Regulatory Updates

California Regulators to Hold En Banc Conference on California Customer Choice

On Monday, October 29, 2018, the California Public Utilities Commission (“CPUC”) will hold a joint En Banc hearing on customer choice with the California Energy Commission (“CEC”). The En Banc is a continuation of the CPUC’s California Customer Choice Project, which seeks to analyze increased customer choice regarding electric service options and the resulting impact on California’s ability to achieve its policy objectives of affordability, decarbonization, and reliability. The California Customer Choice Project provides a forum for stakeholders—including Community Choice Aggregators (“CCAs”), Investor Owned Utilities (“IOUs”), Electric Service Providers (“ESPs”), consumers, and regulators—to coordinate regarding California’s changing electricity market.

White House Offers a Plan to Secure Cyberspace in Recently Issued National Cyber Strategy

On September 20, 2018, President Donald J. Trump and his Administration released a National Cyber Strategy outlining the White House plan to strengthen the cybersecurity of the United States. The President provides a preface to the Strategy, explaining the commitment of the Administration to securing and preserving cyberspace. The Administration then goes on to organize the cyber strategy under four pillars: protect the homeland; promote American prosperity; preserve peace by strengthening the United States; and advance American influence. Within each pillar, the Administration identifies particular goals and priority actions to achieve those goals. This summary does not list each of the numerous action items, but rather provides an overview of the most prevalent themes of the Strategy.

D.C. Circuit Finds Cost-Causation Principle Must Be Followed Even If Allocating Costs of a Transmission Project Meeting an Individual Utility’s Planning Criteria

Seal of the Court of Appeals for the District of Columbia

On August 3, 2018, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit or Court) found that the Federal Energy Regulatory Commission (FERC) acted arbitrarily and capriciously in approving a PJM Interconnection, L.L.C. (PJM) tariff amendment that proposed to exclude from regional cost sharing, high-voltage transmission projects undertaken to satisfy an individual utility’s planning criteria.[1] The Court found FERC failed to justify its departure from the cost-causation principle, a long-standing rule that requires FERC to make some reasonable effort to match costs to benefits in order to ensure just and reasonable rates.

DHS and National Cybersecurity Center Host Cyber Security Webinar

The Department of Homeland Security (“DHS”) and the National Cybersecurity and Communications Integration Center (“NCCIC”) joined together to host an unclassified webinar to brief on Russian government cyber activity against critical infrastructure. The webinar series is offered in response to Russian government actions targeting U.S. Government entities as well as organizations in the energy, nuclear, commercial facilities, water, aviation, and critical manufacturing sectors. The webinar presentation included an overview of recent attack and various common techniques used to infiltrate targets.

The presentation focused its discussion on the penetration of corporate networks and the targeting of control systems. NCCIC emphasized that often threat actors will first attack a “staged target” that has a preexisting relationship with the “intended target.” This strategy is undertaken in order to lay the groundwork for sending phishing emails from what seems like a trusted source, but which actually contains malware. If not careful, clicking on links or opening attachments from these sources can provide threat actors access to the credentials that could open the entire corporation, along with their customers, to a cyberattack.

FERC Split on Consideration of Greenhouse Gas Emissions in Pipeline Permitting – Proceeds with Notice of Inquiry

On June 12, 2018, the Federal Energy Regulatory Commission (FERC) issued an order that implicates the scope of environmental review in pipeline permitting decisions under section 7 of the Natural Gas Act. See Tennessee Gas Pipeline Co., LLC, Docket No. CP15-77-001, order denying reh’g and dismissing clarification. The June 12 Order applied a new policy announced in a May 2018 pipeline certificate proceeding, which limits FERC’s review and disclosure of upstream and downstream greenhouse gas emissions as part of FERC’s National Environmental Policy Act responsibility and public interest determination under the Natural Gas Act. See Dominion Transmission – New Market Project, Docket No. CP14-497. Specifically, a majority of Commissioners found that the environmental effects of natural gas production are neither caused by a proposed pipeline nor reasonably foreseeable consequences of FERC’s approval of a proposed pipeline. In the absence of record evidence showing that the project’s specific adverse consequences are against the public interest, FERC limited its environmental review to exclude consideration of greenhouse gas emissions. FERC distinguishes Sierra Club v FERC, where the D.C. Circuit ordered FERC to determine downstream usage, asserting that downstream use of the gas was foreseeable in that particular case due to the pipeline project delivering natural gas to identifiable gas-fired electric generating plants.

California Regulators Hold “Green Book” En Banc Conference to Debate California Customer Choice

On June 22, 2018, the California Public Utilities Commission (“CPUC”) and California Energy Commission (“CEC”) convened an En Banc hearing on the recently released, Draft Green Book which details the evolving framework of California Customer Choice. The agencies held the En Banc in light of the explosive growth of Community Choice Aggregators (“CCAs”) in California and growing options for retail Direct Access, and to discuss possible changes to be considered with respect to California’s regulatory framework. The panel discussions included representatives from CCAs, Investor Owned Utilities (“IOUs”), elected officials, Electricity Service Providers (“ESPs”), trade organizations and academia. Significant parts of the discussion involved the question of, in loosening state regulatory control, how California could avoid unintended outcomes and breakdowns in services as had occurred in the 2000-2001 Energy Crisis.