On September 19, 2019, FERC proposed substantial revisions to its Public Utility Regulatory Policies Act of 1978 (“PURPA”) regulations.  If adopted, the package of reforms proposed in the Notice of Proposed Rulemaking (“NOPR”) would: (1) allow states more flexibility to incorporate competitive forces when setting avoided cost rates for Qualifying Facilities (“QFs”), (2) modify the “one-mile rule,” (3) reduce the size threshold for the rebuttable presumption about QFs’ ability to access markets, (4) provide clarity on establishing a legally enforceable obligation (“LEO”), and (5) establish a simplified process to challenge a project’s QF status.  FERC requested comments on a number of proposals, which are due 60 days from publication of the NOPR in the Federal Register.

On September 19, 2019, FERC concurrently issued two orders granting in part separate complaints filed by American Electric Power Service Corporation (“AEP”) and the City of Prescott, Arkansas (“Prescott”) finding that, to the extent loads pseudo-tied from Midcontinent Independent System Operator, Inc. (“MISO”) to Southwest Power Pool, Inc. (“SPP”) are subject to overlapping or duplicative congestion charges by both MISO and SPP, then such charges are unjust, unreasonable, unduly discriminatory, or preferential.  On the same day, FERC also established briefing procedures (“Briefing Order”) related to the complaint orders to further investigate issues concerning potentially unjust, unreasonable, and unduly discriminatory tariff provisions, contract provisions, and/or practices that result in overlapping and/or duplicative congestion charges being imposed on pseudo-tie transactions between MISO and SPP.

On September 19, 2019, FERC granted in part and denied in part a complaint by EDF Renewable Energy, Inc. (“EDF”) which alleged that the Midcontinent Independent System Operator, Inc. (“MISO”), Southwest Power Pool, Inc. (“SPP”), and PJM Interconnection, L.L.C. (“PJM”) Open Access Transmission Tariffs (“Tariffs”), the MISO-SPP Joint Operating Agreement (“JOA”), and the MISO-PJM JOA are unjust and unreasonable because they lack sufficient detail and transparency regarding the process each Regional Transmission Organization (“RTO”) uses to coordinate with Affected Systems, i.e., other transmission systems that may be affected by a proposed generator interconnection.  FERC’s order comes after an April 2018 technical conference that explored the issues raised in EDF’s complaint as well as broader Affected Systems issues (see February 13, 2018 edition of the WER).  FERC’s September 19 order agreed that the lack of transparency in Affected System coordination creates cost uncertainty that presents a significant obstacle to the development of new generation resources, and required MISO, SPP, and PJM to memorialize their current Affected System study coordination processes in their Tariffs and JOAs.  FERC also required the RTOs to add to their Tariffs and JOAs clear references to further Affected System coordination details in business practices and other coordination documents.  However, FERC declined to initiate a generic proceeding on the Affected Systems coordination issues raised in the technical conference in regions beyond those identified in the complaint.

Summary of NOPR

On September 19, 2019, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its regulations implementing Sections 201 and 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) in light of changes in the energy industry since 1978.[1]

On September 4, 2019, the North American Electric Reliability Corporation (“NERC”) published a Lessons Learned report (“Report”) analyzing a March 5, 2019 cybersecurity incident that caused brief communications outages across several states.  NERC also provided guidance on how to avoid the firewall firmware vulnerabilities that made the cybersecurity incident possible.

On August 30, 2019, FERC instituted a section 206 proceeding to require PJM Interconnection, L.L.C. (“PJM”) to revise its Amended and Restated Operating Agreement (the “PJM Operating Agreement”) in light of a recent reversal from the U.S. Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”).  In the new section 206 proceeding, FERC is requiring PJM to revise the PJM Operating Agreement to include projects needed solely to address Form No. 715 local planning criteria in PJM’s competitive proposal process, or to show cause why such revisions are not required.  In a concurrent order on remand, FERC also rejected revisions to the PJM Transmission Owner Tariff that had previously been amended to clarify that 100 percent of the costs for projects that are included in the PJM Regional Transmission Expansion Plan (“RTEP”) solely to address individual transmission owner Form No. 715 local planning criteria should be allocated to the transmission owner’s transmission zone.  FERC expects to issue a final order on the section 206 proceeding within 180 days.

On September 10, 2019, the United States Court of Appeals for the Third Circuit (“Third Circuit”) vacated a federal district court order permitting PennEast Pipeline Company (“PennEast”) to exercise eminent domain power under the Natural Gas Act (“NGA”) over property interests owned by the State of New Jersey.  The Third Circuit found that while the NGA delegates the federal government’s eminent domain authority to private gas companies, it does not delegate the federal government’s separate and distinct exemption from state sovereign immunity under the Eleventh Amendment.  After acknowledging concerns that its decision would disrupt the interstate gas pipeline industry, the Third Circuit suggested that in the case of state-owned property, a “work-around” might be for a federal official to file the necessary condemnation actions, and then to transfer the property to the natural gas company.

On September 6, 2019, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) dismissed the City of Oberlin, Ohio’s and the Coalition to Reroute Nexus’s (collectively, “Petitioners”) request to vacate FERC’s authorization for Nexus Gas Transmission, LLC (“Nexus”) to: (1) construct and operate an interstate natural gas pipeline through parts of Ohio and Michigan; and (2) use eminent domain to acquire any necessary rights of way to complete the project (see December 18, 2018 edition of the WER).  The D.C. Circuit agreed with Petitioners, however, that the Commission failed to adequately substantiate its finding that it lawfully credited Nexus’s precedent agreements—under which shippers agree to enter into service agreements once the pipeline is built—with foreign shippers serving foreign customers as evidence of market demand for the interstate pipeline.  As a result, the D.C. Circuit remanded this issue to the Commission, without vacatur, for further explanation of the decision.

On August 27, 2019, FERC issued a final rule amending its regulations at 18 C.F.R. § 385.2001(a) to require that all physical filings and submissions to be delivered to FERC, other than those sent via the U.S. Postal Service (“USPS”), are to be sent to FERC’s off-site security screening facility in Rockville, Maryland.  FERC’s rule makes no changes to electronic filings submitted through its online system.  The final rule was published in the Federal Register on September 4 and will go into effect 60 days later, or on November 4, 2019.

On August 27, 2019, FERC staff and the North American Electric Reliability Corporation (“NERC”) staff (collectively, “Staff”) jointly issued a white paper on Notices of Penalty (“NOP”) for violating Critical Infrastructure Protection (“CIP”) Reliability Standards, which details requirements for Bulk Power System cyber security.  Staff elected to draft the white paper in response to the increase in Freedom of Information Act (“FOIA”) requests for the disclosure of non-public information in CIP NOPs, such as the identity of the CIP violator.  The overarching objective of the proposal is to provide increased transparency, while protecting sensitive security information that could jeopardize the Bulk Power System if made public.  If approved, the proposal will not have a retroactive effect on pending matters, or CIP NOPs already filed with the Commission.