FERC, CFTC, and State Energy Law Developments

On November 17th, Morgan Lewis and Ernst & Young presented a joint webcast on structuring your company’s compliance program to avoid repetitive reliability violations.

Topics included:

  • How to avoid repeat violations of NERC and Regional Entity Standards
  • Ways to properly structure your compliance program
  • Strategic, tactical, and operational approaches
  • How to develop appropriate monitoring tools

A recording of the webcast and associated materials are available:

On October 7, the North American Electric Reliability Corporation (NERC) issued a Recommendation to Industry (Recommendation) requesting that transmission owners review their current Facility Ratings Methodology for their transmission facilities to determine whether the methodologies incorporate the actual field conditions of the facilities. NERC is concerned that transmission owners have not considered the existing field conditions surrounding a transmission facility when establishing facility ratings. Under the Recommendation, all of the identified entities are required to submit a plan for how they will assess the actual condition of all of their transmission facilities, potentially leading to widespread revisions of transmission facilities ratings. Entities that formally received the Recommendation are required to submit a receipt of acknowledgment By October 20, 2010, and submit plans for assessing their transmission facilities By December 15, 2010. While the Recommendation is not itself an enforceable Reliability Standard, the reporting obligations are binding on the recipients pursuant to federal regulations.

The Recommendation arose out of a conductor-to-ground fault resulting from vegetation contact with a bulk power transmission line of a transmission owner. Upon a subsequent review using Light Detection and Ranging (LiDAR) technology, the transmission owner found more than 100 conductor-to-ground clearance issues that had previously gone undetected due to inconsistencies between the actual topography surrounding the transmission lines and the lines’ design. As a result of this finding, NERC issued the Recommendation as a way to prod the industry to identify and eliminate these inconsistencies. Read more…

On September 20, the Federal Energy Regulatory Commission (FERC) issued Order No. 739, Promoting a Competitive Market for Capacity Reassignment. Order No. 739 permanently lifts the price cap for transmission customers reassigning electric transmission capacity. FERC explained that lifting the price cap is intended to facilitate the development of a market for electric transmission capacity reassignments as a competitive alternative to primary transmission capacity.

In Order No. 890, Preventing Undue Discrimination and Preference in Transmission Service, FERC had determined that it would be appropriate to lift the price cap for all transmission customers reassigning point-to-point transmission capacity, believing that the cap had served to reduce transmission options for customers and had impaired the development of a secondary market for transmission capacity. Read more…

As new high-voltage transmission increasingly becomes a stand-alone business, the structures for ownership and financing of that business continue to evolve. Drivers for new high-voltage transmission include the need for reliability and for delivery from energy sources under renewable portfolio standards, the availability of federal stimulus funds or loan guaranties, the support of the Federal Energy Regulatory Commission with rate incentives, and other mechanisms including the adoption of the anchor-customer structure for merchant transmission.

Utilities and merchant transmission companies are currently exploring a whole host of creative structures and financing options for the development and construction of new transmission. While a number of difficult issues — including thorny issues associated with siting and cost allocation — remain to be addressed before these transmission projects are built, it is clear that the need for new transmission coupled with FERC’s incentives and ARRA funding are providing the impetus for new transmission proposals. Read more…

Our panelists discussed issues relating to FERC’s proposed rulemaking, including the specific reforms under consideration:

  • Greater regional coordination in transmission planning
  • Consideration of public policy requirements in transmission planning processes
  • Removal of obstacles to nonincumbent transmission provider participation in transmission planning processes
  • Increased interregional coordination in transmission planning through interregional planning agreements
  • Cost allocation of new transmission projects on an intra- and interregional basis and potential jurisdiction issues

A recording of the webcast and the associated materials are available.

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, 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…

On March 18, in a Notice of Proposed Rulemaking (NOPR) likely to have wide-ranging effects on the planning of transmission systems across the United States, the Federal Energy Regulatory Commission (FERC) proposed to reject the industry understanding of a crucial Transmission Planning (TPL) Reliability Standard developed by the North American Electric Reliability Corporation (NERC), and instead impose a broader requirement on Planning Authorities and Transmission Planners when they assess the reliability of their systems under single contingency conditions and plan appropriate changes to their systems.  Read more…

During this one-hour webcast on integrating renewable energy resources into the transmission grid, our presenters discussed issues relating to the integration of variable generating resources, such as:

  • Power system reliability, including energy imbalance practices, scheduling, and forecasting
  • Transmission expansion and upgrades, including cost planning and recovery
  • Balancing Authority coordination

Our presenters also addressed FERC's Notice of Inquiry on the integration of variable energy resources, in which FERC sought comments (due March 29) on the extent to which barriers may exist that impede the reliable and efficient integration of variable energy resources into the electric grid and whether reforms are needed to eliminate those barriers.

A recording of the webcast and the associated materials are available.

On January 27, the Federal Register published a Notice of Inquiry (NOI) issued By the Federal Energy Regulatory Commission (FERC) on January 21, 2010 requesting comments from electricity industry participants regarding the integration of Variable Energy Resources (VER) onto America’s electricity grid. Publication of the NOI triggers a 60-day comment period, during which industry participants may submit proposals and recommendations sought in the NOI. The NOI is a significant step in FERC’s efforts to encourage continued generation and transmission of renewable energy, and provides industry participants an opportunity to assist in shaping FERC policy relating to renewable resource development and deployment.  Read more…