On December 23, 2020, FERC accepted Southwest Power Pool, Inc.’s (“SPP”) proposal to implement the Western Energy Imbalance Service Market (“WEIS Market”), a voluntary market providing for security-constrained economic dispatch to balance supply and demand every five minutes. SPP’s proposal consisted of a Tariff to implement the WEIS Market, a joint dispatch agreement executed by eight participating entities, and the Western Markets Executive Committee Charter to establish the WEIS Market’s governance structure and procedures. The December 23rd order follows FERC’s rejection of SPP’s WEIS Market proposal in July 2020.

On January 4, 2021, Mark C. Christie was sworn in as FERC’s newest Commissioner. The Senate previously confirmed the nomination of Commissioner Christie, along with the nomination of now-current-Commissioner Allison Clements, in a late night voice vote on November 30, 2020 (see December 8, 2020 edition of the WER). With the swearing in of Commissioner Christie, FERC now has a full five-member Commission with three Republicans (Chairman Danly and Commissioners Chatterjee and Christie) and two Democrats (Commissioners Clements and Glick).

On December 21, 2020, FERC modified its previous cost-of-service compensation decisions allowing Constellation Mystic Power, LLC (“Mystic”) to continue operating two gas-fired generation facilities (“Mystic 8 and 9”) fueled exclusively by an affiliate, Everett Marine Terminal (“Everett”), which, like Mystic, is owned by Exelon Generation Company, LLC (“Exelon”). Commissioner Richard Glick dissented, reiterating his belief that FERC has exceeded its jurisdiction to “bail out” the liquified natural gas (“LNG”) import terminal.

On December 17, 2020, FERC issued a final rule permitting Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment to be certified as cogeneration qualifying facilities (“QFs”) under the Public Utility Regulatory Policies Act of 1978 (“PURPA”).  The Final Rule follows FERC’s October 15, 2020 Notice of Proposed Rulemaking (“NOPR”) (see October 21, 2020 edition of the WER), and addresses the comments received in response to the NOPR.  While the NOPR would have limited the type of eligible fuel cells to only solid oxide fuel cells, the Final Rule modified the definition of “useful thermal energy” in section 292.202(h) of FERC’s regulations to include all fuel cells that use waste heat in an integrated fuel reforming process.

On December 17, 2020, FERC issued a Notice of Proposed Rulemaking proposing to revise its regulations to establish incentives for public utilities to make certain cybersecurity investments that go beyond the current requirements of the Critical Infrastructure Protection (“CIP”) Reliability Standards established by the North American Electric Reliability Corporation (“NERC”) (“Cybersecurity NOPR”). Specifically, FERC proposed rules to allow regulated entities to:

  1. receive incentive-based rate treatment for the voluntary implementation of: (i) certain NERC CIP Reliability Standards to facilities that are not currently subject to those requirements (“NERC CIP Incentives Approach”), and/or (ii) certain security controls included in the National Institute of Standards and Technology Framework (“NIST Framework Approach”);
  2. request a return-on-equity adder of two hundred (200) basis points for making eligible cybersecurity capital investments; and
  3. defer cost recovery of certain cybersecurity costs that are generally expensed as incurred, and treat such costs as regulatory assets that may be included in transmission rate base.

On December 17, 2020, FERC issued an order concluding its review of the index level used to determine annual changes to oil pipeline rate ceilings, establishing an index level of Producer Price Index for Finished Goods plus 0.78% (PPI-FG+0.78%), and also issued a Withdrawal of Proposed Policy Statement on Oil Pipeline Affiliate Contracts, the latter of which drew a dissenting opinion from Commissioner Richard Glick.

On December 2, 2020, FERC clarified that when an entity with passive equity holdings in a company later wants to assume operational responsibilities over the company, the entity must obtain authorization under Federal Power Act (“FPA”) section 203 prior to the assumption of operational management responsibilities. FERC’s December 2 order on rehearing modified the discussion in a May 29, 2020 order in the proceedings approving Tenaska Lotus Holdings, LLC’s (“Tenaska Lotus”) assumption of rights as operations manager of 41MB 8me, LLC (“Project Company”) (together, “Applicants”), a 51 MW solar facility in California.

On December 7, 2020, FERC issued an order on rehearing sustaining its previous order in which it: found that PJM Interconnection, L.L.C.’s (“PJM”) uplift allocation rules were unjust, unreasonable, and unduly preferential as they did not allocate uplift to Up-to-Congestion (“UTC”) transactions; and directed PJM to update its rate. FERC disagreed with comments provided by XO Energy MA, LP (“XO Energy”) that FERC’s previous order was inconsistent with cost causation principles, since the record in the proceedings did not support a finding that UTCs are the cause of capacity-related costs that would be passed through as uplift.

On December 4, 2020, the U.S. Department of Energy (“DOE”) issued a final rule updating its National Environmental Policy Act (“NEPA”) implementing regulations regarding applications to import to, or export from, liquid natural gas (“LNG”) terminals. The final rule follows DOE’s May 1, 2020 Notice of Proposed Rulemaking (“NOPR”) (see May 22, 2020 edition of the WER). In the preamble to the final rule, DOE explained that the objective of the revision is to improve the efficiency of DOE’s decision-making process through saving time and expense associated with NEPA compliance and eliminating unnecessary environmental documentation.