The National Labor Relations Board (NLRB) has had a busy year of significant decisions for employers, including one in Entergy Mississippi, addressing the supervisory status of certain electric utility transmission and distribution dispatchers and resulting ineligibility to vote in a union election. This important decision is discussed further in our recent edition of Labor & Employment NOW.
FERC, CFTC, and State Energy Law Developments
New Jersey advanced several of the Murphy administration’s clean energy goals during June 2019. Over the past month, the state released a draft of its revised Energy Master Plan (EMP), approved the Ocean Wind offshore wind project proposed by Ørsted, and released a detailed analysis on energy storage development in New Jersey.
Consolidated Edison Company of New York, Inc. (Con Edison) and Orange and Rockland Utilities, Inc. (O&R) issued a draft joint Request for Proposals (RFP) on May 31 to competitively procure scheduling and dispatch rights from new energy storage projects. Through this initial solicitation, Con Edison and O&R are targeting at least 300 megawatts (MW) and 10 MW, respectively, of new energy storage facilities to meet the in-service deadline of December 31, 2022, set by the New York Public Service Commission (NYPSC) in its December 2018 Order (Storage Order) establishing New York’s three gigawatt (GW) energy storage deployment goal.
Both utilities will accept bids only for new storage projects sized over five MW and connected to the transmission or distribution system that can directly participate in New York Independent System Operator (NYISO) markets and provide distribution benefits, if applicable. These front-of-meter systems must be able to discharge for at least four hours 100 to 350 times per year, have at least 85% roundtrip efficiency, and maintain 98% availability for dispatch each contract year.
FERC issued a Notice of Inquiry (NOI) on March 21 seeking stakeholder comment on the scope and implementation of its electric transmission infrastructure development incentives regulations and policy. The NOI seeks answers to whether and how FERC should update its rules and policies in this area through more than 100 questions organized into four broad categories:
- FERC’s incentive policies and how it should approach evaluating applicants’ requests for transmission development incentives, including its Return on Equity (ROE) adder policy
- What expected benefits or project characteristics warrant incentives, including whether the Commission should consider reliability benefits, economic efficiency benefits, security, or resilience in that determination
- Whether existing incentives, including the ROE adder, remain relevant and appropriate today
- Whether particular types of infrastructure development incentives should automatically sunset, and under what certain circumstances that should happen
As we reported in December 2018, to jumpstart the energy storage market as envisioned by Governor Andrew M. Cuomo, the New York Public Service Commission (NYPSC) issued an order establishing an aggressive 3 GW energy storage goal by 2030, with an interim target of 1.5 GW by 2025, and directing investor-owned electric utilities (IOUs) to engage in competitive procurements for energy storage. The IOUs will issue draft requests for proposals (RFPs) this summer following a stakeholder process that kicks off on March 29.
A recent advisory published by the Commodity Futures Trading Commission’s Division of Enforcement and comments of the division director have highlighted the CFTC’s attention toward investigating potential violations of the Commodity Exchange Act (CEA) that involve foreign corrupt practices. On March 6, CFTC Director of Enforcement James M. McDonald addressed this very issue in remarks before the ABA National Institute on White Collar Crime. At the same time, the division issued an Enforcement Advisory providing guidance on how the CFTC will treat instances of self-reporting and cooperation concerning CEA violations that also involve foreign corrupt practices.
In response to state legislation enacted last year, the New Jersey Board of Public Utilities (BPU) is seeking comments concerning the state of and prognosis for energy storage development within the State of New Jersey. New Jersey enacted the Clean Energy Act on May 23, 2018. Among other things, the act requires the BPU, in consultation with the regional grid operator, PJM Interconnection, LLC, and other stakeholders, to conduct an energy storage analysis and submit a written report on energy storage to the governor and legislature by May 23, 2019.
On February 21, FERC issued an order[1] on rehearing and clarification of Order No. 845,[2] which was issued in April 2018, and reformed certain parts of the large generator interconnection rules. As we previously reported, the reforms of Order No. 845 were intended to improve the efficiency of processing interconnection requests, maintain reliability, balance the needs of interconnection customers and transmission owners, and remove barriers to resource development. In Order No. 845-A, FERC generally affirmed Order No. 845 and denied most of the rehearing requests, but did grant clarification and rehearing in limited respects. The revisions and clarifications in Order No. 845-A largely preserve the reforms and explain how certain reforms should be implemented. Order No. 845-A will become effective 75 days after publication in the Federal Register. Transmission providers are required to submit compliance filings by May 22, 2019.
An amendment to FERC’s M&A statute, Section 203 of the Federal Power Act (FPA), was signed into law on September 28, 2018. (See our prior blog post.) Public Law 115-247 (PL 115-347 or the Amendment) makes a minor but helpful change to one provision of FPA Section 203 by immunizing one particular class of transactions from pre-consummation FERC M&A application and approval requirements.
On February 21, 2019, FERC adopted the rulemaking[1] that the Amendment directs:
- Mergers or consolidations of public utility facilities that are valued at under $1 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC
- Likewise, mergers or consolidations of public utility facilities that are valued above $1 million but not above $10 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC, but are subject to a reporting requirement
- The reporting requirement applicable to those merger transactions falling within the $1 million to $10 million range directs that the form of notice to the Commission be submitted within 30 days following the facility merger or consolidation, and include the following information:[2]
- The exact name of the public utility and its principal business address
- A narrative description of the transaction, including
- the identity of all parties involved in the transaction, whether such parties are affiliates, and all jurisdictional facilities associated with or affected by the transaction;
- the location of such jurisdictional facilities involved in the transaction;
- the date on which the transaction was consummated;
- the consideration for the transaction; and
- the effect of the transaction on the ownership and control of such jurisdictional facilities.
- Mergers or consolidations of public utility facilities that are valued above $10 million will continue to require formal, pre-consummation FPA Section 203 applications and orders, unless some other exemption or blanket authorization applies in a particular case
- The new rulemaking will become effective 30 days after its publication in the Federal Register, or likely in late March 2019.
The new rulemaking will simplify certain asset transfers but does not in any way change or relax Commission Section 203 requirements relating to changes in the voting ownership interests of a public utility, and to direct and indirect “dispositions” of control. Those requirements were not affected by the Amendment.
Eighteen governors, members of the Governors’ Wind & Solar Energy Coalition, issued an open letter on November 9 to the Federal Energy Regulatory Commission (FERC) to encourage the development of needed electric transmission that they claim existing federal efforts are insufficient to address.
