FERC, CFTC, and State Energy Law Developments

On June 9, the U.S. House of Representatives passed the Grid Reliability and Infrastructure Defense Act (GRID Act), which is intended to strengthen the U.S. electrical grid against terrorist attacks, cyber threats, electromagnetic pulse weapons, and solar storms. The GRID Act authorizes the Federal Energy Regulatory Commission (FERC) to issue emergency orders to protect critical electric infrastructure, and to take other measures to address current and potential vulnerabilities.

The GRID Act amends the Federal Power Act to permit FERC to issue orders for emergency measures to protect the reliability of either the bulk-power system or critical electric infrastructure whenever the President issues a written directive or determination identifying an imminent grid security threat. FERC’s authority to take such action can be employed without notice or hearing. However, FERC, to the extent practicable in light of the nature of the grid security threat and the urgency for emergency measures, is instructed to consult with certain governmental authorities, including the governments of Canada and Mexico, regarding implementation of such emergency measures. Any orders issued By FERC that implement emergency measures must be discontinued within 30 days of (i) the President providing a directive that an imminent security threat no longer exists, or (ii) FERC determining that the need for emergency measures no longer exists. In no case may a Commission order implementing emergency measures continue for longer than one year.  Read more…

How does one successfully prepare for a NERC audit?  Each year, the Regional Entities of the North American Electric Reliability Corporation (“NERC”) conduct audits of companies to determine compliance with Reliability Standards.

On June 3, our presenters reviewed:

  • How to prepare Reliability Standard Audit Worksheets and mark appropriate documentation.
  • How to best answer auditor questions and present material during the audit.
  • How to address issues that emerge during the audit.
  • NERC’s process for conducting the audit and drafting the audit report.

A recording of the webcast and the associated materials are available.

In its June 2010 issue, The Electricity Journal published an article By Daniel Skees titled "Inventing the Future of Reliability: FERC’s Recent Orders and the Consolidation of Reliability Authority."

The Energy Policy Act of 2005 established mandatory reliability standard enforcement under a system in which the Federal Energy Regulatory Commission and the Electric Reliability Organization would have their own spheres of responsibility and authority. Recent orders, however, reflect the Commission's frustration with the reliability standard drafting process and suggest that the Electric Reliability Organization's discretion is likely to receive less deference in the future.

On May 13, the Environmental Protection Agency (EPA) issued a final rule (Tailoring Rule) that addresses Clean Air Act (CAA) permitting requirements for greenhouse gas (GHG) emissions. EPA’s Tailoring Rule—the fourth action in an ongoing EPA effort to regulate GHG emissions—establishes GHG emission level thresholds that determine when stationary source facilities must seek and obtain permits under the CAA’s New Source Review Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs. The Tailoring Rule is, in part, the product of the complicated interaction under the CAA between EPA’s decision to regulate GHG emissions from automobiles, and the related effect that decision has on the permitting and regulation of GHGs from stationary sources, such as manufacturing and industrial facilities.  Read more…

On April 27, Morgan Lewis's Energy Practice presented this webcast on the current issues in transmission development. Topics of discussion included:

  • Necessary state and/or federal approvals for new transmission
  • Rate incentives for new transmission
  • Corporate structures for holding and developing new transmission
  • Financing options for developing new transmission

A recording of the webcast and the associated materials are available.

On March 18, the Federal Energy Regulatory Commission (FERC or the Commission) issued a series of orders that represent significant modifications in the way mandatory Reliability Standards are developed and enforced by the North American Electric Reliability Corporation (NERC).  Read more…

On March 18, the Federal Energy Regulatory Commission (FERC or the Commission) issued two orders with respect to the proposed Tres Amigas “Superstation” (or the Project). As proposed, the Project would consist of a three-way alternating current (AC)/direct current (DC) transmission interconnection station that would interconnect the three asynchronous transmission grids in the coterminous United States: the Eastern Interconnection, the Electric Reliability Council of Texas (ERCOT), and the Western Electricity Coordinating Council (WECC) in Clovis, New Mexico, thus allowing significant amounts of power to be transmitted among the three interconnections for the first time.  Read more…

On March 18, the Federal Energy Regulatory Commission issued a Policy Statement on Penalty Guidelines to assess civil penalties pursuant to the Commission’s civil penalty authority that was created By the Energy Policy Act (EPAct) of 2005. The Penalty Guidelines are modeled after the factor-based United States Sentencing Guidelines and are modified to account for Commission-specific considerations and concerns. By offering a quantitative and qualitative factor-based approach, FERC seeks to promote greater fairness and proportionality in determining penalties. Penalty Guidelines will apply to violations of FERC regulations, orders, and policies along with a special application for violations of FERC-approved Reliability Standards.  Read more…

On March 18, in a Notice of Proposed Rulemaking (NOPR) likely to have wide-ranging effects on the planning of transmission systems across the United States, the Federal Energy Regulatory Commission (FERC) proposed to reject the industry understanding of a crucial Transmission Planning (TPL) Reliability Standard developed by the North American Electric Reliability Corporation (NERC), and instead impose a broader requirement on Planning Authorities and Transmission Planners when they assess the reliability of their systems under single contingency conditions and plan appropriate changes to their systems.  Read more…

Earlier today, the Federal Energy Regulatory Commission (FERC) approved the implementation plan for Critical Infrastructure Protection (CIP) Reliability Standards compliance By nuclear generator owners and operators in the United States. As a result, the timeline for achieving compliance with these complex Reliability Standards on cyber-security protections has begun. Compliance with two CIP Reliability Standard Requirements, CIP-002-1 Requirements R1 and R2, must be achieved within 12 months. Compliance with the remaining Requirements is dependent on future developments, but will likely be due within 18 months. Due to the complexity of implementing these measures alongside the separate cyber-security regulations of the Nuclear Regulatory Commission (NRC), achieving auditable compliance By these deadlines is likely to be a lengthy process, specific to the facilities of each licensee.  Read more...