission Owners from Building New Lines Violates the Commerce Clause

On July 28, 2022, FERC issued a show cause order indicating that several regional transmission organization (“RTO”) and independent system operator (“ISO”) tariffs appear to be unjust and unreasonable because they lack certain credit risk management practices.  FERC also issued a related Notice of Proposed Rulemaking (“NOPR”) to allow all market operators to share credit-related information among themselves so that they can more accurately assess market participants’ credit risks.  Both actions aim to improve credit risk management in organized wholesale electric power markets.
Continue Reading FERC Issues Show Cause Order and NOPR on Credit Risk

On July 15, 2022, a FERC Administrative Law Judge (“Presiding Judge”) issued an initial decision in a proceeding involving the “threshold” issue of whether four solar generating facilities (collectively, “Facilities”) interconnected at the distribution level are eligible to receive reactive power compensation under Schedule 2 of the PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariff (“Tariff”). The Presiding Judge concluded that the Facilities are ineligible to receive reactive power rates because the facilities in question did not satisfy the so-called capability requirement, as explained further below.
Continue Reading FERC Judge Rules that Four Solar Generators Interconnected at the Distribution Level Are Ineligible to Receive Reactive Power Compensation Under PJM’s Tariff

On June 16, 2022, FERC issued two Notice of Proposed Rulemakings (“NOPRs”) aimed at improving the reliability of the bulk power system against threats of extreme weather. The NOPRs build on the June 2021 Technical Conference on Climate Change, Extreme Weather, and Electric System Reliability, which revealed an industry-wide need to assess current vulnerabilities of the transmission system to weather-related risks.
Continue Reading FERC Proposes Rules to Address Extreme Weather

On May 31, 2022, FERC accepted and set for hearing Southwest Power Pool, Inc.’s (“SPP”) proposal to revise its Open Access Transmission Tariff (“OATT”) to establish a formula rate template (“Formula Rate”) on behalf of People’s Electric Cooperative (“People’s Electric”) when People’s Electric transfers functional control of its transmission facilities to SPP on June 1, 2022. The Commission granted People’s Electric’s request to include a 50-basis point adder for participating as a member of SPP, a regional transmission organization (“RTO”). Commissioner Christie wrote separately in concurrence to express his continued support for limiting the RTO participation adder to three years.
Continue Reading FERC Approves ROE Adder for SPP Membership, Prompting Statement from Commissioner Christie

On May 19, 2022, FERC issued Order No. 881-A responding to arguments raised on rehearing of Order No. 881, which revised the pro forma OATT and FERC regulations to increase the accuracy and transparency of electric transmission line ratings. FERC ultimately sustained the result of Order No. 881, denying all requests for rehearing, but did provide a number of clarifications regarding the new requirements.
Continue Reading FERC Clarifies Order on Transmission Line Ratings