Category: The Americas

1
Executive Order Directs Federal Agencies to Reconsider Federal Initiatives Focused on Greenhouse Gas Emissions and Climate Change
2
Oregon Lawmakers Consider Carbon Pricing Legislation
3
WUTC Proposes Changes to Planning Paradigms and IRP Models for Energy Storage Technologies
4
MassCEC Solicits Proposals for Innovative Energy Storage Uses Cases and Business Models
5
Avangrid Wins Latest BOEM Auction for Offshore North Carolina Lease and Moves Towards Full Commercial Lease
6
Developers Submit Unsolicited Requests for Wind Leases Offshore Massachusetts and New York
7
FERC to Discuss Interaction Between Competitive Wholesale Energy Markets and State Energy Policies
8
Cyber-physical Attacks on Critical Infrastructure: What’s Keeping Your Insurer Awake at Night?
9
CAISO Urges Flexibility and Coordination to Advance Distributed Energy Resource Aggregations at FERC
10
FERC Issues Order to Delegate Further Authority to Staff in Absence of Quorum

Executive Order Directs Federal Agencies to Reconsider Federal Initiatives Focused on Greenhouse Gas Emissions and Climate Change

By William J. Moltz, David J. Raphael, Sandra E. Safro, Ankur K. Tohan, Michael L. O’Neill                     

President Donald Trump signed an Executive Order on March 28, 2017, entitled “Promoting Energy Independence and Economic Growth” (“Order”), which is designed to prompt reconsideration, and in some cases revocation, of the Obama Administration’s actions to address greenhouse gas emissions and climate change.  The Order directs several federal agencies to review, and possibly withdraw, specific policy initiatives like the Environmental Protection Agency (“EPA”) Clean Power Plan rulemaking and the U.S. Department of the Interior (“Interior”) 2015 and 2016 rules on oil and gas production on federal lands.  In addition, the Order directs the U.S. Council on Environmental Quality (“CEQ”) to rescind its 2016 final guidance document regarding the consideration of greenhouse gas emissions and climate change impacts in environmental reviews performed under the National Environmental Policy Act (“NEPA”).  More broadly, the Order also directs all federal agencies to review “all agency actions” that “potentially burden the development or use of domestically produced energy resources.”

As discussed in greater detail below, the Order may have far-reaching implications for U.S. policy on energy production, greenhouse gas regulation, and climate change that could have spillover impacts for energy infrastructure development.  A vigorous debate is certain to follow with interested stakeholders evaluating strategic options including notice and comment rulemaking, litigation, and legislative advocacy.

To read the full alert on K&L Gates HUB, click here.

Oregon Lawmakers Consider Carbon Pricing Legislation

By Ankur K. Tohan, Alyssa A. Moir, Buck B. Endemann, Christina A. Elles

This is the second installment in the West Coast Carbon Policy Update — Three Part Series, which will examine carbon policies along the West Coast in Washington, Oregon, and California.

On March 28, 2017 President Trump signed an executive order instructing the Environmental Protection Agency to withdraw and rewrite the Clean Power Plan, but lawmakers in Oregon are pushing ahead with statewide efforts to reduce greenhouse gas (“GHG”) emissions. Oregon lawmakers are currently considering several carbon pricing bills — including a cap-and-trade program, a carbon tax, a cap-and-fee program, and a GHG emission rule issued by the state’s environmental agency — that will add a pricing component to the state’s GHG goals.

To read the full alert on K&L Gates HUB, click here.

 

WUTC Proposes Changes to Planning Paradigms and IRP Models for Energy Storage Technologies

By Vanessa Pronovost, Eric Jay, Molly Suda, and William Holmes

The Washington State Utilities and Transportation Commission (the “WUTC”) has issued a Draft Report and Policy Statement on Treatment of Energy Storage Technologies in Integrated Resource Planning and Resource Acquisition (the “Draft Report”) in connection with two consolidated dockets, UE-151069 and U-161024 (the “Dockets”).  The Draft Report is intended to provide useful guidance regarding energy storage technologies to investor-owned utilities (“IOUs”), vendors seeking to promote energy storage for use by IOUs, and anyone interested in the use of energy storage on electric distribution systems.  The WUTC is seeking comments to the Draft Report by 5:00 pm on Monday, April 3, 2017 for the WUTC’s consideration in preparing its final policy statement on the Dockets.

Before issuing the Draft Report, the WUTC held two formal workshops and solicited two rounds of comments.  Commenters generally agreed that current integrated resource planning (“IRP”) models are inadequate for purposes of capturing the benefits of energy storage technologies.  The following is a summary of the WUTC’s conclusions and guidance with respect to investments in energy storage technologies.

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MassCEC Solicits Proposals for Innovative Energy Storage Uses Cases and Business Models

By William H. Holmes, Molly Suda, and Michael L. O’Neill

On March 9, 2017, the Massachusetts Clean Energy Center (MassCEC) issued a Request for Proposals for the “Advancing Clean Energy Storage” (ACES) Program.  MassCEC is offering up to $10 million in funding for energy storage demonstration projects that “pilot innovative, broadly replicable energy storage use cases/business models with multiple value streams in order to prime Massachusetts for increased commercialization and deployment of storage technologies.”  The organization expects to make 10-15 awards of between $100,000 and $1,250,000 each. Applications are due to MassCEC by 4 pm Eastern Time on June 9, 2017.

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Avangrid Wins Latest BOEM Auction for Offshore North Carolina Lease and Moves Towards Full Commercial Lease

By Stanford D. Baird, Joseph D. Condo, Ankur K. Tohan, David L. Wochner, Michael L. O’Neill

Following an auction on March 16, 2017, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) named Avangrid Renewables, LLC (Avangrid) the provisional winner of the auction.  Avangrid, majority owned by global energy firm Iberdrola, S.A., outbid three other auction participants to secure rights to a 122,405-acre area off the coast of Kitty Hawk, North Carolina.  Avangrid and BOEM will now work to finalize the provisional lease and continue to develop the project.

BOEM has not scheduled any other lease auctions for offshore wind projects on the Outer Continental Shelf.  However, as this month’s unsolicited bids for offshore Massachusetts and New York demonstrate, businesses remain interested in developing offshore wind projects with or without an open lease application solicitation.  Therefore, in addition to submitting unsolicited lease applications, there is an opportunity to advocate at the federal level with the Trump Administration and BOEM to continue the leasing program on the Outer Continental Shelf and to continue advocating for state-level incentives for offshore wind projects.

The Auction Process and the Winning Bid
Following years of preparation, BOEM announced its plans to hold the North Carolina Outer Continental Shelf lease in January 2017.  Nine bidders pre-qualified as “eligible bidders” under BOEM’s auction rules.  Four companies participated in the March 16 auction:

  • Avangrid
  • Statoil Wind US LLC
  • Wind Future LLC
  • wpd offshore Alpha LLC (wpd offshore)

The bidding lasted 17 rounds, with Avangrid and wpd offshore both bidding more than $8 million in the 16th round.  Avangrid’s 17th round bid of $9,066,650 successfully secured the provisional win for Avangrid.

Next Steps for the North Carolina Lease and Beyond
Part 585 of the Code of Federal Regulations lays out the next steps for finalizing the lease for the offshore North Carolina block.  First, the U.S. Department of Justice and the Federal Trade Commission will review BOEM’s auction process.  Then Avangrid must execute the lease, file financial assurance, and pay the balance of the “bonus bid” (the difference between the winning bid and the applicable bid deposit) within 10 days of receiving the lease documents.

Once the lease is finalized, Avangrid will have one year to submit its Site Assessment Plan (SAP) to BOEM.  The SAP describes the initial activities the leaseholder will undertake to evaluate the lease site (federal guidance available here).  If approved, BOEM’s regulations allow Avangrid five years to develop and submit a Construction and Operations Plan for BOEM’s approval, although the plan must be filed at least six months prior to the end of this five-year period.  A Construction and Operations Plan outlines the facilities that the leaseholder plans to construct and use for its project, as well as construction activities, commercial operations, and decommissioning plans (additional federal guidance here).   Once the Construction and Operations Plan is filed, BOEM will evaluate the potential environmental impacts of the proposed project and reasonable alternatives, as well as solicit public comment.  If BOEM approves the Construction and Operations Plan, Avangrid would have a 25-year commercial lease term with the possibility of renewal.

More broadly, the North Carolina offshore wind lease auction was the last pending open auction.  BOEM has evaluated potential commercial leasing and received indications of commercial interest in other Outer Continental Shelf areas, such as offshore California, Hawaii, and South Carolina, but the agency has not set a timetable for announcing any further competitive lease auctions.  In the absence of an open auction, interested parties may submit unsolicited lease applications in accordance with 30 C.F.R. § 585.230.

There is also an opportunity to advocate for additional competitive Outer Continental Shelf lease auctions with the Trump Administration.  President Donald Trump’s “America First: A Budget Blueprint to Make America Great Again” proposes a 12 percent cut to the Department of the Interior’s budget, suggesting that agencies like BOEM within the Department may be de-emphasized under the new Trump Administration.  In contrast, Secretary of the Interior Ryan Zinke called the results of last week’s North Carolina auction a “big win for collaborative efforts with state, local, and private sector partners,” so the Trump Administration, as well as legislators in Congress, may be disposed to support continued offshore wind development as this year’s federal budget debate unfolds.

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Developers Submit Unsolicited Requests for Wind Leases Offshore Massachusetts and New York

By Stanford D. Baird, Joseph D. Condo, Ankur K. Tohan, David L. Wochner, and Michael L. O’Neill

On March 10, 2017, the U.S. Department of Interior’s Bureau of Ocean Energy Management (BOEM) posted four unsolicited applications for wind project leases on the Outer Continental Shelf.  PNE Wind U.S.A., Inc. has filed three lease applications, two for offshore Massachusetts and one for offshore New York.   Separately, Statoil Wind US LLC filed a lease application for offshore Massachusetts.

The developers’ lease requests, particularly the overlapping requests for offshore Massachusetts, indicate continued interest and growing competition in the U.S. offshore wind sector.  The quickening pace of activity in the U.S. offshore wind market, including completion of Deepwater Wind’s Block Island offshore wind farm and today’s auction process for offshore North Carolina, suggests that offshore wind projects may become a more important part of the U.S. power generation portfolio in the coming years.  In addition, the unsolicited application for offshore New York and the federal government’s response may provide an early indication as to the Trump Administration’s position on offshore wind development going forward.  Increased activity and a new administration in the White House present opportunities to engage on this issue and shape the policies that will govern the federal offshore leasing program for the next four or eight years, or beyond. Read More

FERC to Discuss Interaction Between Competitive Wholesale Energy Markets and State Energy Policies

By Molly Suda and William M. Keyser

The Federal Energy Regulatory Commission (“FERC”) has scheduled a technical conference on May 1 and 2 to discuss and obtain input on the interaction between competitive wholesale markets and state energy policies. In recent years, several states that are part of organized wholesale energy markets have adopted legislation or policies to support or promote certain generation resources or resource types.  As a result of these state policy initiatives, FERC has been forced to grapple with questions about state versus federal jurisdiction and the effect of the state policies on competition and prices in the organized wholesale energy markets. The technical conference offers an open forum to discuss potential solutions and find ways to reconcile states’ interests with interests in preserving the benefits of regional competitive wholesale markets.     Read More

Cyber-physical Attacks on Critical Infrastructure: What’s Keeping Your Insurer Awake at Night?

By James E. Scheuermann

Cyber-physical attacks on critical infrastructure that have the potential to damage those physical assets and to cause widespread losses to third parties are keeping your insurer awake at night.  A cyber-physical attack on critical infrastructure occurs when a hacker gains access to a computer system that operates equipment in a manufacturing plant, oil pipeline, a refinery, an electric generating plant, or the like and is able to control the operations of that equipment to damage those assets or other property.  A major cyber-physical attack on critical infrastructure is a risk not only for the owners and operators of those assets, but also for their suppliers, customers, businesses and persons in the vicinity of the attacked asset, and any person or entity that may be adversely affected by it (e.g., hospital patients and shareholders).

Because damages caused by a cyber-physical attack can be widespread, massive, and highly correlated, affecting multiple sectors of the economy and many lines of insurance, the insurance industry is giving this risk heightened attention.  The U.K. insurance marketplace Lloyd’s, London and the University of Cambridge, for example, conducted a major study of the losses resulting from a hypothetical cyber-physical attack on 50 electrical generators in the Northeast U.S. Other insurance market participants have also published reports addressing cyber-physical risks to critical infrastructure.  The insurance industry’s focus on cyber-physical risks perhaps should be action-guiding for corporate policyholders as well.

To read the full alert on K&L Gates HUB, click here.

CAISO Urges Flexibility and Coordination to Advance Distributed Energy Resource Aggregations at FERC

By Buck B. Endemann, William M. Keyser, and Molly Suda

Introduction

As previously covered by this blog, on November 17, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) to remove barriers so that electric storage resources and distributed energy resource aggregations can better participate in the capacity, energy, and ancillary services markets operated by Regional Transmission organizations (“RTOs”) and independent system operators (“ISOs”).  This post will focus on the response to those proposals submitted by the California Independent System Operator (“CAISO”), particularly as they relate to distributed energy resource aggregations.

FERC defines distributed energy resource aggregators as entities that aggregate one or more distributed energy resources, such as electric storage resources, distributed generation, thermal storage, and electric vehicles (collectively, “DERs”), and offer those resources into wholesale markets.  The NOPR called for comments on what types of market rules should be established to provide DERs with more certainty and to remove barriers to entry.

The California Independent System Operator (“CAISO”) is one of the largest ISOs in the nation, responsible for managing about 80 percent of California’s electricity flow.  Having recently received FERC approval of its own DER aggregation participation model, CAISO has a head start on incorporating DER aggregations into its energy and ancillary services markets.[1]  In fact, in a statement issued concurrently with the NOPR, Acting FERC Chairman Cheryl LaFleur specifically identified CAISO’s DER aggregation rules as a model to study and evaluate any lessons learned from CAISO’s implementation of those rules.

CAISO submitted its comments on FERC’s proposal on February 13, 2017.  With its recent experience in developing a DER program, CAISO’s comments offer insights that may guide FERC as it works toward a final rule.[2]  Overall, CAISO’s comments strongly support incorporating DER aggregations into the nation’s energy and ancillary services markets, so long as each RTO/ISO is given the flexibility to develop participation models that reflect regional and regulatory preferences in generation, transmission, and distribution assets.  CAISO also predicts that the roles and responsibilities of transmission and distribution operators will experience significant change in the coming years, and that FERC, electric grid operators, and market participants can best encourage innovation and resiliency by avoiding any overly-prescriptive models that stifle DER participation.[3]

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

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.

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