Federal Energy Regulatory Commission

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By Michael Gergen, Jared Johnson and Shannon Torgerson

On July 21, 2011, the Federal Energy Regulatory Commission (FERC) issued Order No. 1000 (the “Final Rule”), which reforms FERC’s transmission planning and cost allocation requirements by requiring public utility transmission providers to improve transmission planning processes and allocate costs for new transmission facilities to the beneficiaries of those facilities.  Key elements of the Final Rule are highlighted below, and a Client Alert with a more extensive summary and analysis will…

Under Federal Energy Regulatory Commission (FERC) Order 745 considering Demand Response Compensation in Organized Wholesale Energy Markets, new requirements governing payment for demand response resources must soon be implemented by Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs).  As previously discussed in our Clean Energy Law Report, pursuant to Order 745 issued on March 15, 2011, ISOs and RTOs are required to implement a Net Benefits Test in order to assess the threshold point at which demand…

On June 16, 2011, the Federal Energy Regulatory Commission (FERC) issued a notice of inquiry (NOI) in Docket Nos. RM11-24-000 and AD10-13-000 seeking comment on ways to facilitate the increased market-based provision of ancillary services traditionally supplied by transmission providers that help the bulk power grid to operate more smoothly and reliably from all resource types, especially from new electric storage technologies.   FERC has taken a number of actions in recent years to foster the development of wholesale energy markets…

On March 15, 2011, the Federal Energy Regulatory Commission (FERC) issued a Final Rule (PDF) in its “Demand Response Compensation in Organized Markets” proceeding in Docket No. RM10-17 (Final Rule).  The new rule is intended to assure that demand response resources located in regional electricity markets administered by an Independent System Operator or Regional Transmission Organization (ISO / RTO) will have the ability to receive the market clearing price for energy when capable of being dispatched and when a “benefits” test is met.   

The rule sets forth new requirements for compensation paid to demand response resources (resources that can reduce their consumption of electric energy in response to an increase energy price) participating in day-ahead or real-time energy markets administered by an ISO / RTO.  Resources can be paid the full market clearing locational marginal price (LMP) when (i) the resource is capable of responding and can reduce its consumption, and (ii) dispatch of the demand response resource is deemed cost-effective under a new “net benefits test.”  (See page 2, footnote 5 of the Final Rule for a more detailed discussion of LMP pricing). 

Clean energy projects have tremendous potential to create jobs and grow the economy and help the nation meet its energy needs in a more sustainable way, but regulatory and legal barriers to energy projects have substantially reduced job creation and economic growth while impeding efforts to bring new energy generation facilities on line, according to a recent economic study commissioned by the US Chamber of Commerce as part of its Project No Project.  The report, entitled, “Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects,” (PDF) found that legal challenges, threats of legal challenge, and regulatory hurdles caused the delay or cancellation of 333 energy projects which, if constructed and operated for twenty years, would have potential economic and employment benefits of  a projected $3.4 trillion.  These estimated benefits would include $1.4 trillion in employment earnings and one million or more jobs per year.

By Michael J. Gergen, Jared W. Johnson, and Shannon D. Torgerson

In an order issued December 16, 2010, the Federal Energy Regulatory Commission (FERC) conditionally accepted the California Independent System Operator Corporation’s (CAISO) proposed revisions to its Tariff (Docket No. ER10-1401) to implement a revised transmission planning process (RTPP) for the CAISO-controlled grid.  The CAISO had sought FERC approval of the RTPP proposal to facilitate the development of the electric transmission infrastructure necessary for California utilities to obtain 33% of their total energy supplies from renewable resources by December 31, 2020, as mandated under the California Air Resources Board (CARB) Renewable Electricity Standard and as proposed in legislation to modify the state’s Renewables Portfolio Standard (RPS).   

The RTPP introduces a three-phase approach to try to streamline identification of needed electric transmission projects for the CAISO-controlled grid, and clarifies the limited categories of transmission facilities in California that may be built and owned by non-incumbent transmission developers.

On February 22, 2011, the Federal Energy Regulatory Commission (FERC) issued a Notice of Technical Conference [PDF] to be held on March 15, 2011, regarding the ownership of and priority access rights to new transmission lines. 

The Notice lists a number of pending FERC dockets which relate to requests regarding ownership of and/or priority access to new transmission facilities intended to serve renewable generation resources. The Notice states that participants at the Technical Conference should be prepared to discuss ownership…

By L&W energy attorneys

The Federal Energy Regulatory Commission (FERC) recently released a notice of proposed rulemaking (NOPR) in Docket No. RM11-7-000 revising the compensation paid for frequency regulation service in organized wholesale power markets administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).     

Frequency regulation service is the injection or withdrawal of real power by facilities capable of responding appropriately to deviations or imbalances on a transmission system.  Minor frequency deviations can adversely affect energy consuming devices, while major deviations cause generation and transmission equipment to separate from the grid, possibly resulting in cascading blackout. Frequency regulation is largely provided by generators (e.g., water, steam and combustion turbines) specially equipped to respond to dispatch signals sent by a transmission system operator.  However, non-generator resources, such as controllable demand response and storage devices, are increasingly providing this service in some of the organized wholesale power markets. 

In an order issued January 31, 2011 (Sky River), the Federal Energy Regulatory Commission (FERC) rejected a Common Facilities Agreement (CFA) negotiated between Windstar Energy, LLC (Windstar), developer of a wind generation facility in California, and Sky River LLC (Sky River), an affiliate of NextEra and part owner and operator of a 9-mile transmission line known as the “Wilderness” line.  The CFA was structured as a licensing arrangement under which Windstar, as licensee, paid for rights to use the line on a pro rata basis over a 20-year term.  When Sky River filed the agreement, it sought waivers of the requirements of Order Nos. 888 and 890 to file an Open Access Transmission Tariff (OATT) and to maintain an Open-Access Same Time Information System (OASIS).

As part of the Energy Policy Act of 2005 (Act), the Department of Energy (DOE) was directed to identify NIETCs—which are essentially corridors with a pressing need for more transmission capacity for electricity.  The Act allows utilities a fast-track approval process for permits for transmission lines within an NIETC.  Notably, the Federal Energy Regulatory Commission (FERC) may grant a permit for transmission lines within an NIETC if, among other things, a state agency fails to approve the permit application within…