On March 19, 2020, FERC granted Pacific Gas and Electric Company’s (“PG&E”), licensee for the Kilarc-Cow Creek Hydroelectric, Project No. 606 (“Project”), request for a Declaratory Order finding that the California State Water Resources Control Board (“California Board”) waived its authority to issue a water quality certification under section 401 of the Clean Water Act.  FERC’s recent opinion continues its application of the D.C. Circuit’s opinion in Hoopa Valley Tribe (see December 11, 2019 edition of the WER), which held that section 401 provides one year as the absolute maximum for a state to act on a water quality certification application and rejected an extension of the statutory deadline via a coordinated withdrawal-and-resubmission scheme between an applicant and the state certifying agency.

On Thursday, March 19, in lieu of its monthly Commission meeting, FERC issued a Notice regarding its response to the Novel Coronavirus Disease (“COVID-19”) and the President’s March 13 declaration of a National Emergency.  Chairman Neil Chatterjee delivered comments about the Notice and the Commission’s operations in the coming weeks and months.

On March 10, 2020, FERC granted rehearing of its November 9, 2018 order that accepted revisions to ISO New England Inc.’s (“ISO-NE”) Tariff modifying the calculation of the economic life of existing capacity resources seeking to retire or permanently leave the ISO-NE capacity market, to better reflect competitive market behavior. FERC determined the benefits of the Tariff revisions did not outweigh the disruption to capacity market participants’ settled expectations and, therefore rejected the economic life revisions in their entirety, effective August 10, 2018, and declined to rerun any Forward Capacity Auctions (“FCA”) to preserve market certainty.  

On March 10, 2020, FERC accepted and suspended Midcontinent Independent System Operator, Inc.’s (“MISO”) proposal to allow for the selection of a storage facility as a transmission-only asset (“SATOA”) in the MISO Transmission Expansion Plan (“MTEP”). FERC found that MISO failed to demonstrate that the proposal was just and reasonable and not unduly discriminatory, and directed staff to convene a technical conference to explore issues including:

  1. Evaluation and selection criteria for a SATOA in the MTEP;
  2. Permitted market activities for SATOAs and potential wholesale market impacts;
  3. How MISO’s current formula rate structure accommodates cost recovery for SATOAs;
  4. A SATOA’s potential impact on MISO’s generator interconnection queue; and
  5. Operating guidelines that will apply to a SATOA.

On March 6, 2020, FERC rejected ISO New England Inc.’s (“ISO-NE”) and the New England Power Pool Participants Committee’s proposed revisions to the ISO-NE Tariff intended to eliminate ISO-NE’s ability to retain a resource for local transmission reliability needs if that resource has been previously retained for fuel security purposes (“Proposed Tariff Revisions”). FERC found that the Tariff Revisions were not just and reasonable because they would limit ISO-NE’s ability to address potential future transmission reliability issues without alternative transmission solutions yet being in place.

On February 27, 2020, FERC granted Southwest Power Pool, Inc.’s (“SPP”) request to further delay implementation of reforms designed to facilitate energy storage resource (“ESR”) participation in SPP’s markets. SPP requested the deferral in December 2019, explaining that it would not be able to implement its ESR participation model as scheduled due to ongoing delays in the development of a new market and transmission settlement system and software changes associated with FERC’s Order No. 841 reforms. FERC accepted SPP’s deferral request and ordered a new, August 5, 2021 effective date for SPP’s underlying Order No. 841 tariff changes. Commissioner Bernard McNamee issued a separate opinion concurring with FERC’s order.

On March 4, 2020, FERC denied rehearing of its prior order rejecting the New Jersey Board of Public Utilities’ (“NJBPU”) complaint alleging unjust and unreasonable cost allocations for the Bergen-Linden Corridor transmission project (“BLC Project”). FERC found that it had already fully addressed the issues raised in the original complaint and that there was no need for an evidentiary hearing to evaluate disputed facts related to the BLC Project.

On February 28, 2020, FERC rejected Midcontinent Independent System Operator, Inc.’s (“MISO”) Tariff proposal to subject generation resources that are not designated as capacity resources (“Non-Capacity Resources”) to MISO’s physical withholding rules in MISO’s day-ahead market. FERC determined that MISO’s proposed revisions lacked sufficient clarity and would effectively subject Non-Capacity Resources to a must-offer rule obligation without a corresponding capacity payment.

On March 5, 2020, the United States Senate approved a motion to proceed on the American Energy Innovation Act (“AEIA”), S. 2657, after a cloture vote was called on the motion by Senate Majority Leader Mitch McConnell (R-Ky.) in order to move the bill to the Senate floor. However, on March 9, 2020, at least two measures to limit debate on the bill itself were rejected—opening the door for numerous floor amendments, including legislative language to limit greenhouse gas emissions that is projected to be offered by Senate Democrats.

The AEIA is a compendium of energy-related statutory provisions which was released in an omnibus, bipartisan legislative package on February 27, 2020 by Energy and Natural Resources Committee Chair Senator Lisa Murkowski (R-Alaska) and Ranking Member Senator Joe Manchin (D-W. Va.). Senators Murkowski and Manchin offered a substitute amendment featuring the full text of the AEIA (Amendment 1407) after the motion to proceed was voted-out affirmatively, and they are acting as floor managers for the bill.

Among other things, the bill focuses on advancements and development of energy storage and hydropower resources. In particular, as described in greater detail below, the bill directs FERC to initiate a rulemaking on cost recovery for energy storage assets and extends authorization for certain incentives to develop generation at non-powered or already-powered dams. The Committee held approximately 12 months of hearings on many of the proposed legislation’s components. If enacted, the bill would constitute the first major piece of national energy legislation since the Energy Policy Act of 2005, after a twelve-year hiatus in significant congressional activity.