FERC, CFTC, and State Energy Law Developments

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...

During this one-hour webcast on integrating renewable energy resources into the transmission grid, our presenters discussed issues relating to the integration of variable generating resources, such as:

  • Power system reliability, including energy imbalance practices, scheduling, and forecasting
  • Transmission expansion and upgrades, including cost planning and recovery
  • Balancing Authority coordination

Our presenters also addressed FERC's Notice of Inquiry on the integration of variable energy resources, in which FERC sought comments (due March 29) on the extent to which barriers may exist that impede the reliable and efficient integration of variable energy resources into the electric grid and whether reforms are needed to eliminate those barriers.

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

On February 26, the Federal Energy Regulatory Commission (FERC) for the first time initiated a review of a Notice of Penalty filed By the North American Electric Reliability Corporation (NERC) regarding the settlement of an alleged violation of mandatory Reliability Standards. According to FERC, the $80,000 proposed penalty amount in the Notice of Penalty may be insufficient under the circumstances surrounding the violations at issue, because the vegetation-related outage led to a combined loss of 270 MW of firm load in the systems of two Registered Entities: Turlock Irrigation District (Turlock), the subject of the Notice of Penalty, and Modesto Irrigation District. In order to determine whether the penalty is appropriate, and to determine if there are any other violations that may have contributed to the loss of firm load, FERC stayed the effectiveness of the settlement and established a deadline of March 18, 2010 for answers, interventions, and comments on these issues.  Read more…

For its March 2010 issue, The Electricity Journal published an article By Levi McAllister and Kelly L. Dawson titled "Restoring Faith in the Bulk-Power System: An Early Assessment of Mandatory Reliability Standards."

Abstract:
The driving force underlying creation of mandatory reliability standards was the prevention of widespread outages, such as those that occurred in 1965, 1977 and 2003. So far, no similar outage has occurred when an entity is in full compliance with the standards, and NERC and FERC have demonstrated that they will actively enforce compliance while aggressively pursuing entities alleged to be non-compliant.

On January 27, the Federal Register published a Notice of Inquiry (NOI) issued By the Federal Energy Regulatory Commission (FERC) on January 21, 2010 requesting comments from electricity industry participants regarding the integration of Variable Energy Resources (VER) onto America’s electricity grid. Publication of the NOI triggers a 60-day comment period, during which industry participants may submit proposals and recommendations sought in the NOI. The NOI is a significant step in FERC’s efforts to encourage continued generation and transmission of renewable energy, and provides industry participants an opportunity to assist in shaping FERC policy relating to renewable resource development and deployment.  Read more…

On January 22, the Federal Energy Regulatory Commission (FERC) issued an Initial Decision determining that a former hedge fund trader violated FERC’s Anti-Manipulation Rule. The decision, issued By Administrative Law Judge (ALJ) Carmen A. Cintron, is a major step in concluding a lengthy, ongoing investigation initiated By FERC in July 2007. Read more…

On January 21, 2010, the Federal Energy Regulatory Commission (FERC) approved Technical Feasibility Exception (TFE) rules proposed By the North American Electric Reliability Corporation (NERC) applicable to certain Critical Infrastructure Protection (CIP) mandatory Reliability Standards. However, reiterating its prior conclusions from Order No. 706, FERC directed NERC to revise the rules to clarify that the TFE rules will apply to the compensating or alternative measures implemented By Responsible Entities under CIP-006-1 R1.1 and CIP-007-1 R3.  Read more…

On January 13, 2010, the U.S. Supreme Court determined, in an 8-1 decision, that energy rates challenged by non-contracting parties are presumed to be just and reasonable, and may only be set aside if the rates seriously harm the public interest. In NRG Power Marketing v. Maine Public Utilities Commission, the Supreme Court reversed the U.S. Court of Appeals for the District of Columbia Circuit, which held that non-contracting parties challenging rates set forth in energy contracts need not establish that the rates upset the public interest in order to invalidate the challenged rates. The Supreme Court’s decision resolves an issue of first impression By reaffirming the Court’s Mobile-Sierra doctrine and its 2008 ruling in Morgan Stanley Capital Group, Inc. v. Public Utility District No. 1Read more…

In Order No. 714, FERC mandated that all entities begin submitting tariffs and related agreements electronically. This directive departs from a long-established policy of submitting hard copies of tariffs and related agreements for Commission approval. FERC's new eTariff program will take effect on April 1, 2010.

During this January webcast, presenters explained FERC's eTariff mandate and addressed issues such as who will be subject to the eTariff requirement, what will be required, how FERC will implement its eTariff program, and what are the important dates for implementation.

A recording of the webcast is available.