A LawFlash prepared by our energy team discusses likely results of the Texas power outages and blackouts during the recent winter storm, which include federal and state investigations into the outages, federal investigations into commodity and futures price spikes during the storm, force majeure inquiries, and demands for corrective actions to ensure future reliability of the grid system.
FERC, CFTC, and State Energy Law Developments
On February 17, Texas Governor Greg Abbott took the extraordinary measure of directing the Railroad Commission of Texas (RRC) to restrict out-of-state exports of natural gas produced in Texas through February 21. Noting the unprecedented extreme weather events facing the state, Governor Abbott’s directive seeks to “ensure that any natural gas currently in Texas is not sent outside of Texas,” unless it is first offered for sale to in-state power generators. Governor Abbott “mandate[d] that all sourced natural gas be made available for sale to local power generation opportunities before leaving the state of Texas.”
FERC Chairman Richard Glick announced his plans on February 11 to better incorporate environmental justice and equity concerns into FERC’s decisionmaking process.
Midcontinent Independent System Operator (MISO) has issued a report analyzing the effects of renewable energy growth in the MISO region and concluding that the system can reliably accommodate a significant percentage of variable renewable resources.
The US Department of Energy submitted a report to the president last month on “Economic and National Security Impacts under a Hydraulic Fracturing Ban.” This 80-page report analyzed the effects of a hypothetical United States ban on high-volume hydraulic fracturing technology used with any new or existing onshore wells starting in 2021 through 2025.
A natural gas trader pleaded guilty in federal district court last week to conspiring to commit commodities fraud and wire fraud in an insider trading scheme over natural gas futures. His co-conspirator had pleaded guilty last July to conspiracy to commit wire fraud and to violate various provisions of the Commodity Exchange Act and the Commodity Futures Trading Commission’s (CFTC) anti-manipulation rule.
In May 2020, US President Donald Trump issued Executive Order 13920, banning the unrestricted import or use of certain categories of bulk-power system electric equipment from foreign adversaries, with a focus on Russian and Chinese equipment suppliers. The future of that regulation is now up in the air.
The US Supreme Court granted certification on February 3 to review the US Court of Appeals for the Third Circuit’s decision in In re PennEast Pipeline Co. in order to resolve an important question: Does the Natural Gas Act (NGA) delegate authority to exercise the federal government’s eminent domain power to condemn land in which a state claims an interest when FERC grants a certificate of public convenience and necessity for an interstate pipeline project?
Our colleagues in the tax practice recently prepared a LawFlash examining the final regulation on the Section 45Q carbon capture tax credit issued by the US Department of the Treasury and Internal Revenue Service. We discussed the draft regulations in an earlier LawFlash, which also provides background on the Section 45Q credit. Because the final rule was published and took effect before the inauguration of President Joe Biden, the regulation is not subject to the regulatory freeze issued by the new administration.
During its January open meeting, FERC issued an order directing independent system operators (ISOs) and regional transmission organizations (RTOs) to submit informational reports regarding co-located generation resources. The order focuses on so-called “hybrid resources,” which is a term that refers generally to sets of co-located resources sharing a single point of interconnection that can be separately dispatchable or modeled and dispatched as a single integrated resource. The forthcoming reports could shed light on the manner in which hybrid resources are, or could be, participating in wholesale markets as well as the hurdles to such participation.