On April 15, 2021, FERC issued a long-awaited policy statement providing guidance on incorporating state-determined carbon pricing into organized markets operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”). The non-binding policy statement explains how FERC will review and consider rate filings submitted under section 205 of the Federal Power Act (“FPA”) to establish market rules for incorporating state-determined carbon pricing into RTOs and ISOs. Continue Reading FERC Issues Policy Statement on Carbon Pricing in Organized Wholesale Electric Markets

On April 15, 2021, FERC issued a Notice of Proposed Rulemaking (“NOPR”) to supplement the March 2020 NOPR regarding its electric transmission incentive policy under Federal Power Act (“FPA”) section 219 (see March 23, 2020 edition of the WER). While FERC’s March 2020 NOPR proposed to provide all utilities that turn over their wholesale transmission facilities to a Regional Transmission Organization (“RTO”) a fixed 100 basis-point increase in return on equity (“ROE”) (“RTO Participation Incentive”), the Supplemental NOPR proposes instead to codify its current practice of granting a 50 basis-point RTO Participation Incentive for utilities that join an RTO. In addition, FERC proposes that a utility will only be eligible for the incentive for the first three years after transferring operational control of its facilities to an RTO. The Supplemental NOPR also seeks comment on whether the RTO participation adder should be available solely to utilities that join an RTO voluntarily, and if so, how FERC should determine that the decision to join was voluntary. Commissioner Mark Christie issued a separate concurring statement, and Commissioners Neil Chatterjee and James Danly each issued separate dissenting statements. Continue Reading FERC Proposes Reforms to RTO Participation Incentive in Supplemental NOPR

On April 15, 2021, FERC issued a declaratory order confirming that under FERC Order No. 1000, incumbent New York Transmission Owners (“NYTOs”) have a federal right of first refusal (“ROFR”) for upgrades to their existing transmission facilities, including upgrades that are part of another Developer’s transmission project selected in the regional transmission plan for cost allocation. Specifically, FERC declared that the foundational agreements and Section 31.6.4 of the New York Independent System Operator, Inc. (“NYISO”) Open Access Transmission Tariff (“OATT”) established a ROFR of NYTOs to build, own and recover the cost of transmission upgrades to their existing facilities. In the same order, FERC denied requested clarification from the NYISO that such ROFR-exercising NYTOs could be considered “Developers” under the transmission planning process. FERC also provided additional clarity on the distinction between ROFR-eligible “upgrades” and new transmission facilities, indicating that different physical configurations resulting in power flow changes, increasing voltage/transfer capability, and performing different transmission functions, likely fall outside of traditional “upgrades.”

Continue Reading FERC Confirms NYTOs Federal Right of First Refusal to Build and Recover Cost of Upgrades to Existing Transmission Facilities

On March 30, 2021, FERC accepted the New York Independent System Operator’s (“NYISO”) proposed Co-located Storage Resource (“CSR”) Participation Model to enable energy storage resources (“ESRs”) paired with wind or solar resources to share a common point of injection and participate in the NYISO-administered markets. FERC’s order accepted revisions to NYISO’s Energy and Ancillary Services (“E&AS”) market rules, its metering rules, its Interconnection Process, its Installed Capacity Market participation rules, and its market power mitigation measures to accommodate the interconnection and participation of an ESR that is co-located with a wind or solar resource. Chairman Glick issued a concurring statement addressing NYISO’s application of existing buyer-side market power rules to co-located ESR and intermittent resources, urging NYISO “to move expeditiously to replace those rules with a model that moves beyond the minimum offer price rule as a means for mediating the interaction between state policies and wholesale markets.” Continue Reading FERC Accepts NYISO Co-Located Storage Resource Participation Model

On March 24, 2021, FERC modified a December 17, 2020 order (“December Order”) while reaching the same overall result, allowing construction to recommence for a portion of the Mountain Valley Pipeline, LLC (“Mountain Valley”) project located near Jefferson National Forest in Virginia. FERC determined that the Environmental Conditions in Mountain Valley’s certificate order did not preclude FERC from permitting Mountain Valley to resume construction on portions of its pipeline, even though certain federal authorizations that were vacated on appeal are still pending, and also reaffirmed that completing the construction would be preferable to temporary mitigation efforts. Chairman Richard Glick and Commissioner Allison Clements dissented, arguing that FERC cannot authorize Mountain Valley to resume construction while federal authorizations remain outstanding. Continue Reading Mountain Valley Pipeline Construction to Resume over Opposition from Chairman Glick and Commissioner Clements

On March 23, 2021, the United States Court of Appeals for the Second Circuit (the “Second Circuit” or the “Court”) agreed with FERC’s determination that the New York State Department of Environmental Conservation (“DEC”) had waived its certification authority under the Clean Water Act (“CWA”) by failing to act within the one-year statutory deadline. Notably, the Second Circuit held that a state agency cannot revise a certification request date by written agreement with the applicant, thereby altering the one-year statutory deadline for state action. Denying the petitions for rehearing by DEC and the Sierra Club, the Court applied the same reasoning it applied in New York State Dep’t of Env’t Conservation v. FERC (“New York I”), 884 F.3d 450, 455-56 (2d Cir. 2018) (see March 20, 2018 edition of the WER) where the Second Circuit determined that DEC could not unilaterally alter the application date based on when it considered an application complete “because that approach would allow a state agency not only to dictate when the review process can begin but also to delay it indefinitely.” There, to avoid such a subjective standard, the Second Circuit established a bright line rule that the beginning of the review is determined by the date “of receipt of such request.”

Continue Reading Second Circuit Sides with FERC – States May Not Agree to Revise the Certification Request Date to Avoid Waiver of its Certification Authority Under Section 401 of the Clean Water Act

Addressing environmental justice (EJ) concerns highlighted during the campaign is an important priority for the Biden Administration.  Within a week of taking the oath of office, President Biden issued a sweeping executive order with a number of EJ initiatives, including creation of a White House Environmental Justice Interagency Council consisting of the heads of each Cabinet-level and independent federal agency.  The order also directed federal agencies to “make achieving environmental justice part of their missions” through development of programs and policies aimed at addressing disproportionately high adverse environmental impacts on disadvantaged communities. Continue Reading FERC to Increase Focus on Environmental Justice

On March 18, 2021, FERC issued a Final Rule amending its regulations to establish a one-year period for states, tribes, or other certifying authorities (“Certifying Agencies”) to act on a Clean Water Act (“CWA”) Section 401 water quality certification request for proposed natural gas and liquefied natural gas projects. Continue Reading FERC Establishes Water Quality Certification Waiver Period for Natural Gas Projects

On March 5, 2021, FERC issued a Notice of Virtual Listening Sessions and Public Comment Period soliciting input on how it should establish and operate its Office of Public Participation (OPP) pursuant to section 319 of the Federal Power Act (FPA).  Commission staff, led by Commissioner Clements, held the first public listening session on March 17, and additional listening sessions and a Technical Workshop are scheduled for the coming weeks. Continue Reading Addressing Environmental Justice: FERC Holds Virtual Listening Sessions and Accepts Public Comments on Development of the Office of Public Participation