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On May 23, 2017, the Federal Energy Regulatory Commission (FERC) published its Fiscal Year 2018 Congressional Performance Budget Request and FY 2016 Annual Performance Report (available here). FERC sought a funding request of approximately $367.6 million. The funding request is an increase of about $48.4 million above its fiscal year (FY) 2017 funding, an approximate increase of 15.2 percent. FERC, which is an independent federal agency, recovers the full cost of its operations budget through annual charges and filing fees levied on the entities it regulates, and deposits its revenue in the U.S. Treasury so that it has a net zero effect on the federal appropriations budget. FERC is obligated to show that its performance is aligned with its strategic goals, and so its FY 2018 budget request to Congress includes programmatic goals that support its mission of reliable, efficient, and sustainable energy while aiming to ensure just and reasonable rates, terms, and conditions.

The budget request provides continued funding for program contracts associated with statutorily required hydropower environmental workload, natural gas pipeline construction oversight, liquefied natural gas construction inspections, and expert witness contractor assistance in FERC’s enforcement program. In addition, the request provides resources to support FERC’s infrastructure review process for non-federal hydropower and natural gas pipeline facilities.

FERC’s Budget Request identified several substantive issues that it anticipates addressing in FYs 2017 2018 in furtherance of its mission, including:

Order No. 1000 Effectiveness: FERC will continue to evaluate the effectiveness of the transmission planning reforms related to Order No. 1000 in FYs 2017 and 2018. FERC also indicated that in FY 2017 or FY 2018, it will address one remaining regional compliance filing pursuant to Order No. 1000. FERC also expects to continue to explore issues related to competitive transmission development in FY 2017.:

Interconnection Reforms: FERC will continue work related to its proposed reforms to the interconnection process that it started in 2016 (Docket No. AD14-8-000), and which led to a notice of proposed rulemaking in December of 2016 (Docket No. RM17-8-000). FERC noted that the reforms are intended to improve the interconnection process with transparency and predictability.

Energy Storage and Distributed Energy: FERC will continue to promote the integration of energy storage and distributed energy into the wholesale electricity markets. In late 2016, FERC issued a notice of proposed rulemaking that would require the regional transmission operators (RTOs) and independent system operators (ISOs) to revise their tariffs to recognize electrical storage resources and distributed energy resource aggregators as participants in the organized wholesale markets, and to adopt a model that best accommodates the unique physical and operational characteristics of distributed energy (Docket No. RM16-23-000). FERC received comments on the proposed rulemaking in February of 2017 and intends to continue related work in FYs 2017 and 2018.

Resource Development and Capacity: FERC intends to continue evaluating how best to incorporate state policies on new resource development with its FERC-approved capacity auction markets as operated by the RTOs/ISOs. In May of 2017, FERC convened a technical conference on the capacity markets operated by the eastern RTOs/ISOs (ISO-New England; New York ISO; and PJM) (Docket No. AD17-11-000). FERC intends to continue work on these issues in FYs 2017 2018. 

Energy Imbalance Market: In FYs 2017 and 2018, FERC will continue to monitor the implementation, performance, and integration of existing and new balancing authority areas participating in the energy imbalance market (EIM) that FERC approved for the California ISO (CAISO) in FY 2014, as well as any proposals by CAISO to the current market’s design and processes.

Efficient Trade between Wholesale Energy Markets: In FYs 2017 2018, FERC will continue to identify and address barriers to efficient trade between markets. In this regard, FERC described proceedings in which it considered issues related to seams between organized wholesale markets in 2016, including its issuance of an order approving a proposal to implement Coordinated Transaction Scheduling between Midcontinent-ISO (MISO) and PJM (allowing the two RTOs to use a uniform energy pricing methodology for interchange transactions), and its acceptance of a settlement offer resolving disputes between MISO and Southwest Power Pool.

Smart Grid: In FYs 2017 2018, FERC will evaluate the National Institute of Standards and Technology’s development of smart grid interoperability standards pursuant to the Energy Independence and Security Act of 2007, and initiate a rulemaking by which to adopt those standards if sufficient consensus is reached.

Audits: In terms of its FY 2017 and FY 2018 audits, FERC anticipates focusing on: RTOs/ISOs, formula rates, market-based rates, reliability, affiliated transactions, open access transmission tariffs, gas pipeline tariffs, oil pipeline carriers, mergers and accounting and reporting audits. FERC will continue to use a risk-based approach in the preparation of its annual audit plan to address areas FERC identifies as of highest priority.

Natural Gas and Hydropower Proceedings: Recognizing the continued relevance of natural gas and hydropower projects, FERC intends to conduct four natural gas environmental training seminars in FY 2018 and to continue its regular hydropower licensing training sessions in anticipation of an increase in project filings. FERC will also focus its attention on assessing the safety of natural gas and non-federal hydropower facilities.

Reliability Standards, Compliance and Infrastructure Security: In FY 2018, FERC will continue work on various issues related to Reliability Standards, including cyber security, geomagnetic disturbances, real power balancing performance, and transmission operations and interconnection. FERC also plans on continuing to examine and coordinate with other strategic partners on issues pertaining to energy infrastructure security.  

For more information on this or other FERC-related issues, please feel free to contact Bhaveeta K. Mody.