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.
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.
The case arose following challenges to FERC’s Order No. 841 (and its order on rehearing), a 2018 rulemaking requiring grid operators (i.e., regional transmission organizations (RTOs) and independent system operators (ISOs)) to implement rules to facilitate the participation of electric storage resources in wholesale capacity, energy, and ancillary service markets.
At its June 18 open meeting, FERC issued a notice of inquiry seeking public input on cybersecurity-related enhancements to the Critical Infrastructure Protection (CIP) reliability standards. In light of the constantly evolving nature of cybersecurity threats to the bulk power system, FERC is interested in determining whether the current CIP standards adequately address specific cyberrisk areas related to data security and cybersecurity incident detection, containment, and mitigation. In addition, FERC is seeking comment on the potential risk of a coordinated cyberattack on geographically distributed targets.
The IRS proposed a draft rule on May 28 covering the qualification for carbon capture and sequestration tax credits under Section 45Q of the Internal Revenue Code. The proposed regulations could provide financial benefits to energy projects that will enhance the spread of that technology and the reduced carbon release that it promises.
The US Department of the Treasury issued a letter on May 7 stating that it plans to modify the continuity safe harbor for both the production tax credit (PTC) and the energy investment tax credit (ITC). Under the current law, taxpayers seeking to claim a PTC for electricity produced from qualifying facilities or an ITC for qualifying energy property must generally begin construction on the qualifying facility or property by specified dates.
To be considered to have begun construction, the taxpayer must start physical work of a significant nature, or must satisfy the safe harbor requirements by incurring 5% or more of the total cost of the facility or property. The taxpayer must then demonstrate continuous efforts to complete construction, and must place the facility or property in service within four years to meet the requirements for a continuity safe harbor.
President Donald Trump signed an executive order on May 1 declaring that the use of bulk-power system equipment supplied by companies controlled by certain foreign nations poses an extraordinary threat to the US power grid. The order observes that the bulk-power system is a valuable target for malicious actors, and any attack on that system could pose serious risks to the economy, public health and safety, and national security.
In light of those risks, the executive order declares a national emergency with respect to the power grid and moves to ban the unrestricted import or use of bulk-power system electric equipment from foreign adversaries. Although the order calls for coordination among multiple executive branch heads, including the Director of National Intelligence and the Secretary of Homeland Security, it primarily tasks the Secretary of Energy with fulfilling the President’s directives.
In an order issued on April 17, the Federal Energy Regulatory Commission (FERC) agreed to defer implementation of certain cybersecurity and operational reliability standards administered by the North American Electric Reliability Corporation (NERC) that had important compliance milestones later this year, including the suite of supply chain risk management standards that have been under development for several years and were set to take effect on July 1. The move by FERC is intended to provide some measure of relief from impending compliance burdens and to allow electric utilities to focus their resources on responding to the coronavirus (COVID-19) pandemic.
The Pipeline and Hazardous Materials Safety Administration’s (PHMSA’s) long-awaited final rule on the minimum safety standards for underground natural gas storage facilities (UNGSFs) was published in the February 12 Federal Register. The final rule amends the pipeline safety regulations applicable to depleted-hydrocarbon reservoirs, aquifer reservoirs, and solution-mined salt caverns used to store natural gas. These pipeline safety regulations were established in an interim final rule that PHMSA issued in December 2016 in response to a recent significant gas leak and the mandate in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (the PIPES Act). The PIPES Act directed PHMSA to establish minimum safety standards for depleted-hydrocarbon reservoirs, aquifer reservoirs, and solution-mined salt caverns used to store natural gas. The final rule becomes effective March 13, 2020.
A notice of proposed rulemaking (NPRM) titled, “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” published today by the White House’s Council on Environmental Quality (CEQ), is likely to have far-reaching effects for the energy and public infrastructure sectors, and could facilitate more efficient implementation of energy production/generation projects for all major energy sources (i.e., renewable, fossil, nuclear, and hydroelectric sources) as well as transportation projects.
The proposed rule has four major elements: (1) to modernize, simplify, and accelerate the NEPA process; (2) clarify terms, application, and scope of NEPA review; (3) enhance coordination with states, tribes, and localities; and (4) reduce unnecessary burdens and delays.
It will be important for industry entities that depend on federal agency action when advancing projects and securing permits to actively participate in the proposed rulemaking, and to provide meaningful comments that will help the CEQ build a sufficient agency record to defend against any later litigation challenges to new regulations.
Interest in microgrids is on the rise in the United States as over half of states explore ways to modernize the grid and promote distributed energy resources (DER), including innovative renewable energy, storage, and demand response technologies. However, microgrids are not defined by law or regulation in most states and are more complex than other types of DER because they involve both the generation and distribution of energy. This raises several policy questions, including who should pay for microgrid development and use and whether microgrid operators that technically distribute energy to retail customers should be classified as public utilities and subject to regulations ordinarily imposed on such entities. California is currently exploring the potential benefits of microgrids and the role of state regulation.