Regulatory Updates

FERC Issues Policy Statement related to RTO/ISO Market Rules and State-Determined “Carbon Prices”

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On April 15, 2021, the Federal Energy Regulatory Commission (“FERC”) issued a Policy Statement to explain how FERC will approach filings under section 205 of the Federal Power Act (“FPA”) that propose to change Regional Transmission Organizations (“RTO”) or Independent System Operator (“ISO”) market rules to incorporate a “state-determined carbon price” (i.e., state or multi-state mechanisms to value greenhouse gas (“GHG”) emissions, such as California’s cap-and-trade program administered by the California Air Resources Board, and associated pricing in the Western Energy Imbalance Market).  FERC identifies a non-binding list of potential considerations when evaluating such filings, though FERC will continue to consider the specific facts of each proceeding.  FERC Commissioners Danly and Christie authored separate opinions, concurring and dissenting in part.

FERC also declares its policy is “to encourage efforts of RTO/ISOs and their stakeholders to explore and consider the value of incorporating a state-determined carbon price into RTO/ISO markets.”  Acknowledging that “state efforts to reduce GHG emissions” is a “matter self-evidently under state jurisdiction,” the Policy Statement finds wholesale market rules incorporating a state-determined carbon price (leaving to the state’s regulation the carbon price itself) may “improve the efficiency and transparency” of FERC-jurisdictional organized wholesale markets, with benefits such as “market certainty to support investment.”  While FERC will encourage RTO/ISO efforts to develop such market rules, FERC clarifies its Policy Statement should not be read as implying a “preference for a state-determined carbon pricing approach over other state policies.”  FERC’s Policy Statement identifies at least 18 states currently with laws, regulations, or policies related to decarbonizing the electricity sector; and 12 states with some form of “carbon pricing,” which FERC defines to include:  (a) price-based methods (i.e., an explicit charge on GHG emissions); and (b) quantity-based methods (i.e., limiting the amount of permissible GHG emissions). 

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CEC Approves Volume II on Microgrids Lessons Learned as Part of the 2020 IEPR Update

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On April 14, 2021, the California Energy Commission (“CEC”) held a Business Meeting where it adopted, among other things, the CEC’s 2020 Integrated Energy Policy Report (“IEPR”) Update Volume II (The Role of Microgrids). In Volume II, the CEC evaluated lessons learned from a decade of investment and research resulting in 58 microgrids. Overall, the CEC recognizes that microgrids are not the appropriate solution for every problem, but do play a role in responding to Public Safety Power Shutoff (“PSPS”) events, supporting lifesaving services, supporting low-income, tribal, rural, and disadvantaged communities, as well as serving unique energy demands. Thus, the CEC recommends: (1) continued research on clean alternatives to backup diesel generation; (2) continued implementation of the California Public Utilities Commission (“CPUC”) Senate Bill (“SB”) 1339 Proceeding (R.19-09-009) Track 3 activities; (3) continuing to streamline distribution interconnection; (4) addressing right-of-way issues; and (5) developing financial tools that enable microgrid deployment without state funding. On March 15, 2021, the CEC adopted 2020 IEPR Update Volume I (Blue Skies, Clean Transportation) and Volume III (California Energy Demand Forecast Update).

CEC’s April 14, 2021 Business Meeting Agenda is available here.

CEC’s March 17, 2021 Business Meeting Presentation is available here.

CEC’s 2020 IEPR Update Volume II (The Role of Microgrids) is available here.

For further information, please contact: Peter J. Scanlon, Sean M. Neal, Robert A. Laurie, Lauren M. Perkins, and Sylwia Dakowicz.

FERC’s Renewed Notice Of Inquiry Into Its Policy For Certificating Natural Gas Pipeline Projects Under Section 7 Of The Natural Gas Act. [PL18-1]

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FERC is once again requesting comments regarding its 1999 policy for certification of natural gas pipelines.  Under Section 7 of the Natural Gas Act,[1] natural gas companies cannot construct or extend pipeline facilities unless they obtain a certificate of public convenience and necessity from FERC.  In 1999, FERC issued a policy statement[2] setting forth the criteria it would apply when deciding whether to issue a certificate of public convenience and necessity.  The Commission opened the 1999 policy for review and comment in a 2018 Notice of Inquiry (NOI),[3] but took no action as a result of comments received.  In February 2021, FERC renewed its request for comment, expanding the scope of issues to include a focus on the project’s greenhouse gas emissions, and environmental justice community concerns.  The new NOI reflects the Biden Administration’s Executive Order on combatting climate change, as well as FERC Chairman Glick’s consistent dissents from orders approving pipeline expansions, wherein he raised concerns about: (1) the lack of accounting for carbon/climate change in the Commission’s environmental review; and (2) the use of precedent agreements with affiliates to demonstrate need for projects.[4]

The following summarizes the considerations in play when the 1999 Certificate Policy was adopted, and the interests raised in the 2018 and 2021 notices of inquiry.

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PJM Considers Enhancements to Capacity Market

photo 1564957341074 6520b6b483bdPhoto Credit:  Jay Heike at:  https://images.unsplash.com/photo-1564957341074-6520b6b483b

PJM Interconnection LLC (“PJM”) held a series of workshops in February and March 2021 to discuss possible enhancements to the PJM capacity market, including eliminating or reforming the current Minimum Offer Price Rule (“MOPR”).  PJM believes that MOPR reform needs to come first, before it can move onto considering other capacity market issues.  For MOPR reforms, PJM put forth four possible options, while noting that it is open to considering other proposals during the stakeholder process.  The first option is a transitional approach that maintains the current MOPR while attempting to accommodate state policy resources by reducing the clearing price to ensure total cost does not increase.  The second option is intent-based and would only apply MOPR when certain ex-ante screens are triggered.  The third option would create an explicit buyer side market power screen based on the contractual obligation of a supply resource and the impact to clearing price.  The fourth option would revert back to the pre-December 2019 version of the MOPR and potentially include portions of prior iterations.  In the final workshop, PJM also discussed the possibility of conducting an alternative stakeholder process for MOPR reform, in order to implement the reforms in time for the December 2021 Base Residual Auction.  

PJM’s presentation from the first workshop is available here.
Details from the second workshop, including stakeholder presentations, are available here.
Details from the third workshop, including stakeholder presentations, are available here.
PJM’s presentation from the fourth workshop is available here.

For further information, please contact Thomas Rudebusch, Bhaveeta Mody, or Ellen Hill.

President Biden Announces New Infrastructure Plan

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Photo by René DeAnda at https://unsplash.com/photos/zfKlCKK-Ql0

            On March 31, 2021, the President announced a $2.3 trillion dollar infrastructure plan, during a visit to Pittsburgh, Pennsylvania.  The plan includes a major investment in the expansion of the electric transmission grid, including the creation of the “Grid Deployment Authority” at the U.S. Department of Energy.  This $100 billion portion of the plan would include 20 Gigawatts of high-voltage transmission facilities, and would likely include use of the power marketing administration’s authority to construct and expand transmission.  The proposal includes a 10-year extension of tax credits for clean energy generation and storage.  A national broadband investment program would be created and would work to get 100% nationwide high-speed coverage, including rural and tribal areas.  The broadband proposal would specifically reduce barriers so that municipalities and rural electric cooperatives could actively participate in this plan. A $5 billion rural partnership program would be created, including tribes. $174 billion would also be dedicated to expansion of the electric vehicles market, including 500,000 charging stations, incentives for vehicle purchases, state and local funding and funding to convert diesel school bus fleets.  The plan would fund resilience of infrastructure, including the FEMA Building Resilient Infrastructure and Communities (BRIC) program, HUD Community Development Block Grants and new Department of Transportation initiatives.  Resilience programs would also include targeted work in the Great Lakes and for dam safety.  $56 billion would be targeted to states and tribes to support water and wastewater infrastructure.  The proposal also includes $115 billion for roads, bridges and highways, while also investing $85 billion in public transit. $213 billion would be invested to build and retrofit two million homes and businesses, including weatherization, neighborhood investments, tax credits and a new $27 billion Clean Energy and Sustainability Accelerator for private investments.  $100 billion would be provided for new public schools and funds to upgrade VA facilities and federal buildings.  $180 billion would be targeted for R&D investment, including $15 billion for demonstrations of carbon capture utilization and sequestration, energy storage, hydrogen, nuclear, wind, solar and EVs. 

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DOE to Host Webinars on Wildfire Risk to Electric Infrastructure

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From April 8 through 29, the U.S. Department of Energy (“DOE”) and the National Laboratories will hold webinars concerning the risk of the nation’s electrical infrastructure due to wildfires.  As has been seen, climate change and aging infrastructure have been among causes of wildfire ignition throughout the country, seen dramatically in recent years in the West.  States have authorized power shutoffs in anticipation of high risk weather events, such as wind storms, which may contribute to electrical equipment igniting wildfires. 

DWGP has been tracking and advising utilities on wildfire issues, including the wildfire mitigation plan efforts in California and resiliency efforts such as the California Public Utilities Commission’s emergency preparedness initiative. 

The DOE webinars will discuss not only prevention of wildfires due to ignition by utility equipment, but also protection of utility equipment from approaching wildfires.  Webinars will include:

            April 8, 2021:  Sensing and Detection / Fire Testing Capabilities

            April 15, 2021:  Situational Awareness

            April 22, 2021:  Modeling & Analytical Tools

            April 29, 2021:  Modeling & Analytical Tools / Post Fire Analysis

For more information regarding the webinars, please see the following DOE posting here.

Please contact Lisa Gast, Sean Neal, Robert Laurie, Lauren Perkins, Ellen Hill, and Sylwia Dakowicz for further information.

April 1, 2021 Newly Effective Reliability Standards

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As of April 1, 2021, the following standards became effective:

FAC-002-3 – Facility Interconnection Studies
INT-006-5 – Evaluation of Interchange Transactions
INT-009-3 – Implementation of Interchange
IRO-002-7 – Reliability Coordination – Monitoring and Analysis
IRO-010-3 – Reliability Coordinator Data Specification and Collection
MOD-031-3 – Demand and Energy Data
MOD-033-2 – Steady-State and Dynamic System Model Validation
NUC-001-4 – Nuclear Plant Interface Coordination
PER-006-1 – Specific Training for Personnel
PRC-004-6 – Protection System Misoperation Identification and Correction
PRC-006-5 – Automatic Underfrequency Load Shedding
PRC-027-1 – Coordination of Protection Systems for Performance During Faults
TOP-001-5 – Transmission Operations
TOP-003-4 — Operational Reliability Data

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DWGP Assists the Navajo Tribal Utility Authority in Securing USDA Loan Award of $235 Million for Rural Utility Infrastructure Development

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Applauded by Arizona Senators Kyrsten Sinema and Mark Kelly and Arizona Congressman Tom O'Halleran (AZ-01), the U.S. Department of Agriculture (USDA) granted the Navajo Tribal Utility Authority (NTUA) a $235 million Rural Development loan for critical improvements in providing reliable electricity, water, and gas to the Navajo Nation.  The newly awarded investment will fund NTUA’s transmission expansions and upgrades, headquarters and warehouse construction, the service to 5,337 consumers, 144 miles of transmission line, 221 miles of distribution line and funding in smart grid technologies.

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