• April 25, 2018

FERC Commissioners Testify on Energy Infrastructure, Resiliency, State-Federal Tensions

FERC, Regulatory
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On April 17, 2018, the five Commissioners of the Federal Energy Regulatory Commission (“FERC”) testified before the House Energy Subcommittee in a hearing titled “Oversight of the Federal Energy Regulatory Commission and FY2019 Budget.”  Chairman Kevin McIntyre, along with Commissioners Cheryl LaFleur, Neil Chatterjee, Robert Powelson and Richard Glick discussed a number of topics ranging from cyber security and grid resiliency to baseload resources, removing barriers to entry for energy storage, review of the pipeline approval process, as well as potential modifications to the Public Utility Regulatory Policies Act (“PURPA”) and the Federal Power Act (“FPA”).

Key topics and takeaways included:

  • Tension between state energy policies and wholesale electricity markets.  Chairman McIntyre commented that finding a balance between state energy policies and FERC’s jurisdiction over the wholesale markets is one of the trickiest areas the Commission faces.  He explained that states have the authority to prefer certain energy resources, and FERC has the obligation to ensure that electricity generated by these resources is
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  • March 28, 2018

Tax Reform’s Changes to the Treatment of Non-Shareholder Contributions to Capital

Development Incentives, Financing, Tax
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The 2017 tax reform act amended Section 118 of the Internal Revenue Code, to dramatically reduce the ability of a corporation to exclude from its gross income grants that the corporation receives from federal, state, or local governments or from civic groups to incentivize corporate investments. Many energy infrastructure projects benefit from exactly these kinds of incentives. Now and in the future, project developers need to be aware of and understand these changes, so that they can work to minimize the adverse consequences of the tax reform act’s amendment.

Before Tax Reform. Before the passage of the tax reform act, Section 118 provided that a corporation’s gross income did not include any contribution to the capital of the corporation. The regulations that accompanied this section explained that this exclusion applied to contributions received from persons other than shareholders (i.e., so-called “non-shareholder contributions to capital”). Thus, for example, if the government or a civic group contributed property to a corporation in order to

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  • March 15, 2018

Carbon Dioxide Capture Credit Enhanced

Biomass, Clean Energy, Development Incentives, Financing, Tax, Tax Credits
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The Bipartisan Budget Act of 2018 extended and enhanced a tax credit that incentivized carbon dioxide capture, storage, and utilization.

The enhanced credit, known as the “45Q tax credit,” offers a tax credit of up to $50 per ton for carbon oxide (not just dioxide) that is sequestered and up to $35 per ton for carbon oxide that is reutilized.  The credit amounts began at $22.66 per ton of sequestered carbon oxide and $12.83 per ton of reutilized carbon oxide in 2017, and are set to increase linearly until hitting $50 and $35 per ton of sequestered and reutilized carbon oxide, respectively, in 2026.  Businesses have six years to begin qualifying projects and have twelve years from the time they begin operations to take advantage of the credits.  For sequestered carbon oxide to qualify for the credit, it must be:

  • captured from an industrial source,
  • amounts that would otherwise be released into the atmosphere as an industrial emission,
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  • March 14, 2018

FERC Approves CASPR, ISO-NE’s New Forward Capacity Auction

Clean Energy, FERC
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On March 9, 2018, the Federal Energy Regulatory Commission (FERC), in a split decision, approved ISO-New England Inc.’s (ISO-NE) proposed tariff revisions to accommodate entry of additional clean energy resources into the Forward Capacity Market (FCM).[1]  ISO-NE’s Competitive Auctions with Sponsored Policy Resources (CASPR) revises the Forward Capacity Auction (FCA) rules to include a secondary auction to “facilitate the transfer of capacity supply obligations (CSOs) from existing capacity resources, which commit to permanently exit ISO-NE’s wholesale markets” to new, state-incentivized clean energy resources known as “Sponsored Policy Resources.”

Existing resources that shed their CSO in the substitution auction will retain a one-time “severance payment” for the difference between the clearing prices in the primary and substitution auctions.  With the exception of approved tariff changes regarding FCM settlements, CASPR takes effect immediately, to coincide with the start of the year-long auction administration cycle for FCA 13.

FERC’s order is an important one, as it approves tariff revisions that reconcile

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  • March 09, 2018

A New Incentive for Energy Infrastructure?

Development Incentives, Financing, Renewable Energy, Tax, Tax Credits
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The Tax Cuts and Jobs Act of 2017 (better known as the tax reform bill) created a significant—and little-discussed—economic development program that encourages long-term investments in so-called “Opportunity Zones” by offering temporary tax deferral for capital gains re-invested in the Opportunity Zone and a permanent exclusion for gains from the Opportunity Zone investment.  This program has the potential to be one of the most significant economic development programs in the country and has broad applicability to a variety of industries.  Any person or business seeking to invest capital, raise capital, or that will recognize significant capital gains in the next few years should be aware of the benefits of this program.

What are Opportunity Zones?  Opportunity Zones are low-income areas (determined on a census tract basis), which are designated by the governor of each state as Opportunity Zones.  Each governor must designate his or her state’s Opportunity Zones from the pool of eligible low-income census tracts and certain contiguous tracts.[1] 

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  • February 27, 2018

FERC has Options if Court of Appeals Seeks to Shut Down an Operating Interstate Pipeline

FERC, Natural Gas Pipelines, Regulatory
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Can an interstate natural gas pipeline continue to operate if a court vacates its certificate authorizations?

On January 31, 2018, in Sierra Club v. FERC, No. 16-1329 (D.C. Cir.), the United States Court of Appeals for the District of Columbia Circuit denied rehearing  and rehearing  en banc (before the full court) of petitions for rehearing filed by the Federal Energy Regulatory Commission (“FERC”) and jointly by Duke Energy Florida, Florida Power & Light, Florida Southeast Connection, Sabal Trail Transmission, and Transcontinental Gas Pipe Line (the “Supporting Intervenors”).  The court’s orders raise the possibility that the court will issue its mandate and vacate FERC’s orders granting certificates of public convenience and necessity authorizing the construction and operation of the Florida Southeast Connection pipelines, which are currently transporting natural gas to power plants in Florida. If the court issues the mandate, FERC and the pipeline operators will be faced with whether, and if so how, the pipelines can continue

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  • February 23, 2018

Welcome to the Energy Infrastructure Blog!

Acquisition, Biogas, Biomass, Construction, Development Incentives, Energy Storage, Financing, Hydropower, Offshore Power, Permitting, Regulatory, Renewable Energy, Siting, Solar Power, Tax, Tax Credits, Tidal Power, Wind Power
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Welcome to the Energy Infrastructure Blog – EI Blog, for short – Pierce Atwood’s new blog that will provide information and analysis on the key policy and legal issues relevant to energy infrastructure policy, development, and finance in New England and beyond.  Pierce Atwood has assembled a team of legal practitioners from diverse practice areas who focus on all aspects of developing, buying, and selling energy infrastructure projects, and who also recognize that understanding both the fundamentals and trends in this ever-changing area is essential for developers, investors, policymakers, and interested members of the public.  We look forward to sharing our insights with you. 

Why an energy infrastructure blog – and why now?

We may not always think about it, but the mixed generation fleets, as well as the electricity transmission and distribution network that “keep the lights on” throughout New England are integral parts of everyone’s everyday lives.  Policymakers, lawyers, and

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