FERC, CFTC, and State Energy Law Developments

Following its March 2010 Open Meeting, the Federal Energy Regulatory 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 Corp. (NERC).

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On June 17, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in which it proposes to amend the transmission planning and cost allocation requirements for public utility transmission providers established in Order No. 890. FERC states that there have been significant changes in the electric power industry since Order No. 890 and the NOPR's purpose is to address deficiencies in the current transmission planning and cost allocation processes.

In the NOPR, FERC proposes to require public utility transmission providers to submit compliance filings implementing several reforms to their planning processes. Read more...

On March 18, 2010, the Federal Energy Regulatory Commission (FERC or the Commission) issued several orders that portend a significant expansion of FERC control over the development and drafting of mandatory Reliability Standards By the North American Electric Reliability Corporation (NERC). On June 11, FERC denied requests for rehearing of one of these orders, which had directed NERC to propose By June 30, 2010, modifications to Reliability Standard TPL-002-0, to prevent transmission planners from planning to permit the loss of nonconsequential load under single contingency conditions. However, FERC granted an extension of time until March 31, 2011 for the requested modification, and clarified that the modification may permit transmission planners to plan for the loss of firm service at the fringes of their system, so long as these exceptions are technically justified and case-specific.

NERC and others had challenged FERC’s March 18 order, arguing that it does not allow NERC to develop alternatives, that it threatens to impose costs that far exceed the benefit to bulk electric system reliability, and that it fails to give “due weight” to the technical expertise of NERC as required By the Federal Power Act. The Commission rejected all of these arguments.  Read more…

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…