Independent System Operator

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By Michael J. Gergen and Jared W. Johnson

On November 15, 2012, the Federal Energy Regulatory Commission (“FERC”) issued a Policy Statement to provide new guidance for applicants seeking rate incentives for new transmission infrastructure projects.  FERC’s transmission rate incentives policy stems from a package of amendments to the Federal Power Act (“FPA”) enacted by Congress in 2005, specifically Section 219 of the FPA, which was added to provide incentive-based rate treatments for investments in transmission infrastructure that would…

By Joshua T. Bledsoe, Tim B. Henderson, and Jared W. Johnson

Seeking to quell uncertainty surrounding the definition of resource shuffling ahead of the first cap-and-trade auction on November 14, 2012, the California Air Resources Board (“CARB”) passed a Resolution on October 18, 2012, requiring the Executive Officer to redefine resource shuffling and provide concrete examples.  CARB’s Resolution requires CARB Staff to issue proposed regulatory amendments by mid-2013 and release regulatory guidance consistent with the Resolution before the…

By Joshua T. Bledsoe, Tim B. Henderson, and Jared W. Johnson

With the first auction in California’s cap and trade program fast-approaching on November 14, 2012, the California Air Resources Board (“ARB”) recently suspended a much-discussed aspect of the program that requires first deliverers of electricity to attest that they have not engaged in “resource shuffling.”  Resource shuffling involves a seller of energy into California modifying its portfolio of sales so that lower or no-emission electricity is…

By Michael Feeley and Aron Potash

A lawsuit which delayed and once threatened to dismantle California’s greenhouse gas (GHG) cap and trade scheme was largely resolved last week, removing one roadblock to California’s plan to be the first state to impose an economy-wide GHG trading program.  Under modified regulations adopted by the California Air Resources Board (CARB) on October 20, 2011, California will require certain emitters of GHGs to obtain allowances or offsets in amounts commensurate to their respective emissions…

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 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).