Power & Pipes

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.

At its December open meeting, FERC proposed to establish rules for incentive-based rate treatments for voluntary cybersecurity investments by a public utility. If approved, the regulations would provide incentives for utilities to invest in cybersecurity improvements above and beyond existing mandatory requirements, provided the investments are related to the jurisdictional transmission or sale of electric energy. Traditionally FERC has worked to enhance the cybersecurity of the bulk-power system by directing the development and expansion of mandatory NERC Critical Infrastructure Protection (CIP) reliability standards. The proposed rules here would be quietly revolutionary by offering the “carrot” of financial incentives for cybersecurity enhancements, rather than relying exclusively on the “stick” of monetary sanctions that result from violations of mandatory requirements.

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.

Following its December 17 open meeting, FERC issued an order withdrawing and terminating a proceeding that had been opened earlier this year to examine oil pipeline affiliate contracts. FERC initiated that proceeding on October 15, 2020, when it issued a proposed policy statement outlining how FERC would evaluate whether a contract between an oil pipeline carrier and its affiliate resulting from an open season process is just and reasonable and not unduly discriminatory under the Interstate Commerce Act (ICA).

The Federal Energy Regulatory Commission (FERC) proposed revisions to its Policy Statement on Natural Gas and Electric Price Indices (Policy Statement) on December 17 to encourage market participants to report transactions to price index developers and to provide greater transparency into the natural gas price formation process. It also issued a Notice of Proposed Rulemaking (NOPR) proposing to amend three sections of its regulations to codify the Safe Harbor Policy set forth in its Policy Statement.

The US Senate has confirmed the nominations of Mark Christie (R) and Allison Clements (D) to fill the remaining Republican and Democratic vacant seats on the Federal Energy Regulatory Commission. These confirmations restore FERC to its full capacity of five members for the first time in almost two years.

The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2020 Report on Enforcement on November 19. The report provides a review of OE’s activities during fiscal year 2020 (FY 2020), covering October 1, 2019, through September 30, 2020. At bottom, FERC opened and closed significantly fewer investigations this year as compared to the past three, likely due to the ongoing coronavirus (COVID-19) pandemic.

Following significant pushback from the regulated community, FERC and NERC Staff jointly announced in a new white paper that filings and other submissions to FERC describing violations of cybersecurity reliability standards would be entirely nonpublic. Under the revised approach, all cybersecurity noncompliance information will be considered CEII and not disclosed in response to FOIA requests.

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.