FERC, CFTC, and State Energy Law Developments

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...

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."

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.