FERC has issued a notice of inquiry inviting comments on potential changes to its regulations requiring financial assurance measures in licenses and other authorizations for hydroelectric projects. As of December 2020, FERC has identified at least 88 of the approximately 1,600 hydroelectric projects under FERC license that are nonoperational, primarily due to the licensees’ lack of financial resources. FERC expressed concern that inadequate financing may result in threats to public safety and environmental resources. Therefore, in order to fulfill its responsibilities to the public, FERC is considering whether to take additional measures to ensure licensees have the financial resources to operate and maintain their projects for the life of the project, including under unforeseen circumstances.
Power & Pipes
FERC, CFTC, and State Energy Law Developments
The US Congress adopted extensive federal energy policies in the Energy Act of 2020 (Energy Act), which President Donald Trump signed into law on December 27 as part of the Consolidated Appropriations Act, 2021. The Consolidated Appropriations Act also includes tax provisions important to the energy sector.
FERC has issued a final rule, Order No. 874, expanding the eligibility criteria for Qualifying Facilities (QFs) as defined under the Public Utility Regulatory Policies Act of 1978 (PURPA) to enable certain fuel cell–based electric generation to receive QF status. The final rule amends the definition of useful thermal energy output of a topping-cycle cogenerator in its regulations implementing PURPA by adding a new paragraph to specifically include thermal energy that is used by a fuel cell system with an integrated steam hydrocarbon reformation process for production of fuel for electricity generation. This new paragraph, along with the rest of Order No. 874, removes ambiguity as to whether such fuel cell technology may be included in the eligibility criteria for a cogeneration facility to be a QF.
The US Department of Energy (DOE) has released the Hydrogen Program Plan, a strategic framework that intends to “accelerate research, development, and deployment (RD&D) of hydrogen and related technologies in the United States.” The plan communicates DOE’s plan to focus on conducting coordinated RD&D activities to enable the adoption of hydrogen across multiple domestic applications and sectors. DOE will implement those efforts through the DOE Hydrogen Program, an existing program that facilitates hydrogen research and development activities and that spans multiple DOE offices.
Read our recent LawFlash analyzing the Federal Energy Regulatory Commission’s (FERC’s) Order No. 2222, which directs wholesale electric market operators to facilitate the participation of distributed energy resource (DER) aggregators under one or more participation models. The new rule vastly expands the opportunities for DERs, such as grid-enabled water heaters, small solar installations, and electric vehicles, to aggregate and compete alongside traditional generators for a slice of wholesale market revenues. ISOs/RTOs will have 270 days from the date the rule is published in the Federal Register to submit their compliance filings and propose implementation dates for their regions.
FERC has issued an order extending the blanket waivers of all requirements to hold meetings in person and/or to provide or obtain notarized documents in open-access transmission tariffs through January 29, 2021. The order continues the blanket waivers first issued on April 2, 2020, in response to requests from regulated entities, which were set to expire on September 1, 2020. FERC cites the coronavirus (COVID-19) national emergency proclamation issued by President Trump on March 13, 2020; the continued risk to health and safety currently presented by personal contact; and guidance from public health officials on social distancing as good cause for the waivers.
FERC has issued a final rule, Order No. 872, revising the Commission’s regulations governing qualifying small power producers and co-generators (collectively, qualifying facilities or QFs) under the Public Utility Regulatory Policies Act of 1978 (PURPA). The Commission stated that the rule addresses significant changes that have occurred in the US energy markets and the Commission’s desire to modernize its PURPA regulations to protect consumers and preserve competition while meeting the Commission’s statutory obligations. The revisions will have significant implications for all utilities required to purchase the output of QFs, as well as generators that rely on PURPA rates and obligations. The final rule takes effect 120 days after publication in the Federal Register.
FERC recently dismissed the New England Ratepayers Association’s petition for declaratory order requesting FERC to exert jurisdiction over certain net-metering transactions. The decision leaves some key legal and jurisdictional questions about net metering unanswered. For now, FERC’s existing view that net-metering transactions are subject to state commissions’ retail sales jurisdiction, unless a customer sells more power back to the utility than it consumes in the applicable retail billing period (usually one month), remains intact.
On July 10, the US Court of Appeals for the DC Circuit found that the Federal Energy Regulatory Commission was well within its rights to prevent states from prohibiting energy storage resources from participating in wholesale (i.e., sales for resale) energy markets. The court’s order is the latest judicial affirmation of FERC’s authority to regulate activities on wide portions of the electric grid, including facilities reserved to state regulators, if those activities affect wholesale rates.