Tag: Federal Power Act

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FERC Issues Order to Delegate Further Authority to Staff in Absence of Quorum
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FERC Issues Proposed Policy Statement Clarifying the Use of Hold Harmless Commitments in Section 203 Applications
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FERC Announces Proposed Rule to Reduce Regulatory Burden for Generators that Own Generation Tie-Lines

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.

FERC Issues Proposed Policy Statement Clarifying the Use of Hold Harmless Commitments in Section 203 Applications

On January 22, 2015, the Federal Energy Regulatory Commission (“Commission”) issued a Proposed Policy Statement on Hold Harmless Commitments (“Policy Statement”), in which it proposed changes to the basis on which it will review transactions subject to Section 203 of the Federal Power Act (“FPA”).[1]  Specifically, the Policy Statement proposes clarifications to the rules regarding the identification of transaction-related costs and use of hold harmless commitments, which are often included in Section 203 applications for transactions involving traditional franchised public utilities as a means of demonstrating that a proposed transaction will not adversely affect ratepayers.  As part of a hold harmless commitment, an applicant typically commits not to seek recovery of transaction-related costs in Commission-jurisdictional rates unless the applicant can demonstrate that the costs are off-set by transaction-related savings.  The Commission must ensure that a proposed transaction does not have an adverse impact on jurisdictional rates and has traditionally allowed applicants to use a hold harmless commitment to satisfy this prong of the Commission’s analysis.  Read More

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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