FERC, CFTC, and State Energy Law Developments

On March 17, the Federal Energy Regulatory Commission (FERC or the Commission) issued an order denying rehearing of Order No. 743, in which the Commission had directed the North American Electric Reliability Corporation (NERC) to modify its definition of “bulk electric system,” which serves to identify those entities subject to mandatory Reliability Standards. While the Commission explained that a new definition was needed to remove the discretion granted to Regional Entities under the existing definition, the Commission stressed that NERC need not implement the 100 kV bright-line proposal put forward By FERC in Order No. 743 but could exercise its discretion and technical expertise to propose an alternative method for defining “bulk electric system,” so long as it was “consistent, repeatable, and verifiable with supporting technical analysis.”

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On March 17, 2011, the Federal Energy Regulatory Commission (Commission) issued an order affirming a notice of penalty filed By the North American Electric Reliability Corporation (NERC) regarding an alleged violation of Reliability Standard FAC-003-1 Requirement R2 (Annual Plan for Vegetation Management) By the Turlock Irrigation District (Turlock). Turlock’s alleged violation of FAC-003-1 Requirement R2 resulted in the loss of firm load due to tree contact with a 230 kV transmission line, combined with a human error related to a communication switch. The Commission affirmed the $80,000 penalty agreed upon By Turlock and the Western Electricity Coordinating Council (WECC), and provided guidance on how future penalties should be assessed for reliability violations that incur a loss of load.

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A combination of energy and environmental public policy initiatives has driven the rapid growth of variable energy resources (VERs) in the United States in recent years. The variability of VER generation output, however, makes it difficult to operate and plan bulk-power systems in real time, as well as in near-term and long-term operating and planning horizons. FERC and the industry have struggled to overcome these problems as more VERs have reached commercial operation.

On November 18, 2010, in Docket No. RM10-11-000, FERC promulgated a Notice of Proposed Rulemaking (NOPR) meant to facilitate the integration of VERs into the bulk-power systems in light of, among other issues, the above complications.

Our webinar discussed:

  • FERC's proposed revisions to the pro forma Open Access Transmission Tariff and Large Generator Interconnection Agreement to facilitate the integration of VERs into bulk-power systems
  • Subject areas for which FERC has sought industry comment and feedback in the NOPR
  • Potential business and regulatory implications of the VER NOPR

Comments on the NOPR must be filed with FERC By March 2, 2011.

A recording of the webcast and associated materials are available:

On February 17, the Federal Energy Regulatory Commission (FERC or the Commission) issued a Notice of Proposed Rulemaking to ensure just and reasonable compensation for the procurement of frequency regulation service in the Regional Transmission Organization (RTO) and Independent System Operator (ISO) organized wholesale electric markets. The Commission preliminarily found that, within the RTO and ISO markets, frequency regulation service for faster-ramping resources have been compensated at the same rate as frequency regulation service for slower-ramping resources, and as such, the current compensation practices for these services may result in unjust, unreasonable, and unduly discriminatory service compensation.

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On February 17, in Docket No. RM11-9-000, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) seeking information on locational exchanges of electric power and comments on whether and under what circumstances such exchanges should be permitted. The NOI arose out of a petition for declaratory order filed in Docket No. EL10-71-000, in which Puget Sound Energy, Inc. (PSE) sought a finding that locational exchanges do not have to be conducted under an Open Access Transmission Tariff (OATT). With respect to PSE’s petition, FERC also issued an order on February 17 deferring action on the petition pending the outcome of the NOI.

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A combination of energy and environmental public policy initiatives has driven the rapid growth of variable energy resources (VERs) in the United States in recent years. The variability of VER generation output, however, makes it difficult to operate and plan bulk-power systems in real time, as well as in near-term and long-term operating and planning horizons. FERC and the industry have struggled to overcome these problems as more VERs have reached commercial operation.

On November 18, 2010, in Docket No. RM10-11-000, FERC promulgated a Notice of Proposed Rulemaking (NOPR) meant to facilitate the integration of VERs into the bulk-power systems in light of, among other issues, the above complications.

Our webinar discussed:

  • FERC’s proposed revisions to the pro forma Open Access Transmission Tariff and Large Generator Interconnection Agreement to facilitate the integration of VERs into bulk-power systems
  • Subject areas for which FERC has sought industry comment and feedback in the NOPR
  • Potential business and regulatory implications of the VER NOPR

Comments on the NOPR must be filed with FERC By March 2, 2011.

Associated materials are available

Describing what it considers "a significant number of outages of generating facilities" along with disruptions in natural gas deliveries during the recent extreme cold weather across Texas and the Southwest, on February 14, the Federal Energy Regulatory Commission (FERC or Commission) directed the creation of a staff task force to conduct a broad inquiry into those events. Unlike the FERC-led investigation following the 2008 Florida Blackout, this investigation is not, at this time, intended to discover whether any regulations, requirements, or standards were violated. Instead, the investigation is intended to identify (1) the causes of the outages and disruptions and (2) the actions FERC might undertake to prevent a recurrence of these issues.

On January 20, the Federal Energy Regulatory Commission (FERC) denied a request for rehearing of FERC’s April 15, 2010 order in Docket No. RM04-7-007, which had responded to a request for clarification regarding the categories of employees that may not be permissibly shared under FERC’s Affiliate Restrictions (Clarification Order). To the extent that FERC had stayed the requirement to comply with the Clarification Order, sellers will be required to comply with the Clarification Order within 90 days of the issuance of the January 20, 2011 order—that is, By April 20, 2011. FERC also terminated a rulemaking proceeding that would have codified in the regulations the findings in the Clarification Order.

On January 20, 2011, the Federal Energy Regulatory Commission (FERC) issued Order No. 710-B, revising the financial forms, statements, and reports for natural gas companies contained in FERC Form Nos. 2, 2-A, and 3-Q to include functionalized fuel data (on pages 521a through 521c of those forms) and the amount of fuel waived, discounted, or reduced as part of a negotiated rate agreement.

On February 8, 2011, the Federal Energy Regulatory Commission (FERC) will hold a Reliability Technical Conference addressing issues related to prioritizing reliability risks confronting the Bulk Power System and prioritizing the Reliability Standards related to such risks.