On May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q. The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, and also favorably modifies several key factors of both requirements. In addition, on May 18, the U.S. Treasury Department released a revised version of Notice 2016-31, which states that the provisions of Notice 2016-31 apply to any project for which a taxpayer claims the PTC or, via Code Section 48(a)(5), the ITC, that is placed in service after January 2, 2013.
The United States Fish and Wildlife Service recently proposed revisions to its regulations authorizing take of bald and golden eagles.
The Bald and Golden Eagle Protection Act (“BGEPA”) imposes criminal and civil penalties against “whoever . . . shall take . . . any bald . . . or any golden eagle, alive or dead, or any part, nest, or egg thereof . . . .” “Take” is broadly defined to mean “pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, molest or disturb.” The United States has expressed its intent to pursue companies that violate BGEPA.
Earlier today, May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q. The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, but also creates a few new provisions that apply to renewable energy projects seeking the PTC or ITC after the PATH Act revisions to the Internal Revenue Code.
In July 2015, comprehensive bills that would modernize U.S. energy policy for the first time since 2007 were introduced in the House and Senate. Notwithstanding their respective controversies, both bills started their legislative journeys with bipartisan support. That same month, the Senate reported their bill (S. 2012) out of Committee 18-4, and the House bill (H.R. 8) passed unanimously through the Energy and Power Subcommittee.
In the House, the bipartisan spirit appeared to wane in August and September. The House’s bill lost much of its bipartisan support in the wake of a substitute amendment offered by Chairman Fred Upton (R-MI). On September 30, the Energy and Commerce Committee marked the Upton substitute, which was reported out of committee on a largely party-line vote, 32-20. Ranking Member Frank Pallone (D-NJ) promised the Republicans that without the bipartisan concessions, H.R. 8 could be vetoed by the President. And, indeed, after the bill passed through the full Committee, the White House released an official veto threat against the legislation. Democrats’ attempts at amending the bill on the floor largely failed. The bill ultimately passed the House in December by a predominantly party-line vote of 249-174, with only nine Democrats voting in favor.
Back in the Senate, S. 2012 first received floor consideration in late January 2016. The bill’s sponsors and party leadership were hopeful that, in spite of the anticipated introduction of potentially controversial amendments, the bipartisan spirit of the bill would remain intact throughout floor consideration. This spirit did largely prevail until the Senators from Michigan insisted that the bill’s passage be contingent on Federal funds for Flint, MI, to address its lead water crisis. Majority Leader Mitch McConnell (R-KY) eventually pulled the bill from the floor after it failed to overcome a procedural motion. The Michigan Senators continued negotiations with Senators Lisa Murkowski (R-AK) and Jim Inhofe (R-OK) to come to an agreement on Flint. Finally, in April, an agreement came together and S. 2012 was brought back to the floor. After the consideration of final amendments, the chamber passed the bill by an overwhelmingly bipartisan vote of 85-12.
Up next, the two chambers will form a formal conference committee where they will reconcile the many differences between the two bills. Both Rep. Upton and Sen. Murkowski have expressed eagerness in getting the bill to the President before the summer recess, which starts July 16. There is a lot of work yet ahead, but it is expected that efforts will get underway within the coming weeks. As the Chairperson of the Senate’s committee of jurisdiction, Sen. Murkowski will “hold the gavel” for the conference committee since the House held control of the proceedings during the last major energy bill conference in 2007. Sen. Murkowski’s optimism and perseverance during the months-long Flint negotiations highlight her ability and willingness to work with her Democratic partner, Sen. Maria Cantwell (D-WA), to accomplish this overhaul legislation and present a final package to the President that is not only comprehensive but bipartisan in nature.
In preparation for conference, we updated our side-by-side comparison of the House- and Senate-passed energy bills. Our analysis shows 20 issue areas that overlap between the House and Senate energy bills. Those commonalities are charted in the attached side-by-side comparison. This overlap highlights that while the House Democrats cried partisanship during their markup, the House bill still has plenty of similarities to the bipartisan Senate bill.
Following the chart of commonalities is a list of provisions unique to S. 2012 and then a list unique for H.R. 8.
To view the side-by-side comparison, click here.
As an update to our earlier post on FERC’s latest proceeding related to electric storage resources, on April 27, 2016, FERC issued an order extending the deadline for RTOs and ISOs to submit their responses to FERC’s data requests. The RTOs’ and ISOs’ responses are now due on May 16, 2016. FERC also granted an extension to June 6, 2016 for other comments.
The Public Utility Commission of Oregon (the “Commission” or “OPUC”) has scheduled a workshop on May 9, 2016 to assist the Commission with its task of adopting guidelines that utilities are to use when drafting and submitting energy storage proposals under House Bill (HB) 2193. The workshop was scheduled in response to a Commission-request at the March 30, 2016 prehearing conference in Docket No. UM 1751, which was opened in compliance with HB 2193. At the prehearing conference, Administrative Law Judge Ruth Harper informed the parties that the Commission wanted the proceeding to start with a Commission workshop to address the purpose and content of the guidelines, as well as the range of viable projects. Read More
Late last month, the United States Environmental Protection Agency (“EPA”) submitted briefs to the United States Court of Appeals for the District of Columbia in support of its Clean Power Plan (“CPP”) rule. The agency’s briefs were filed in response to a challenge against the rule brought by industry groups and states (“Petitioners”). Amici curiae briefs on both sides of the issue were also filed by several cities, states, advocacy groups, and companies. The D.C. Circuit will hear oral arguments on the legality of the CPP in June. In February, the United States Supreme Court stayed the implementation of the CPP until the resolution of these legal challenges.
Last week, the Federal Energy Regulatory Commission (“FERC”) opened a proceeding in Docket No. AD16-20 for FERC Staff to consider a wide range of issues related to electric storage resources, including whether barriers exist in the United States’ organized wholesale energy markets that are frustrating the participation of electric storage resources in those markets and leading to unjust and unreasonable wholesale electricity prices. The new proceeding was also a topic of discussion during FERC’s monthly meeting on Thursday, April 21, 2016, with each Commissioner expressing significant interest in the energy storage issues to be considered and studied by FERC Staff. For purposes of the proceeding, FERC Staff has taken a broad view of electric storage resources, defining such resources to include all facilities “that can receive electric energy from the grid and store it for later injection of electricity back to the grid . . . regardless of their size and storage medium, or whether they are interconnected to the transmission system, distribution system, or behind a customer meter.”
To kick-off the proceeding, FERC Staff sent letters to California Independent System Operator Corp., ISO New England, Inc., Midcontinent Independent System Operator, Inc., New York Independent System Operator , PJM Interconnection L.L.C., and Southwest Power Pool, Inc. (collectively, the “RTOs and ISOs”), requesting that by May 2, 2016, they submit information about current market rules and procedures applicable to electric storage resources’ participation in each respective market. In a concurrent notice issued in the same docket, FERC Staff also invited other comments on whether current market rules are blocking the participation of electric storage resources in the organized markets and whether there are specific rule changes that could facilitate the participation of such resources. FERC Staff is asking other commenters to specifically address the RTOs’ and ISOs’ May 2, 2016 responses, and set May 23, 2016 as the deadline for such other comments. The types of data requested from the RTOs and ISOs and the related topics on which FERC Staff is seeking comment are outlined below.
- Eligibility to participate in the organized wholesale electric markets. FERC Staff has asked each of the RTOs and ISOs to explain whether electric storage resources are currently eligible to participate in capacity, energy, and/or ancillary services markets, and if not, what justifies their ineligibility. FERC Staff is also seeking comments on whether clarification of particular market rules or tariff provisions would remove undue barriers to the participation of electric storage resources.
- Minimum technical criteria and performance requirements to participate in the organized wholesale electric markets. In addition to requesting information from the RTOs and ISOs on the current technical criteria and performance requirements (e.g., minimum capacity sizes, bid sizes, or run times) that must be met to participate in the wholesale markets, FERC Staff is seeking input on whether certain technical criteria or performance requirements are unjustified and unfairly prevent market participation by electric storage resources. FERC Staff has also requested input on alternative minimum criteria or eligibility requirements and the potential effect of such alternatives on system reliability and market operations.
- Bid parameters applicable to electric storage resources. The operational capabilities of electric storage resources to receive, store, and later sell electricity distinguish electric storage resources from conventional generation. Thus, FERC Staff is seeking input on whether current market rules for bid parameters could and should be revised to better reflect electric storage resources’ operational capabilities, and whether making such revisions would improve RTOs’ and ISOs’ ability to model and dispatch electric storage resources. Given the broad array of technologies encompassed by FERC Staff’s definition of electric storage resources, FERC Staff also asks that commenters address whether specific technologies warrant different bid parameters or whether a general set of rules could apply to all types of electric storage resources.
- Electric storage resources interconnected at the distribution level and aggregation of electric storage resources. FERC Staff recognized that electric storage resources may be able to participate in the wholesale markets despite being interconnected at the distribution level. Therefore, FERC Staff is seeking input on what market opportunities are or should be available for distribution-connected electric storage resources and the impact of electric storage resources participating in the wholesale markets while simultaneously providing distribution-level services. FERC Staff has also asked the RTOs, ISOs, and other commenters to address opportunities and means to aggregate multiple electric storage resources into a single resource that serves as the wholesale market participant.
- Energy purchases by electric storage resources and pricing of energy purchases by electric storage resources. FERC Staff asked the RTOs and ISOs to explain the current bid requirements for electric storage resources that are purchasing energy and whether they must pay the locational marginal price for their energy purchases or instead pay a different rate for their receipt of energy from the grid. FERC Staff is also interested in understanding whether the appropriate pricing of energy purchases may be affected by what services the electric storage resources are providing or whether the electric storage resources is interconnected to the transmission system, distribution system, or behind the meter.
This proceeding is yet another signal that energy storage issues are at the forefront of FERC’s regulatory initiatives. As noted in a prior blog post, FERC is already scheduled, in a technical conference on May 13, 2016, to address issues and potential impediments to the interconnection of electric storage resources. Parties interested in the development and deployment of electric storage resources will want to be involved in these proceedings and keep a close eye on the issues raised by commenters. These proceedings and the issues spotlighted for FERC could be precursors to new rulemakings and regulatory changes with the potential to affect the development and direction of new or expanded markets and revenues streams for electric storage resources. We will certainly be monitoring these proceedings and will keep you posted.
Oregon’s landmark “Clean Electricity and Coal Transition Plan,” Senate Bill 1547 (SB 1547), was recently signed into law by Governor Kate Brown. Among other things, the new law increases Oregon’s renewable portfolio standard to 50 percent by 2040 and requires Oregon’s investor-owned utilities to eliminate coal-fired resources from the electricity allocated to Oregon’s ratepayers by 2030. We will be posting an analysis of the new law shortly, but in this post we wanted to focus on the part of SB 1547 that will establish a community solar program in Oregon.
The U.S. Senate is currently debating legislation to reauthorize the Federal Aviation Administration (FAA). It is likely that the bill will contain a tax title including energy tax provisions. There is increasing support for an extension of the Investment Tax Credit for biomass, geothermal and fuel cells. Also under discussion are other proposals, including tax credits for biofuels, carbon capture and sequestration.
Some conservative groups are voicing opposition to any renewable energy tax provisions. However, key Senate Republicans and Democrats indicate that an agreement is close.
Timing for House action on a FAA bill and possible tax title is unclear.
We will provide an update next week.