FERC, CFTC, and State Energy Law Developments

On April 27, Morgan Lewis's Energy Practice presented this webcast on the current issues in transmission development. Topics of discussion included:

  • Necessary state and/or federal approvals for new transmission
  • Rate incentives for new transmission
  • Corporate structures for holding and developing new transmission
  • Financing options for developing new transmission

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

On March 18, the Federal Energy Regulatory Commission (FERC or the Commission) issued a series of orders that represent significant modifications in the way mandatory Reliability Standards are developed and enforced by the North American Electric Reliability Corporation (NERC).  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…

Earlier today, the Federal Energy Regulatory Commission (FERC) approved the implementation plan for Critical Infrastructure Protection (CIP) Reliability Standards compliance By nuclear generator owners and operators in the United States. As a result, the timeline for achieving compliance with these complex Reliability Standards on cyber-security protections has begun. Compliance with two CIP Reliability Standard Requirements, CIP-002-1 Requirements R1 and R2, must be achieved within 12 months. Compliance with the remaining Requirements is dependent on future developments, but will likely be due within 18 months. Due to the complexity of implementing these measures alongside the separate cyber-security regulations of the Nuclear Regulatory Commission (NRC), achieving auditable compliance By these deadlines is likely to be a lengthy process, specific to the facilities of each licensee.  Read more...

On February 26, the Federal Energy Regulatory Commission (FERC) for the first time initiated a review of a Notice of Penalty filed By the North American Electric Reliability Corporation (NERC) regarding the settlement of an alleged violation of mandatory Reliability Standards. According to FERC, the $80,000 proposed penalty amount in the Notice of Penalty may be insufficient under the circumstances surrounding the violations at issue, because the vegetation-related outage led to a combined loss of 270 MW of firm load in the systems of two Registered Entities: Turlock Irrigation District (Turlock), the subject of the Notice of Penalty, and Modesto Irrigation District. In order to determine whether the penalty is appropriate, and to determine if there are any other violations that may have contributed to the loss of firm load, FERC stayed the effectiveness of the settlement and established a deadline of March 18, 2010 for answers, interventions, and comments on these issues.  Read more…

For its March 2010 issue, The Electricity Journal published an article By Levi McAllister and Kelly L. Dawson titled "Restoring Faith in the Bulk-Power System: An Early Assessment of Mandatory Reliability Standards."

Abstract:
The driving force underlying creation of mandatory reliability standards was the prevention of widespread outages, such as those that occurred in 1965, 1977 and 2003. So far, no similar outage has occurred when an entity is in full compliance with the standards, and NERC and FERC have demonstrated that they will actively enforce compliance while aggressively pursuing entities alleged to be non-compliant.

On January 21, 2010, the Federal Energy Regulatory Commission (FERC) approved Technical Feasibility Exception (TFE) rules proposed By the North American Electric Reliability Corporation (NERC) applicable to certain Critical Infrastructure Protection (CIP) mandatory Reliability Standards. However, reiterating its prior conclusions from Order No. 706, FERC directed NERC to revise the rules to clarify that the TFE rules will apply to the compensating or alternative measures implemented By Responsible Entities under CIP-006-1 R1.1 and CIP-007-1 R3.  Read more…

On January 11, the Nuclear Regulatory Commission (NRC) and the North American Electric Reliability Corporation (NERC) published a Memorandum of Understanding (MOU) regarding the enforcement of NRC cyber security regulations and NERC Critical Infrastructure Protection (CIP) Reliability Standards at commercial nuclear power plants. This MOU provides further detail on what the NRC and NERC view as their separate responsibilities regarding cyber security at nuclear power plants, and explains how they will coordinate execution of these responsibilities going forward.  Read more…

Earlier today, the Federal Energy Regulatory Commission (FERC) approved a stipulation and consent agreement with Florida Power and Light Company (FPL) that included a $25 million penalty to be paid By FPL to resolve potential violations of mandatory Reliability Standards related to the February 26, 2008 Florida Blackout. That event resulted in the loss of 3,650 MW of customer load, and left some noninterruptible customers without power for more than two hours.

The agreement, which contains one of the largest civil penalties ever approved By FERC, is also the first settlement resulting from a reliability investigation headed By FERC enforcement staff, and follows FERC’s public announcement that it—rather than the North American Electric Reliability Corporation (NERC) or the Florida Reliability Coordinating Council, the two entities usually responsible for the enforcement of Reliability Standards in Florida—would investigate the blackout.

Read more…

Last week, the North American Electric Reliability Corporation (NERC) released a revised draft of the proposed procedures that Responsible Entities would use to request a Technical Feasibility Exception (TFE) for Critical Infrastructure Protection (CIP) Reliability Standards. The revised procedures make several significant revisions to the draft TFE procedures released for comment this spring.

Under the revised TFE procedures, the responsibility for reviewing and approving TFE requests has been shifted back to the Regional Entities. Any Responsible Entity seeking a TFE must submit an electronic form to the appropriate Regional Entity containing the basic information regarding the TFE, including the relevant CIP Reliability Standard Requirement eligible for a TFE, the basis and justification for the request, the proposed mitigating measures, and the schedule for achieving Strict Compliance. The templates on which Responsible Entities will submit this information should be available from the Regional Entities beginning on September 17, 2009.  Read more…