Tag: FERC

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FERC Proposes Reforms to Large Generator Interconnection Procedures and Agreements
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FERC Proposes New Rules to Make Room for Storage in Wholesale Electricity Markets
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CFTC Proposes to Permit Private Rights of Action Against RTOs and ISOs and Persons Transacting Thereon
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FERC Issues Rule Requiring Wind Generators to Provide Reactive Power as a Condition of Interconnection
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FERC Issues Order Extending Deadlines for Energy Storage Comments
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FERC Staff Seeks Comments on Participation of Electric Storage Resources in Wholesale Electricity Markets
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FERC Schedules Technical Conference to Explore Generator Interconnection Issues
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FERC Issues Staff White Paper on Guidance Principles for Clean Power Plan Modeling; Suggests Stakeholder Engagement to Consider Reliability Issues
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FERC Finds ISO New England’s Formula Rates and Accompanying Tariff Provisions to be Unjust and Unreasonable
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FERC Proposes Rule That Would Require Wind Generators to Provide Reactive Power as a Condition of Interconnection

FERC Proposes Reforms to Large Generator Interconnection Procedures and Agreements

By William M. Keyser and Elizabeth P. Trinkle

On December 15, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) to revise Parts 35 and 37 of its regulations, as well as the pro forma Large Generator Interconnection Procedures (“LGIP”) and pro forma Large Generator Interconnection Agreement (“LGIA”).  The proposed reforms are designed to improve certainty, promote more informed interconnection, and enhance interconnection processes.

The pro forma LGIP and LGIA establish the terms and conditions by which public utilities subject to the Federal Power Act must provide interconnection service to Large Generating Facilities.  FERC defines “Large Generating Facilities” as facilities with generating capacity greater than 20 MW.  While FERC has previously undertaken steps to reduce undue discrimination in the generator interconnection process, interconnection customers have continued to express concerns regarding inefficiencies and discriminatory practices.  Moreover, FERC proposes that recent changes to the resource mix, the emergence of new technologies, changes to state and federal policies, and challenges with the interconnection study process warrant reforms.  Based, in part, on input received from stakeholders following a 2015 technical conference on these issues, the NOPR identifies reforms to benefit both interconnection customers through timely and cost-effective interconnection and transmission providers by mitigating the potential for re-studies associated with late-stage interconnection request withdrawals.

Specifically, FERC proposes reforms that focus on improving aspects of the pro forma LGIP and LGIA, the pro forma Open Access Transmission Tariff, and the Commission’s regulations.  These reforms fall into three broad categories:  (1) reforms intended to improve certainty in the interconnection process; (2) reforms intended to improve transparency by providing more information to interconnection customers; and (3) reforms intended to enhance interconnection processes.  FERC requests comment from interested stakeholders on specific issues related to development and implementation of each of the proposals within these three broad areas of reform.  An overview of FERC’s proposals and request for comment on each area of reform are summarized below.

Comments on the NOPR will be due 60 days from publication in the Federal Register.  A copy of the NOPR is available here.

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FERC Proposes New Rules to Make Room for Storage in Wholesale Electricity Markets

By Molly Suda and Elizabeth Trinkle

On November 17, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) to amend Section 35.28 of its regulations.  The proposed amendment would remove barriers to the participation by electric storage resources and distributed energy resource aggregations in the capacity, energy, and ancillary service markets operated by regional transmission organizations (“RTOs”) and independent system operators (“ISOs”).  FERC defines “electric storages resources” as resources capable of receiving electric energy from the from the grid and storing it for later injection back to the grid regardless of where the resource is located on the electrical system.  Electric storage resources include all types of electric storage technologies, such as batteries, flywheel, compressed air and hydro-pump.  “Distributed energy resource aggregators” are defined as entities that aggregate one or more distributed energy resources (including electric storage resources, distributed generation, thermal storage and electric vehicles) for participation in the RTO/ISO wholesale markets.

Specifically, FERC proposes in the NOPR that each RTO and ISO revise its tariff to (1) establish market rules that accommodate the participation of electric storage resources in the organized wholesale electric markets and (2) define distributed energy resource aggregators as a type of market participant that can transact in the organized wholesale electric markets.

The NOPR includes a number of high-level proposals, and FERC requests comment from interested stakeholders on specific issues related to development and implementation of these proposals.  An overview of the NOPR and FERC’s key areas of interest for comment are summarized below.

Comments on the NOPR will be due 60 days from publication in the Federal Register.  A copy of the NOPR is available here.

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CFTC Proposes to Permit Private Rights of Action Against RTOs and ISOs and Persons Transacting Thereon

By Lawrence Patent

The Commodity Futures Trading Commission (CFTC) has proposed to amend its previous Order exempting specified electric energy transactions from certain provisions of the Commodity Exchange Act (CEA) and CFTC regulations and to permit a private right of action against regional transmission organizations (RTOs) and independent system operators (ISOs) and persons transacting thereon for alleged fraud and manipulation.  81 Fed. Reg. 30245 (May 16, 2016).  The CFTC stated that it did not intend in the original RTO/ISO Order, issued in 2013 (78 Fed. Reg. 19880 (April 2, 2013)), to grant exemption from the private right of action provided in CEA Section 22, but the Fifth Circuit held that this was the effect of the RTO/ISO Order in Aspire Commodities, L.P. v. GDF Suez Energy N.Am., Inc., No. 15-20125, 2016 WL 758689 (5th Cir. Feb. 25, 2016).  Therefore, were the CFTC to adopt the amendment to the RTO/ISO Order, it would in effect be overruling Aspire.  The types of transactions covered by the RTO/ISO Order include financial transmission rights, energy transactions, forward capacity transactions, and reserve or regulation transactions, and the RTO/ISO Order applies to any person or class of persons offering, entering into, rendering advice, or rendering other services with respect to these transactions.

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FERC Issues Rule Requiring Wind Generators to Provide Reactive Power as a Condition of Interconnection

By Ben Tejblum and William Keyser

On June 16, 2016, the Federal Energy Regulatory Commission (the “Commission”) issued Order No. 827, which establishes reactive power requirements for all new non-synchronous generation (the “Rule”).[1]  Specifically, the Rule revises the Commission’s pro forma Large Generator Interconnection Agreement (“LGIA”) and pro forma  Small Generator Interconnection Agreement (“SGIA”) to require that newly interconnecting non-synchronous generators, including wind generators, provide dynamic reactive power pursuant to the terms of their interconnection agreements.  The Rule is the result of a Notice of Proposed Rulemaking addressing reactive power requirements that was issued by the Commission last November.

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FERC Issues Order Extending Deadlines for Energy Storage Comments

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.

FERC Staff Seeks Comments on Participation of Electric Storage Resources in Wholesale Electricity Markets

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.

FERC Schedules Technical Conference to Explore Generator Interconnection Issues

On March 29, 2016, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Technical Conference announcing that it will hold a technical conference on May 13, 2016, to explore generator interconnection issues faced by interconnection customers, transmission owners and transmission operators across the United States. The issues discussed during the technical conference could have significant implications for the generator interconnection process.

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FERC Issues Staff White Paper on Guidance Principles for Clean Power Plan Modeling; Suggests Stakeholder Engagement to Consider Reliability Issues

On January 19, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Staff White Paper[1] outlining four guiding principles to assist transmission planning entities – including regional transmission organizations (“RTOs”), independent system operators (“ISOs”) and electric utilities – in analyzing the Clean Power Plan (“CPP”) promulgated by the U.S. Environmental Protection Agency (“EPA”).[2]  The CPP requires each state to demonstrate that it has considered electric system reliability issues in developing its state emissions reduction plan.  The EPA explained that one particularly effective way for states to make such a demonstration is by consulting with the relevant RTO, ISO, or other transmission planning entities and documenting this consultation process in their state plans.

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FERC Finds ISO New England’s Formula Rates and Accompanying Tariff Provisions to be Unjust and Unreasonable

On December 28, 2015, the Federal Energy Regulatory Commission (“FERC”) issued an order pursuant to Section 206 of the Federal Power Act (“FPA”)[1] finding that the ISO New England Inc.’s Transmission, Markets and Service Tariff (“Tariff”) is unjust, unreasonable, and unduly discriminatory or preferential.  FERC’s determination was based on a finding that the Tariff lacks formula rate protocols and, by extension, lacks adequate transparency and challenge procedures with regard to the formula rates used by the ISO New England Participating Transmission Owners (“PTOs”).[2]  FERC also found that the formula rates themselves may be unjust and unreasonable or otherwise unlawful because the formula rates appear to lack sufficient detail to accurately determine how certain costs are derived and recovered.

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FERC Proposes Rule That Would Require Wind Generators to Provide Reactive Power as a Condition of Interconnection

In a Notice of Proposed Rulemaking issued on November 19, 2015, the Federal Energy Regulatory Commission (the “Commission”) proposed to eliminate the exemption currently available to wind generators from the requirement to provide reactive power.[1] The proposed rule would require that all newly interconnecting synchronous and non-synchronous generators, including wind generators, provide reactive power pursuant to the terms of their interconnection agreements. Additionally, any existing wind generators will be required to provide reactive power if they propose facility upgrades requiring a new interconnection request. Comments on the NOPR are due by the end of January 2016.

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