FERC

FERC Holds Technical Conference to Consider Financial Assurance for Hydropower Projects

On April 26, 2022 FERC held a Commission staff-led technical conference to discuss whether and, if so, how the Commission should require additional financial assurance mechanisms in the licenses and other authorizations it issues for hydroelectric projects.  The purpose of this effort is to ensure that licensees have the capability to carry out license requirements and, particularly, to maintain their projects in safe condition.  The technical conference followed, by over a year, the Commission’s January 26, 2021 notice of inquiry (NOI) seeking comments on potential changes to FERC’s rules relating to financial assurance for hydropower projects.

Background

The genesis of FERC’s January 2021 NOI was FERC’s concern that inadequate financing of hydropower projects may result in threats to public safety and environmental resources, especially for nonoperational projects.  FERC specifically noted recent experiences where a lack of funding for needed dam safety repairs led to several dam failures in 2020.  Therefore, FERC is considering whether to take additional measures to ensure that licensees have the

DER Aggregations in RTO/ISO Markets: An Update on FERC Order No. 2222 Compliance and Implementation

In September of 2020, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued Order No. 2222,[1] requiring Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”) to adopt rules allowing aggregations of distributed energy resources (“DERs”) to participate in the RTO/ISO-administered wholesale electricity markets.  Now, a year-and-a-half later, the compliance process for each RTO and ISO is ongoing, the proposed implementation timelines for the market rules vary widely, and numerous legal and technical challenges remain to be resolved. Below is an overview of the current status of RTO/ISO efforts to implement Order No. 2222, certain related industry activities, and various implementation challenges that have come to the fore through those market design efforts.

Background

FERC issued Order No. 2222 to “remove barriers” to DER aggregations’ participation in RTO/ISO markets, and to help ensure that the RTO/ISO markets produce just and reasonable rates as required by the Federal Power Act.  Under FERC’s definition, DERs are “any resource located on the

Amidst Ongoing Policy Statement Controversy, D.C. Circuit Remands Another FERC Pipeline Order Over GHG Analysis

Once again finding the Federal Energy Regulatory Commission’s (“FERC” or “Commission”) environmental assessment (“EA”) analysis of the downstream effect of greenhouse gas (“GHG”) emissions associated with interstate natural gas pipelines and liquefied natural gas terminals certificated pursuant to the Natural Gas Act (“NGA”) legally insufficient, on March 11, 2022, the United States Court of Appeals for the District of Columbia Circuit issued a remand directing FERC to consider the reasonably foreseeable indirect effects of burning natural gas as the result of a pipeline expansion project.  The court directed FERC to consider such indirect downstream impacts on remand and to prepare a conforming EA, but declined to vacate the FERC’s orders. Food & Water Watch and Berkshire Environmental Action Team v. FERC, No. 20-1132 (Mar. 11, 2022) (“Food & Water Watch”).  Food & Water Watch, authored by Chief Judge Srinivasan and joined by Judges Millett and Katsas, appears to provide further support for some of the reasoning provided by

Contentious Senate Committee Hearing Highlights the Politically-Charged Nature of FERC’s Recent Pipeline Policy Statements

The Senate Energy & Natural Resources Committee held a hearing today to question Federal Energy Regulatory Commission (FERC) Chairman Richard Glick and Commissioners Allison Clements, Mark Christie, James Danly, and Willie Phillips about FERC’s two recent policy statements regarding natural gas certificates.  Those two policy statements, each of which were issued by 3-2 vote with Commissioners Christie and Danly dissenting with separate statements, were issued on February 18, 2022 and are the subject of a separate Pierce Atwood blog post. Members of the Pierce Atwood Energy team watched the livestream video of the Senate hearing, and, in this post, provide some high-level insights based on the Senators’ questions and Commissioners’ responses today.

To no one’s surprise, the hearing was a politically-charged event. With one notable exception, the participating Senators’ response to FERC’s actions was split along party lines, with Democrats generally supporting the policy statements and Republicans criticizing the policy statements with openly expressed dismay and frustration.  The FERC Commissioners’

FERC Issues Two Controversial Policy Statements on Natural Gas Infrastructure

Industries:

On February 18, 2022, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued two controversial policy statements that will significantly impact the permitting and construction of new natural gas pipeline facilities.  The policy statements were each approved by a 3-2 majority with Commissioners Danly and Christie issuing separate dissents.

The Updated Policy Statement on Certification of New Interstate Natural Gas Facilities (“Updated Policy Statement”) revises FERC’s 1999 Certificate Policy Statement to give environmental analysis and policy, including environmental justice, a greater role in determining whether FERC should approve new natural gas transportation facilities as consistent with the “public convenience and necessity” under Section 7 of the Natural Gas Act (“NGA”).  A companion Interim Policy Statement on the Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews (“GHG Policy Statement”) seeks to explain how FERC will assess the impacts of natural gas infrastructure projects on climate change in its reviews under the National Environmental Policy Act (“NEPA”) and the NGA.

Technical Conference Sparks Debate Over FERC’s Legal Authority to Consider Greenhouse Gas Emissions in Pipeline Certification Review

Practice area:
Industries:

On November 19, 2021, the Federal Energy Regulatory Commission (“FERC” or “Commission”) convened a staff-led technical conference to discuss methods natural gas companies may use to mitigate the effects of direct and indirect greenhouse gas (“GHG”) emissions resulting from pipeline construction and expansion projects that are subject to Natural Gas Act (“NGA”) sections 3 and 7 authorizations by FERC (the “Conference”). The Conference included three panel discussions:  1) The Level of Mitigation for a Proposed Project’s Reasonably Foreseeable Greenhouse Gas Emissions; 2) Types of Mitigation; and 3) Compliance and Cost Recovery of Mitigation.

One of the threshold questions posed by the Commissioners, and a recurring theme throughout the conference, was whether FERC has the legal authority to consider GHG emissions as part of its certification process. Chairman Richard Glick asserted that FERC has authority to mitigate GHG emissions and that doing so will provide greater certainty for the industry, and expressed concern regarding FERC’s handling of the issue to date, given the flurry of recent decisions

FERC Staff Recommends Natural Gas Infrastructure Winterization Measures in Light of 2021 Extreme Winter Weather Events

The Federal Energy Regulatory Commission (“FERC”), in coordination with the North American Electric Reliability Corporation (“NERC”), presented its preliminary findings and recommendations at FERC’s Open Meeting on September 23 regarding its inquiry into the February 2021 Cold Weather Event in the Electric Reliability Council of Texas (“ERCOT”), Southwest Power Pool, Inc. (“SPP”), and Midcontinent Independent System Operator, Inc. (“MISO”).

The February 2021 Cold Weather Event occurred from February 8 through 20, 2021, during which large numbers of generating units experienced outages, derates, or failures to start, resulting in energy and transmission emergencies. The power outages affected millions of customers throughout the ERCOT, MISO, and SPP regions. On February 16, 2021, FERC and NERC announced a joint inquiry to examine the root causes of the event.

The preliminary findings indicate that a majority of the unplanned generating unit outages, derates, and failures to start were due to natural gas fuel supply issues. The major causes of the decline in natural gas

Government Races to Secure Critical Infrastructure in Wake of Colonial Pipeline Ransomware Attack

One of the nation’s largest pipelines, Colonial Pipeline, which carries 45 percent of the East Coast’s fuel supplies, was forced to shut down on May 7 after it was targeted by a ransomware attack. Ransomware is a type of malware where criminal groups encrypt data, effectively “holding it hostage,” until the victim pays a ransom.

Colonial Pipeline resumed operations on May 15. However, the cyberattack has sparked public panic and outcry as parts of the country experience fuel shortages and fuel prices rise to their highest levels in nearly seven years. The incident has also renewed efforts government-wide to strengthen security of U.S. pipelines and the power grid. On May 11, the U.S. House Committee on Energy and Commerce reintroduced bipartisan legislation aimed at bolstering the Department of Energy’s (“DOE”) ability to respond to cybersecurity threats to U.S. energy infrastructure. Among the several measures introduced were:

(1) The Pipeline and LNG Facility Cybersecurity Preparedness Act, which would require DOE to implement

The Natural Gas Industry in a Climate-Focused Future: Regulators Take Action to Adapt

Introduction

Climate change policies at the state and federal levels will have significant impacts on natural gas companies and their customers.  On the one hand, there is pressure on companies to maintain safe and reliable service – on the other, the push for net-zero carbon emissions by 2050.  These competing objectives will have notable effects on how companies conduct their long-term planning to maintain system reliability while avoiding potential stranded costs and safeguarding ratepayers.  This post and subsequent updates will focus on how federal and some state regulators are addressing the issues.

Federal

The Biden Administration’s clean energy plan, which calls for a 100% clean energy economy by 2035 and net-zero emissions economy-wide by no later than 2050, has sparked an increased focus on achieving these goals. To reach net-zero by 2050, the Biden Administration plans to invest $1.7 trillion in federal funds in clean energy research and modernization, deploy zero emission vehicles across the government, and enforce

FERC Accepts PJM Compliance Filings Overhauling Reserve Market and E&AS Offset Calculation

On November 12, 2020, the Federal Energy Regulatory Commission (“Commission”) approved changes regarding PJM Interconnection, L.L.C.’s (“PJM”) reserve market, including how the Regional Transmission Organization (“RTO”) calculates its energy and ancillary services offset (“E&AS Offset”). The order approves a PJM compliance filing establishing categorical exclusions for nuclear, wind and solar resources, which historically have not provided capacity reserves due to their inflexible characteristics.  The order also greenlighted a related exemption process PJM will use to determine reserve eligibility for resources that are automatically deselected, recognizing that in some circumstances nuclear, wind, and solar may be able to provide reserves.

As background, on August 5, 2020, PJM submitted a compliance filing containing revisions to its tariff to incorporate a forward-looking E&AS Offset beginning with the Base Residual Auction (“BRA”) for the delivery year commencing June 1, 2022.  The Commission accepted the compliance filing and established an effective date of May 1, 2022.

PJM’s compliance filing described which resources may provide synchronized reserves, non-synchronized