2017 – Page 7 – Global Power Law & Policy

FERC Issues Order to Delegate Further Authority to Staff in Absence of Quorum

Feb 06 2017

By Sandra Safro, William Keyser, and Molly Suda

On February 3, 2017, FERC issued an Order Delegating Further Authority to Staff in Absence of Quorum, which provides for further delegations to enable FERC to continue to carry out various obligations under the Natural Gas Act (NGA), Federal Power Act (FPA), and Interstate Commerce Act (ICA). In pertinent part, the delegation order states the following:

Delegations Generally.
- The delegations of authority are effective during the Delegation Period, which starts on February 4, 2017, and continues until 14 days after the date on which a quorum is reestablished.
- Delegations are made to the relevant office director, who may further delegate to his or her designee.
Pre-Existing Delegations. All pre-existing delegations of authority by the Commission to its staff remain effective, including the Secretary’s authority to toll the time for action on rehearing requests (also referred to as tolling orders)and the authority of the Director of Office of Energy Market Regulation (OEMR) authority to accept uncontested tariff or rate schedules that would result in rate increases.
Continuation of Activities Related to Safety. Limited Commission operations can continue, including inspecting and responding to incidents at LNG facilities and jurisdictional hydropower projects, and other activities involving the safety of human life or protection of property.
Further Delegations Regarding Rate Proceedings.
- With respect to contested rate and other filings under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA, the Director of OEMR shall have authority to:
  - Accept and suspend filings and make them effective, subject to refund and further Commission order; or
  - Accept and suspend filings and make them effective, subject to refund, and to set them for hearing or settlement judge procedures.
- With respect to initial rates or rate decreases under Section 205 of the FPA where suspension and refund protection is not available, Commission Staff may institute a proceeding to protect customer interests pursuant to Section 206 of the FPA.
- The Director of OEMR may accept uncontested settlements.
Further Delegation Regarding Uncontested Requests for Waivers. The Director of OEMR may take appropriate action on uncontested filings seeking waivers of the terms and conditions of tariffs, rate schedules, and service agreements (including requests for waiver of capacity release and capacity market rules) made under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA.
Further Delegation Regarding Extensions of Time. Commission Staff may extend the time for action on matters where extension is permitted by statute, including extensions of a 180-day period for applications for prior approval under Section 203 of the FPA.

FERC’s order is intended to prevent filings made to the Commission from going into effect by operation of law after a certain period of time as defined by statute. However, it also creates uncertainty, because any contested rate filings approved by Staff and allowed to go into effect will be subject to refund and further review by a Commission having up to three new members once a quorum is reached. It also may result in more filings being set for hearing and settlement judge proceedings, including potentially all initial rate filings that are contested.

FERC Issues Policy Statement on Cost Recovery for Electric Storage Resources, But the Devil Will Be in the “Implementation Details”

Jan 24 2017

By Molly K. Suda, William H. Holmes, and Buck B. Endemann

Last week, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued a Policy Statement to provide guidance for electric storage resource owners and operators that may seek to receive cost-based rate recovery for certain services, as well as market-based revenues for other services.[1] The Policy Statement explains that an electric storage resource may provide transmission or grid support services at a cost-based rate, while also participating in the wholesale energy markets administered by a regional transmission organization (“RTO”) or independent system operator (“ISO”) and earning market-based revenues. As described below, the Policy Statement eliminates some uncertainty created by prior FERC precedent, which limited electric storage resources’ ability simultaneously to provide transmission or grid support services at cost-based rates and also participate in the wholesale markets.

However, the path forward for electric storage resources to “stack” payment streams and recover costs through both cost-based and market-based rates will not be without obstacles. The Policy Statement acknowledges that “implementation details” will need to be addressed. Additionally, FERC Commissioner Cheryl LaFleur dissented, disagreeing with the Policy Statement’s broad statements that electric storage resources’ ability to recovery costs through both cost-based and market-based rates will not adversely impact other market competitors. Commissioner LaFleur also disagreed with the decision to address the issue of electric storage resources’ ability to recover costs through both cost-based and market-based rates in a proceeding separate from the pending Notice of Proposed Rulemaking on electric storage’s participation in RTO/ISO markets (“Electric Storage NOPR”).[2] Thus, while the Policy Statement removes some uncertainty, electric storage resources will likely still have to grapple with cost recovery, competition, and other issues on a case-by-case basis.

This alert provides background on the Commission’s prior precedent related to electric storage resources and cost-based recovery, as well as the Commission’s recent efforts in several open proceedings to address potential barriers to the further development of electric storage resources. Provided below is a summary of the Commission’s Policy Statement, as well as an overview of open questions and unresolved issues that are intertwined with issues presented in the Commission’s Electric Storage NOPR and other recent orders.

Military Urges Renewed Commitment to Renewable Energy

Jan 17 2017

By Scott Aliferis and Elana Reman

On January 12, 2017, Noblis, in partnership with the Pew Charitable Trusts, released a report on energy assurance on U.S. military bases. Cost-effective and reliable energy is crucial to the success of U.S. military missions, and the Department of Defense’s (DoD) fixed military installations account for 1 percent of the total electrical energy consumed by the United States, costing almost $4 billion. The military has long relied on the commercial grid, with standalone generators during peak use, but these sources are vulnerable to disruption due to aging infrastructure, severe weather, and both physical attacks and cyberattacks. Instead, the report proposes shifting to a strategy of large-scale microgrids. It conducts a cost comparison, addresses implementation issues, and analyzes the efficiency and security of microgrids, concluding that they would be superior to the military’s current system for supplying energy.

The Pew Charitable Trusts recently held a panel discussion, which supplements the report’s findings, focused on the intersection of national security, energy, and climate change. Three military secretaries examined past successes, and Dr. Jeff Marqusee, the Chief Scientist of Noblis and author of the report, discussed how the military could enhance its energy security going forward. The panelists argued that investment in renewable energy should continue to be a priority for the U.S. military because its goal is increasing mission assurance. The testimony was followed by a roundtable discussion and Q&A session.

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