Regulatory Updates

James Danly Appointed to Become Chairman of the Federal Energy Regulatory Commission

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President Trump appointed current Commissioner James Danly as Chairman of the Federal Energy Regulatory Commission.  Danly’s tenure with FERC began in 2017, serving as general counsel to the Commission, and subsequently beginning a term as Commissioner in March of this year.  Danly replaces Neil Chatterjee, who will remain as a Commissioner of the Commission.  In his remarks thanking Chatterjee for his service as Chairman, Danly commented on Chatterjee’s efforts to advance liquified natural gas terminals, protect competitive markets, revise the Commission’s policies under PURPA, and expedite approvals of critical energy infrastructure.  As Chairman, Chatterjee in recent months led efforts to remove barriers to participation of distributed energy resources in organized markets and to propose a policy statement that would clarify the Commission’s role over state-determined carbon pricing in wholesale markets.  Chatterjee intends to stay on as a Commissioner through the end of his term in June 2021.

FERC’s announcement can be found here.

PURPA Rulemaking Would Encompass Certain Fuel Cells

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On October 15, 2020, the Federal Energy Regulatory Commission (“Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) in Docket No. RM21-2, in which it proposes to amend its regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”) to clarify that the definition of “useful thermal energy output” of a topping-cycle cogeneration qualifying facility (“QF”) includes energy produced by Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment. 

The Commission issued this NOPR in recognition of the technical development and commercialization of Solid Oxide Fuel Cell systems with integrated natural gas reformation equipment over the past decade, and in response to a Petition for Rulemaking filed by Bloom Energy Corporation (“Bloom Energy”) in Docket No. RM20-20.  The Commission states that the NOPR furthers PURPA’s goal of encouraging the innovation and development of cogeneration facilities. 

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FERC Proposes Policy Statement on Carbon Pricing

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On October 15, 2020, the Federal Energy Regulatory Commission (Commission) issued a Notice of Proposed Policy Statement for Carbon Pricing in Organized Wholesale Electricity Markets after convening a technical conference on the subject. Due to the increased trend of states controlling greenhouse gas emissions by way of carbon pricing, the Commission’s proposed policy statement continues the discussion around market rules that include carbon pricing.

In its proposed policy statement, the Commission explains a long history of allowing generating resources to recover costs associated with environmental compliance through their wholesale rates. The Commission states that its jurisdiction over RTO/ISO market rules that include a state-set carbon price is no different. The Commission takes the opportunity to encourage RTOs/ISOs to consider establishing these types of market rules and make Federal Power Act section 205 filings.

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FERC Issues Order Regarding Minimum Offer Price Rule

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On October 15, 2020, the Federal Energy Regulatory Commission (“Commission”) issued an Order (“October 15 Order”) accepting in part, rejecting in part, and specifying modifications to tariff revisions proposed by the PJM Interconnection (“PJM”) to implement the Commission-directed expansion of the minimum offer price rule (“MOPR”) within the PJM footprint.

Prior to the Commission’s December 2019 Order to expand the MOPR to all state-subsidized capacity resources, the MOPR only applied to new natural gas-fired combustion turbine and combined cycle resources. The Commission’s October 15 Order accepts PJM’s MOPR compliance filings to apply the MOPR to any capacity resource that receives or is entitled to receive a state subsidy.

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ERO Enterprise Further Extends Pandemic Compliance Guidance

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On October 27, 2020, the ERO Enterprise extended guidance originally issued in May through the first quarter of 2021. This guidance and extension for regulatory discretion and onsite compliance activities were issued in response to the evolving nature of the coronavirus pandemic. Regulatory discretion will continue to be available for COVID-19 potential noncompliance when COVID-19 contributes materially or completely to the root cause of the issue. Moreover, this extension allows the continuation of regulatory relief by expanding the Self-Logging Program allowing all registered entities to self-log instances of potential non-compliance with minimal or moderate risk related to their coronavirus response. The extension also includes the deferment of on-site activities, including on-site audits, through the end of the first quarter of 2021, unless there is a need due to a high risk determination.

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October 1, 2020 Newly Effective Reliability Standards

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As of October 1, 2020, the following standards become effective:
CIP-005-6 – Cyber Security – Electronic Security Perimeter(s)
CIP-010-3 – Cyber Security – Configuration Change Management and Vulnerability Assessments
CIP-013-1 – Cyber Security – Supply Chain Risk Management
TPL-007-4 – Transmission System Planned Performance for Geomagnetic Disturbance Events (Requirements R1, R2, R5, 5.1-5.2, R9, 9.1-9.2)

All Reliability Standards, along with their status, purpose, implementation plans, relevant FERC Orders, and Reliability Standard Audit Worksheets, can be accessed at NERC’s One-Stop Shop.

For more information on the NERC Reliability Standards and their potential applicability and impact, please contact Kristen Connolly McCullough, Lisa Gast, or Sean Neal.

FERC and NERC Staff Publish Cyber Response Report

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On September 14, 2020, FERC, NERC, and NERC Regional Entities staff (collectively, “joint staff”) published a Cyber Planning for Response and Recovery Study (CYPRES) Report that discusses utility approaches to protecting their networks against cyber security incidents by way of their incident response and recovery plans. Subject matter experts from the joint staff relied upon the National Institute of Standards and Technology (NIST) Special Publication 800-61 Rev.2, Computer Security Incident Handling Guide Recommendations, as a reference tool for how to respond to incidents effectively.

After a series of site visits and interviews of employees at electric utilities of various sizes and bulk electric system responsibilities, along with varying cyber infrastructure designs, the joint staff made some key observations. While the CYPRES Report confirms there is no “one size fits all” approach to preparing and responding to cyber incidents, it does illuminate common areas where entities can effectively focus their response efforts.

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FERC Issues Final Rule on DER Aggregation and Participation in Organized Markets

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The Federal Energy Regulatory Commission (“FERC”) announced the issuance of a Final Rule, Order No. 2222, which it describes as “historic” in enabling distributed energy resource (“DER”) aggregators to compete in all regional organized wholesale electric markets.  In doing so, FERC makes express reference to the recent appellate ruling on energy storage participation, Order 841, and the court’s view of an expansive federal role over activity that may interact with wholesale electric markets.

As FERC Staff observes, “DERs tend to be too small to meet the minimum size requirements to participate in the RTO/ISO markets on a stand-alone basis, and may be unable to meet certain qualification and performance requirements because of the operational constraints they may have as small resources.”

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