Tag: FERC

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FERC Announces Proposed Rule to Reduce Regulatory Burden for Generators that Own Generation Tie-Lines
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CFTC and FERC Begin Formal Data Sharing
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California Independent System Operator Corporation (CAISO) Proposes Transmission Tariff Changes

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.

 

CFTC and FERC Begin Formal Data Sharing

On March 5, 2014, the Commodity Futures Trading Commission (CFTC) and Federal Energy Regulatory Commission (FERC) announced that they had shared data for the first time under an information sharing Memorandum of Understanding (MOU) that was signed by the two agencies at the beginning of this year.  The purpose of the MOU is to minimize duplicative information requests when the agencies are conducting market surveillance or investigating possible manipulation, fraud or market abuse.  Congress directed the agencies to enter into the MOU as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

The data that is subject to sharing under the MOU relates to information about market participants as well as entities regulated by either agency.  Accordingly, FERC may share data concerning Regional Transmission Organizations (RTOs), Independent System Operators (ISOs), and the independent market monitor of RTOs and ISOs, which is the North American Electric Reliability Corporation (NERC).  The data subject to sharing also includes information about interstate pipelines and storage facilities, which are regulated by FERC, and designated contract markets, swap execution facilities, derivatives clearing organizations and swap data repositories, which are regulated by the CFTC.  Any data shared by the agencies remains confidential unless it is used in an enforcement proceeding.

The agencies also announced the formation of a staff level Interagency Surveillance and Data Analytics Working Group to coordinate information sharing between the agencies and focus on data security, data sharing infrastructure, and the use of analytical tools for regulatory purposes. 

Dodd-Frank mandated a second MOU between the agencies, which also was signed at the beginning of this year, that is intended to resolve conflicts concerning potential overlapping jurisdiction and avoiding conflicting or duplicative regulation.  That MOU addresses circumstances where an entity seeks, or an agency considers sua sponte, an authorization or exemption to engage in activities that the agency thinks may also come within the other agency’s jurisdiction.  This MOU has yet to be invoked.  The second MOU specifically states that it “does not expand, alter or limit the . . . [a]gencies’ respective authorities pursuant to applicable statutes and regulations.”  It therefore remains to be seen whether the agencies will cooperate and coordinate with respect to enforcement matters, or whether we will instead see the prospect of another Amaranth case with multiple actions brought by both agencies.

The agencies have taken a long time to get to this point.  Dodd-Frank provided that the MOUs should be entered into by January 2011, and they were not actually entered into until three years later.  In the interim, the CFTC gave priority to the promulgation of the dozens of regulations that it was also required to adopt under Dodd-Frank.  In addition, last April the CFTC issued Orders exempting from the Commodity Exchange Act (1) certain electric operations transactions entered into by certain government and cooperatively-owned electric utility companies, and (2) certain transactions entered into by ISOs and RTOs that are authorized by a tariff or protocol approved by FERC or the Public Utility Commission of Texas.

The implementation of the information sharing MOU was carried out while each agency is being lead by an Acting Chairman.  Hopefully, the sharing of information under the MOU signals an era of greater cooperation and coordination between FERC and the CFTC than has sometimes been the case in the past.  It will be particularly important to observe this relationship as each agency gets new permanent leadership and the Dodd-Frank regulatory structure is developed.  It is a further reminder that, even though the jurisdictional issues among international regulators arising from cross-border swap transactions have grabbed most of the market’s attention, there are jurisdictional issues among U.S. regulators that have yet to be resolved.

 

California Independent System Operator Corporation (CAISO) Proposes Transmission Tariff Changes

On January 30, 2014, the California Independent System Operator Corporation (“CAISO”) submitted proposed tariff changes to the Federal Energy Regulatory Commission (“FERC”) in Docket No. ER14-1206-000 to implement policy and process enhancements to the project sponsor competitive selection process that takes place during the third stage of CAISO’s transmission planning process. The proposed tariff changes were developed by CAISO over the past several months as part of its Competitive Transmission Improvements stakeholder initiative, which began in September 2013. The proposed tariff changes address five issues:

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