On August 27, 2019, FERC staff and the North American Electric Reliability Corporation (“NERC”) staff (collectively, “Staff”) jointly issued a white paper on Notices of Penalty (“NOP”) for violating Critical Infrastructure Protection (“CIP”) Reliability Standards, which details requirements for Bulk Power System cyber security. Staff elected to draft the white paper in response to the increase in Freedom of Information Act (“FOIA”) requests for the disclosure of non-public information in CIP NOPs, such as the identity of the CIP violator. The overarching objective of the proposal is to provide increased transparency, while protecting sensitive security information that could jeopardize the Bulk Power System if made public. If approved, the proposal will not have a retroactive effect on pending matters, or CIP NOPs already filed with the Commission.
On August 27, 2019, FERC affirmed its earlier rejection of PJM Interconnection, L.L.C.’s (“PJM’s”) proposal to, in certain circumstances, exempt incumbent transmission owners from executing a Designated Entity Agreement pursuant to the Regional Transmission Expansion Plan (“RTEP”) process set forth in Schedule 6 of its Operating Agreement, but not to exempt other transmission developers from this requirement (“August 27 Order”). The August 27 Order on rehearing and compliance affirmed FERC’s conclusion in a July 2018 order that incumbent and non-incumbent transmission owners are similarly situated, and that incumbent transmission owners would be given a competitive advantage in PJM’s RTEP process if they were exempted from executing the Designated Entity Agreement. The August 27 Order also accepted revisions to PJM’s Operating Agreement to provide a 60-day window for an incumbent transmission developer that PJM identified as a Designated Entity in its RTEP process to accept the designation. Continue Reading FERC Affirms Requirement for PJM Transmission Owners to Execute Designated Entity Agreements in its Transmission Planning Process
On August 22, 2019, FERC dismissed as premature Alternative Transmission Inc.’s (“ATI”) petition for declaratory order (“Petition”) asking FERC to declare that ATI’s alternative transmission facilities and services are subject to FERC’s jurisdiction and that ATI, as the owner and operator of the facilities, will be a public utility under the Federal Power Act (“FPA”). Continue Reading FERC Dismisses ATI’s Petition Relating to Determination of FERC Jurisdiction Over ATI’s Proposed Alternative Transmission Facilities and Services
On August 28, 2019, FERC found on voluntary remand from the United States Court of Appeals for the D.C. Circuit (“D.C. Circuit”) that the New York State Department of Environmental Conservation (“New York DEC”) waived its authority under section 401 of the Clean Water Act (“CWA”) to either issue or deny Constitution Pipeline Company, LLC (“Constitution”) a water quality certificate for a proposed 125-mile pipeline project from that would stretch from Pennsylvania to New York (“Project”). Based on the D.C. Circuit’s decision in Hoopa Valley Tribe v. FERC (“Hoopa Valley”) (see April 24, 2019 edition of the WER), FERC concluded that Constitution’s agreement with the New York DEC to withdraw and resubmit CWA section 401 certification applications did not restart the one-year statutory deadline for the New York DEC to act on Constitution’s application. Continue Reading FERC Changes Course, Finds New York Waived Authority to Issue Water Permit for Constitution Pipeline Project
On August 9, 2019, the Federal Energy Regulatory Commission (“FERC”) ruled that hundreds of millions of dollars of ongoing and future investments by Chelan County Public Utility District (“Chelan PUD”) in the Rock Island Hydroelectric Project qualified as early-action investments under the new section 36(c) of the Federal Power Act (“FPA”). Accordingly, FERC will consider these significant investments when the Rock Island Project undergoes relicensing of its FERC license prior to the 2028 expiration of the license.
On July 25, 2019, FERC issued an order directing PJM Interconnection, L.L.C. (“PJM”) “not to conduct the 2019 BRA” (Base Residual Auction) in August (“July 2019 Order”). The 2019 BRA, which will procure capacity for the 2022-2023 Delivery Year, was already delayed from May to August while FERC considered how to apply the PJM Minimum Offer Price Rule (“MOPR”) to resources which receive out-of-market support, including Zero Emissions Credits (“ZECs”) and Renewable Energy Credits (“RECs”). If the MOPR were applied to units receiving ZECs, RECs, or other out-of-market support, it is expected capacity market prices would be higher in some regions, and market revenues may be lower for some generators receiving ZECs or RECs or their off-takers. Continue Reading FERC Directs PJM to Further Delay its 2019 Capacity Auction
On July 23, 2019, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) ruled that state substantive law should be used as the federal standard when determining landowners’ compensation in condemnation actions brought by private entities acting under the Natural Gas Act of 1938 (“NGA”). The Third Circuit ruling reversed a decision by the U.S. District Court for the Middle District of Pennsylvania (“District Court”) and remanded the case for further proceedings. Continue Reading Third Circuit Holds that State Law Controls in Pipeline Eminent Domain Just Compensation Dispute
On July 18, 2019, FERC affirmed on remand its prior approval of Pacific Gas and Electric Company’s (“PG&E”) request for a return-on-equity (“ROE”) incentive adder to its transmission rates (“RTO-Participation Incentive”) for its ongoing membership in the California Independent System Operator Corporation (“CAISO”). In its decision, which followed from a 2018 remand from the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”), FERC reasserted its jurisdiction over such transmission incentive questions and determined that, absent a relevant mandate under California law requiring PG&E’s participation in CAISO, the RTO-Participation Incentive was warranted because it induces PG&E to continue its CAISO membership. Continue Reading FERC Reaffirms PG&E Transmission Rate Incentive Eligibility
On July 23, 2019, FERC Chairman Neil Chatterjee announced that the Commission is establishing a new Division of LNG Facility Review & Inspection (“DLNG”), within its Office of Energy Projects, to handle the growing number of complex applications to site, build, and operate liquified natural gas export terminals. Prior to the establishment of this division, FERC had only thirteen staff dedicated to reviewing and analyzing applications for LNG facilities. With the expansion, however, the DLNG will have twenty dedicated staff in FERC’s Washington, D.C. headquarters and eight staff in the Commission’s new Houston Regional Office. In its press release describing its new office, Chairman Chatterjee stated that Houston was chosen for DLNG’s second location because a significant amount of work related to the LNG projects, along with the necessary expertise, is in and around the Houston area.
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On July 18, 2019, FERC issued a final rule (“Order No. 860”) revising its data collection and reporting requirements for market-based rate (“MBR”) sellers (“MBR Sellers”). FERC will require MBR Sellers to provide certain information about corporate relationships and affiliations through a “relational database” that FERC will implement over the next year and a half. Among other things, FERC adopted reforms to (1) revise the scope of ownership information provided by MBR Sellers in their market-based rate filings; (2) change the information to be included in an asset appendix; (3) require MBR Sellers to submit monthly updates to their relational database; (4) require MBR Sellers to file quarterly notices of change in status, instead of 30 days after the change in status; and (5) remove the existing requirement that MBR Sellers submit corporate organization charts. Notably, FERC declined to adopt its proposal requiring MBR Sellers to submit “Connected Entity” information. Continue Reading FERC Revises Data Submission Requirements for Market-Based Rate Sellers