Global Power Law & Policy

Global Power Law & Policy

Legal and policy developments affecting the global power industry

Another Step Toward North Carolina Offshore Wind: Proposed Offshore Wind Farm Lease Announced

Posted in Electricity, Energy Storage, U.S.A., Wind

The U.S. Department of the Interior has just announced the next step in the years-long process toward the development of wind energy facilities off the coast of North Carolina.  In a notice published in the Federal Register on August 16, 2016, the Bureau of Ocean Energy Management (“BOEM”) proposed the sale of commercial lease rights to develop wind energy facilities on the Outer Continental Shelf off the coast of northeastern North Carolina.  The notice can be found at: https://federalregister.gov/a/2016-19552.  The area proposed for lease encompasses approximately 122,400 acres, begins about 24 nautical miles off the Outer Banks of North Carolina, and contains 21.5 Outer Continental Shelf blocks.  This area is known as the Kitty Hawk Wind Energy Area (“WEA”) and is situated in rough proximity to the Virginia WEA that was leased by BOEM pursuant to an auction process in 2013.  A map of the proposed Kitty Hawk lease area can be found at: http://www.boem.gov/Map-Standard-Background/.  Public comments to BOEM’s notice, as well as expressions of interest in the proposed lease for the Kitty Hawk WEA, may be submitted during the 60-day comment period that ends on October 17, 2016.

To read the full alert, click here.

Regulation on Wholesale Energy Markets Integrity and Transparency – Are you REMIT Compliant?

Posted in Electricity, Europe

The regulatory and enforcement landscape of the European natural gas and electricity markets is changing considerably following the last stage in the implementation of the Regulation on Wholesale Energy Markets Integrity and Transparency (EU) No 1227/2011 (REMIT). REMIT is a European Union Regulation designed to deter market abuse in natural gas and electricity markets. It came into force on 28 December 2011, but full implementation in Member States has been phased in over the years since then. Crucial regulator enforcement powers and sanctions were introduced in the UK in 2013 and 2015, and rules relating to data reporting have become fully operational in 2016.

REMIT has introduced an EU-wide monitoring regime to detect and deter market manipulation and insider trading which may distort wholesale energy prices, potentially resulting in higher retail prices. To that end, it requires disclosure of price-sensitive information regarding energy generation, storage and transmission. REMIT provides for a shared compliance responsibility between the Agency for the Cooperation of Energy Regulators (ACER) and applicable National Regulatory Authorities (NRAs). The applicable NRA in the UK is the Office of Gas and Electricity Markets (Ofgem).

ACER and Ofgem have sent strong signals that they are primed to increase the number of investigations into suspected misconduct in Europe’s natural gas and power markets. The effect of the new reporting regime is that the regulators will have access to more data to detect market abuse, resulting in an increased likelihood of civil and/or criminal sanctions for individuals as well as corporates.

Ofgem has already engaged with some market participants about certain issues, identified through monitoring and investigation, and is cautioning companies to review their approach to compliance with REMIT.

So, who is caught by REMIT and how can a market participant protect itself from civil or criminal liability?

To read the full alert, click here.

CFTC Proposes to Permit Private Rights of Action Against RTOs and ISOs and Persons Transacting Thereon

Posted in Electricity, Regulation and Legislation

The Commodity Futures Trading Commission (CFTC) has proposed to amend its previous Order exempting specified electric energy transactions from certain provisions of the Commodity Exchange Act (CEA) and CFTC regulations and to permit a private right of action against regional transmission organizations (RTOs) and independent system operators (ISOs) and persons transacting thereon for alleged fraud and manipulation.  81 Fed. Reg. 30245 (May 16, 2016).  The CFTC stated that it did not intend in the original RTO/ISO Order, issued in 2013 (78 Fed. Reg. 19880 (April 2, 2013)), to grant exemption from the private right of action provided in CEA Section 22, but the Fifth Circuit held that this was the effect of the RTO/ISO Order in Aspire Commodities, L.P. v. GDF Suez Energy N.Am., Inc., No. 15-20125, 2016 WL 758689 (5th Cir. Feb. 25, 2016).  Therefore, were the CFTC to adopt the amendment to the RTO/ISO Order, it would in effect be overruling Aspire.  The types of transactions covered by the RTO/ISO Order include financial transmission rights, energy transactions, forward capacity transactions, and reserve or regulation transactions, and the RTO/ISO Order applies to any person or class of persons offering, entering into, rendering advice, or rendering other services with respect to these transactions. Continue Reading

CEQ Issues Final Greenhouse Gas Guidance Directing Federal Agencies to Consider Climate Change in their NEPA Reviews

Posted in Climate Change, Emissions, Regulation and Legislation, U.S.A.

On August 2, 2016, the White House Council on Environmental Quality (CEQ) published a final version of its guidance to federal agencies requiring the consideration of greenhouse gas (GHG) emissions and effects on climate change when evaluating potential impacts of a federal action under the National Environmental Policy Act (NEPA). CEQ explains that it does not expect the Final Guidance to be applied to federal actions for which a NEPA review has been concluded or actions for which a final environmental impact statement or environmental assessment has been issued. As discussed in greater detail below, although the Final Guidance is not legally binding on federal agencies, various aspects of the document have the potential to delay permitting timelines as agencies determine whether and how to incorporate the Final Guidance into their reviews and very likely will add to the level of review that agencies undertake.

To read the full alert, click here.

Puget Sound Energy Reports to the Washington UTC on the Progress of its Efforts to Join the CAISO Energy Imbalance Market; CAISO Releases Study Chronicling Benefits of a Regional Energy Market

Posted in Electricity, Public Policy, Regulation and Legislation, Renewables, Sustainability

Puget Sound Energy (“PSE”) recently presented to the Washington Utilities and Transportation Commission (“WUTC”) regarding the steps it is taking to join the California-based Energy Imbalance Market (“EIM”) this coming fall. WUTC Docket No. 151425 (July 20, 2016).  The EIM is a new energy market overseen by the California state energy balancing authority – the California Independent System Operator (“CAISO”) – that came online in November 2014.  It is intended to increase reliability and other benefits for affected costumers by coordinating the dispatch of energy generation and transmission from utilities across an expanded geographic footprint that is expected to encompass significant portions of eight western states by the end 2018. As of the end of the second quarter this year, CAISO estimates that the EIM has resulted in a $65 million gross benefit for its participants to-date.

On October 1st, PSE is scheduled to become the third out-of-state utility to join the EIM, benefiting from the earlier integration efforts of PacifiCorp (November 2014) and NV Energy (December 2015). It will then soon be followed by Arizona Public Services (2016), Portland General Electric (2017), and Idaho Power (2018), which are each at various stages along an EIM integration process that can take from 18-24 months to complete. As PSE reported at the July 20th WUTC hearing, the process requires working toward 34 separate readiness criteria that must be evidenced in a “Readiness Certification” delivered to the Federal Energy Regulatory Commission (FERC) at least 30 days prior to the scheduled “Go Live Date.”

PSE spent the majority of the presentation outlining the breadth of system integration activities that it has been working on for the last 12 months, particularly with its principal vendor, Power Costs, Inc. (PCI). PCI is providing the cloud-based software platform that PSE will use to bridge the numerous differences in network protocols and data management between its own systems and those used by the EIM. By PSE’s estimate, a total of 28 different management systems and operating protocols  have been impacted by the integration efforts, ranging from new systems for outage management and the scheduling of energy demand to increasing the modeling accuracy of resource capabilities and reprogramming the real-time meters installed at each generator on its system.

PSE is now in the “Market Simulation” phase of the integration process, where PSE is running its new system through 16 simulations designed by CAISO to test for bugs and ensure transmission reliability in various market scenarios. This phase is expected to wrap up by early August, after which PSE will begin to dispatch resources into the EIM on a small scale basis without relinquishing full control over the system (“Parallel Operations”) for the two months prior to launch. In the interim, PSE says it will continue focusing heavily on employee training to ensure a smooth transition on October 1st.  It has also launched a suite of customer education programs to answer any questions that they may have about the new system.

At the end of the presentation, the WUTC expressed its appreciation for the opportunity to learn more about this process and indicated that it would keep the docket number open for PSE to post future notices regarding any change in its plans or expectations while completing the prescribed readiness criteria. The WUTC also requested a follow-up presentation to be scheduled for sometime after the Go Live Date for a post-integration debriefing. As more utilities in Washington State weigh the costs and benefits of joining the ever expanding EIM, this will likely not be the last time this issue comes before them.

What happens next? A region-wide energy market?

While utilities around the West consider joining the EIM, CAISO is beginning to promote its vision for the next step in the evolution of the western energy markets. On July 12, CAISO released a study quantifying the potential effects of creating a multi-state, regional electric market in addition to an existing region-wide EIM. The new energy market would go beyond the real time balancing activities of the EIM to integrate the remaining market functions managed by ISO’s across the region – such as day-ahead unit commitment, day-ahead market dispatch, intra-day adjustments, and coordinated transmission planning and generator interconnections.

The CAISO study assumed the existence of a region-wide EIM market and focused exclusively on the additional benefits of implementing the integrated region-wide energy market. Based on a model that assumed a large regional footprint that includes all of the Western Electricity Coordinating Council without the federal power marketing authorities (BPA and WAPA), the study revealed the following west-wide benefits:

  • Reduction of California’s carbon dioxide emissions in 2030 by 4 to 5 million metric tons, or 8 to 10 percent of the state’s total electricity sector emissions. The western region would see a decrease of 10 to 11 million metric tons, or about 3.5 percent, in 2030.
  • The creation of 9,900 to 19,400 new jobs in California by 2030, primarily as a result of lower energy rates.
  • Lower impacts on land, water and biological resources, as more strategic planning reduces the number of transmission projects needed for reliability.
  • Lower energy costs due to smaller operating reserves.
  • Better real-time visibility of system conditions in the larger geographic footprint and enhanced management of regional power flows.
  • Increased integration of renewables and reduced need for curtailment of renewable resources by offering excess energy across the West.

Moreover, by expanding the energy grid, CAISO estimates that California would reach its 50 percent renewable energy goal while saving consumers up to $1.5 billion by 2030, lowering greenhouse gas emissions and adding jobs in California.

This comprehensive benefits study comes three months after PacifiCorp’s announcement in April that it had entered into an agreement with CAISO to explore the feasibility of PacifiCorp becoming a full participant in the CAISO market, a step that would require a full stakeholder and regulatory review in each of PacifiCorp’s jurisdictions of operation (CA, ID, OR, UT, WA, and WY). If PacifiCorp now chooses to go forward with its integration plans, state regulatory proceedings can be expected to begin as early as the fourth quarter of 2016.

FERC Issues Rule Requiring Wind Generators to Provide Reactive Power as a Condition of Interconnection

Posted in Electricity, Regulation and Legislation, U.S.A., Utilities, Wind

On June 16, 2016, the Federal Energy Regulatory Commission (the “Commission”) issued Order No. 827, which establishes reactive power requirements for all new non-synchronous generation (the “Rule”).[1]  Specifically, the Rule revises the Commission’s pro forma Large Generator Interconnection Agreement (“LGIA”) and pro forma  Small Generator Interconnection Agreement (“SGIA”) to require that newly interconnecting non-synchronous generators, including wind generators, provide dynamic reactive power pursuant to the terms of their interconnection agreements.  The Rule is the result of a Notice of Proposed Rulemaking addressing reactive power requirements that was issued by the Commission last November.

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The Washington State Department of Ecology Reissues Clean Air Rule

Posted in Clean Power Plan, Climate Change, Emissions, Regulation and Legislation, Renewables, U.S.A.

On June 1 the Washington State Department of Ecology (“Ecology”) reissued a draft Clean Air Rule (“CAR”). A prior iteration of the rule was filed on January 6, 2016, but was withdrawn by Ecology to address and incorporate feedback from stakeholders and covered parties[1]. Ecology anticipates that the revised CAR will be finalized sometime in September 2016; comments on the proposed rule are due by July 22, 2016.

Like the withdrawn rule, the intent of the reissued CAR is to establish emission standards to cap and reduce greenhouse gas (“GHG”) emissions from in-state stationary sources, petroleum product producers and importers, and natural gas distributors[2]. The CAR would cover two-thirds of all in-state GHG emissions[3], including both public and private sector parties.

According to Ecology, some of the changes in the reissued rule include “incorporating mechanisms to ensure emissions are reduced while supporting business growth; recognizing early actions already taken to reduce emissions; and an effective pathway for power plants.”[4]

Reactions to the reissued CAR have been mixed. Some stakeholders have raised concerns about the costs of implementing the program and the potential costs to energy customers. Others have asserted that the proposal would not sufficiently reduce emissions to protect the environment. [5]

Below, we address what parties could be affected by the reissued rule, how the rule would operate, and the different options for compliance[6]. We also outline the significant changes and significant omissions in the reissued CAR as well as the key dates for stakeholder input and covered party compliance.

Click here to read the full alert on K&L Gates HUB.


 

[1] Chapter 173-442 WAC, Clean Air Rule: Overview of Rulemaking, http://www.ecy.wa.gov/programs/air/rules/wac173442/1510ov.html (last visited June 6, 2016).

[2] Chapter 173-442 WAC, Clean Air Rule: Overview of Rulemaking, http://www.ecy.wa.gov/programs/air/rules/wac173442/1510ov.html (last visited June 6, 2016).

[3] Under the withdrawn and newly proposed draft rule, GHGs include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.  Proposed WAC 173-441-020(g).

[4] Ecology releases updated rule to cap carbon pollution: opportunity for public to review and comment (June 1, 2016) http://www.ecy.wa.gov/news/2016/072.html.

[5] Wash. State Says Updated Rule To Cap Carbon Pollution Will Be More Effective, Bellamy Pailthorp, KPLU, (Jun 2, 2016), http://www.kplu.org/post/wash-state-says-updated-rule-cap-carbon-pollution-will-be-more-effective.

[6] For a detailed description of the withdrawn draft CAR see Washington State Department of Ecology Proposes GHG Limits in “Clean Air Rule,” Ankur K. Tohan, Alyssa A. Moir, and Daniel Kelly-Stallings (Jan. 20, 2016) http://www.klgates.com/washington-state-department-of-ecology-proposes-ghg-limits-in-clean-air-rule-01-20-2016/.

UPDATED: Comprehensive Energy Policy Legislation A Side-by-Side Comparison of H.R. 8 & S. 2012

Posted in Governmental Affairs, Public Policy, Regulation and Legislation, U.S.A.

Linked below is our updated side-by-side comparison of the House and Senate energy bills, which are moving to conference to reconcile differences in the hope of producing a final bill.  The principal difference from our earlier side-by-side comparison is the inclusion of several natural resource and energy R&D provisions added to the House bill late last month in order to prepare the bill for conference and permit the appointment of House conferees.

This is the first comprehensive energy bill to advance this far in the legislative process in nine years.

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New Bill Planned for the Development and Funding of Offshore Wind Energy in Germany

Posted in Electricity, Europe, Generators, Regulation and Legislation, Renewables, Utilities, Wind

An introduction of bidding processes for determining the amount of funding for the generation of electricity from onshore wind turbines, offshore wind turbines and large photovoltaic systems is planned with an amendment of the German Renewable Energy Act (Erneuerbare-Energien-Gesetz).

The German government sees the transition to bidding processes as being a central instrument for attaining the goals laid down by policy makers regarding the development of the share of renewable energies in the production of electricity. The political goal is to increase the share of renewables in the amount of electricity generated to between 40% and 45% by 2025, between 55% and 60% by 2035 and at least 80% by 2050. In real terms the increase in the contribution of renewable energy to the electricity production in Germany has gone from 25.3% in 2013 to 28% in 2014 and 32.6% in 2015. It is the political will of the current government not to fall below or exceed this established scope for expansion. For this purpose the aim is to fix the tendered quantities at a level that is as accurate as possible on the one hand; on the other hand, a high realisation rate needs to be achieved with regard to the projects awarded in the context of the bidding process.

A further goal of the general introduction of bidding processes for establishing the amount of funding is to limit the funding to a level that is economically essential. In order to ensure that this amount is determined correctly by means of the planned bidding processes, a high level of competition must be achieved for these.

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Teresa A. Hill Named to National Law Journal’s “Energy & Environmental Trailblazers”

Posted in Biofuels, Energy Sourcing, Hydropower, Renewables, Solar, U.S.A., Wind

K&L Gates is pleased to congratulate our partner Teresa A. Hill on being named to the National Law Journal’s “Energy & Environmental Trailblazers.” The National Law Journal recognized lawyers across the country that have moved the needle in the energy or environmental space through devising new strategies, pioneering technological advancements, litigating landmark cases, and other innovative initiatives.

Teresa was honored for her work in the cutting edge area of corporate energy sourcing, which helps corporate customers develop and implement sustainability and carbon reduction goals through their energy strategy.

In addition to her work spearheading the K&L Gates Corporate Energy Sourcing Initiative, Teresa focuses her practice in the areas of energy and infrastructure projects and transactions with an emphasis on on wind, solar, biomass, geothermal and hydroelectric power.

Click here to read the National Law Journal feature