FERC, CFTC, and State Energy Law Developments

In a narrow 50-49 vote, the US Senate on December 6 confirmed Bernard L. McNamee, the current head of the US Department of Energy’s Office of Policy, to join the Federal Energy Regulatory Commission. Mr. McNamee, the third Republican on the five-member Commission, was nominated by President Donald Trump in October to fill the vacant seat formerly occupied by former Commissioner Robert Powelson, who stepped down earlier this year. Once Mr. McNamee is sworn in, the Commission will return to full strength, with two Democratic and three Republican appointees.

The Senate Energy and Natural Resources Committee on November 15 favorably advanced the nominations of Dr. Rita Baranwal (Assistant Secretary of Energy (Nuclear Energy)) and Bernard McNamee (Member, Federal Energy Regulatory Commission) to the full US Senate.

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.

The US Senate Committee on Energy and Natural Resources held a hearing last week to consider the nomination of Bernard L. McNamee, the current head of the US Department of Energy’s (DOE’s) Office of Policy, to the Federal Energy Regulatory Commission (FERC or Commission). FERC commissioners are appointed by the president of the United States but must also be confirmed by vote of a full Senate. President Donald Trump nominated Mr. McNamee, a Republican, in October to fill the vacant seat formerly occupied by former Commissioner Robert Powelson, who stepped down from his post earlier this year. If ultimately confirmed, Mr. McNamee will serve as the third Republican commissioner and restore the five-member panel to full strength.

The US Department of Homeland Security (DHS) announced the formation of the Information and Communications Technology (ICT) Supply Chain Risk Management Task Force (the Task Force) on October 30. The Task Force is a partnership between government and private sector partners created to “examine and develop consensus recommendations to identify and manage risk to the global ICT supply chain.” The announcement came at the conclusion of National Cybersecurity Awareness Month and follows other government industry initiatives, such as the Oil and Natural Gas Pipeline Cybersecurity Initiative, that have been developed to manage risks posed by increasingly global supply chains.

For years, the US electric power industry has witnessed a steady uptick in the total capacity of deployed energy storage resources. Part of that growth is attributable to more favorable economics for storage projects, a trend that is set to continue in the coming years—a recent study by Bloomberg NEF forecasted that the global energy storage industry will see $620 billion in new investments by 2040. While the development of stationary batteries is expected to be outpaced by other storage applications, such as electric vehicles, the study also suggests that rapidly sliding capital costs for battery systems will be advantageous for utility-scale projects.

The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2018 Report on Enforcement on November 15. The report provides a review of OE’s activities during fiscal year 2018 (FY 2018), which begins October 1 and ends September 30 annually. Like last year, the report reveals likely areas of focus for FERC enforcement in the coming year, and provides guidance to the industry based on the wide variety of enforcement matters that are otherwise non-public by synthesizing some of the more disparate developments from audits, market surveillance, and other enforcement activities for the benefit of industry stakeholders.

A new market registration option is among the changes SPP is likely to propose in next month’s mandatory compliance filing.

We reported last week on steps that ISO New England has taken to finalize tariff revisions to meet the directives of Order No. 841, the Federal Energy Regulatory Commission’s (FERC or Commission) final rule on electric storage participation in Independent System Operator (ISO) and Regional Transmission Organization (RTO) markets. Order No. 841 requires RTOs and ISOs to submit proposed models that permit electric storage resources to participate in organized capacity, energy, and ancillary service markets by December 3, 2018 (read a more comprehensive overview of the final rule here). At the end of October, Southwest Power Pool, Inc. (SPP) moved closer towards meeting that goal when its board approved tariff revisions developed in response to FERC’s Order No. 841 directives, which should represent new opportunities for some of the 2.5 GW of pending electric storage resources in SPP’s generator interconnection queue.

On October 18, the Federal Energy Regulatory Commission (FERC or Commission) issued Order No. 850, adopting a suite of reliability standards proposed by the North American Electric Reliability Corporation (NERC) to address the cybersecurity risks posed by supply chains for industrial control system assets and services in critical electric utility environments. The final rule largely adopts the proposals from the Commission’s Notice of Proposed Rulemaking (NOPR). But the Commission also directs NERC to expand the scope of the new requirements to include Electronic Access or Control Monitoring Systems (EACMS) and to evaluate the need to further expand the scope of the requirements to include Physical Access Control Systems (PACS) and Protected Cyber Assets (PCAs).

Despite fears that the Commission would shorten the implementation period for the new requirements, the Commission adopted the 18-month implementation period that was originally proposed by NERC.

Revisions aim to build on framework designed originally for pumped-storage hydro facilities and bring region closer to Order No. 841 compliance.

Earlier this year, the Federal Energy Regulatory Commission (FERC or Commission) issued Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators (Order No. 841), a final rule amending FERC’s regulations to facilitate participation of electric storage resources in the capacity, energy, and ancillary service markets operated by regional transmission organizations (RTOs) and independent system operators (ISOs). As we reported previously, Order No. 841 requires RTOs and ISOs to devise an electric storage resource participation model that meets certain general criteria. The RTOs/ISOs must file the tariff revisions directed by Order No. 841 by December 3, 2018, and implement those changes, if approved, by December 3, 2019.