Archive: May 19, 2014

1
Australian Government releases draft legislation to implement the Emissions Reduction Fund
2
Senate Action Halted on Tax Legislation
3
FERC Announces Proposed Rule to Reduce Regulatory Burden for Generators that Own Generation Tie-Lines

Australian Government releases draft legislation to implement the Emissions Reduction Fund

The Australian Government recently released draft legislation to implement the Emissions Reduction Fund (Fund), which is the cornerstone of the Government’s Direct Action Plan climate change policy.  The Direct Action Plan centres around the purchase of greenhouse gas emissions reductions by the Government (via the Fund).

The release of the draft Carbon Credits (Carbon Farming Initiative) Amendment Bill 2014 (Cth) (Bill) follows issuance of an Emissions Reduction Fund Green Paper late last year and a subsequent White Paper in April 2014, both regarding the design of the Fund.

The Bill will amend the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (CFI Act) and build on the existing Carbon Farming Initiative (CFI) under that Act by providing for the purchase of greenhouse gas emission reductions credits by the Government.  The Bill also makes minor amendments to associated Commonwealth legislation.

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Senate Action Halted on Tax Legislation

Senate consideration of legislation to reinstate 55 expired incentives ground to a halt on May 15. The Senate fell 7 votes short of ending a Republican filibuster. While many Republicans support the underlying package, they are opposed to efforts by Senate Majority Leader Reid to limit amendments.

The bill includes a dozen energy-related measures such as the renewable electricity production tax credit and biofuels credits.

Negotiations between key Democrats and Republicans will resume the week of May 19 in hopes of reaching an agreement to end the filibuster and allow the tax package to come up for votes. If the two sides remain at a standoff, the bill may not come up for a vote until after the November election.

 

FERC Announces Proposed Rule to Reduce Regulatory Burden for Generators that Own Generation Tie-Lines

In a Noticed of Proposed Rulemaking announced on May 16, the Federal Energy Regulatory Commission (FERC) proposed the following three reforms to reduce regulatory burdens for generators that own generation tie-lines (also known as Interconnection Customer’s Interconnection Facilities or “ICIF”) and to promote the development of generation resources, while still ensuring open access to those seeking transmission service over the ICIF:

Blanket Waiver of Certain Open Access Rules: A public utility (1) that is subject to open access transmission tariff (OATT) requirements, open access posting requirements, and FERC’s standard of conduct rules solely because it owns, controls, or operates ICIF and (2) that sells electric energy from its Generating Facility would be granted a waiver from the requirement to file an OATT and from related open access posting requirements and standard of conduct rules. Also, unlike under the current policy under which a third-party request for transmission service automatically revokes a generator’s OATT waiver, the proposed blanket waiver would not be revoked if transmission service over the ICIF is requested by a third party.

Federal Power Act (FPA) Sections 210 and 211 Apply to Third-Party Requests for Service: For a third party to obtain interconnection and transmission services on ICIF, the third-party must submit an application to FERC under Federal Power Act (FPA) sections 210 and 211, 16 U.S.C. §§ 824i-j. Sections 210 and 211 grant FERC the authority to require, respectively, the physical interconnection of a third-party’s facilities and the provision of transmission service to a third party if FERC determines that doing so is in the public interest.

Five-Year Safe Harbor Preserving Priority Transmission Rights: ICIF owners that are eligible for the proposed blanket waiver would be entitled to a rebuttable presumption that (1) they have definitive plans to use the capacity on the ICIF and (2) they should not be required to expand their facilities. The rebuttable presumption would last for a period of five years following the ICIF’s energization. However, the ICIF owner would need to make an informational filing to FERC reporting that its five-year safe harbor period had begun. The safe harbor period is intended to preserve eligible ICIF owners’ priority use, which is particularly important to generation projects that will be developed in phases.

The proposed reforms would replace FERC’s current policy of granting priority transmission rights and waivers of OATT and related open access requirements to ICIF owners on a case-by-case basis. FERC found that its current case-by-case approach has created undue risk, burden, and uncertainty for generation developers. The proposed reforms are intended to mitigate these problems while still ensuring open, non-discriminatory access to the transmission grid.

FERC’s announcement seeks comments from the industry on ways to implement and refine the proposed rule, including comments on: (1) the circumstances under which the proposed blanket waiver should not apply or might be revoked, (2) whether planned future use by an affiliate of an ICIF owner is an appropriate factor for the Commission to consider when making a priority rights determination in a Section 210 or 211 proceeding, and (3) whether the structure and length of the proposed safe harbor period is appropriate. Comments on the proposed rule will be due 60 days after the notice of the proposed rule is published in the Federal Register.

Stay tuned for more alerts from K&L Gates with more in-depth analysis of the proposed rule. If you would like to sign up to receive K&L Gates energy alerts, you can do so here.

 

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