The Trump Administration will take office intent on reversing many Obama Administration policies. Although the Trump Administration’s publicly released 100-day plan does not announce a new energy policy, campaign promises and priorities of the Republican-controlled Congress suggest a number of early initiatives that will impact the power sector. Moreover, the Trump transition team for the Department of Energy signaled a variety of potential energy policy priorities in requesting information from the outgoing Obama Administration. The impacts of these regulatory and legislative initiatives will need to be evaluated against the backdrop of market, technology, international, and consumer driven dynamics that are transforming the power sector independent of federal law and policy. The Covington Energy Group will be watching closely the new Administration’s and Congress’ initiatives and evaluating their significance in altering or reinforcing the transformative changes sweeping the power sector. Below, we identify the more prominent expected initiatives from the new Administration.
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U.S. Supreme Court Confirms FERC’s Broad Jurisdictional Reach over Demand Response and other Activities that Affect Wholesale Electricity Markets
In FERC v. EPSA, issued on January 25, 2016, the U.S. Supreme Court ruled, in a 6-2 decision, that FERC has jurisdiction under the Federal Power Act (FPA) to regulate demand response transactions in wholesale electricity markets administered by independent system operators (ISOs) and regional transmission organizations (RTOs). The Court also upheld, as reasoned decision-making, FERC’s determination that ISOs/RTOs should pay the same compensation (i.e., the market clearing price) to generators and demand response resources participating in the day-ahead and real-time energy auction markets. In so holding, the Supreme Court may have paved the way for FERC to provide regulatory incentives for other emerging electricity transactions and practices that blur the historical distinction between FERC-regulated wholesale sales and state-regulated retail sales.
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A Watch List of Possible Changes in EPA’s Final Clean Power Plan
In August, EPA is expected to finalize and to modify its ambitious Clean Power Plan to reduce greenhouse gas emissions from existing power plants. Here is a Watch List of key areas for possible changes and clarification that EPA might make, after considering voluminous public comments on the Proposed Regulations, which were issued in June 2014:
- Timelines for State Implementation. Will EPA relax the level of interim requirements for emission reductions by 2020 (or 2022, as suggested in recent press reports) and allow each state a more gradual or back-loaded schedule to meet final targets by 2030?
- Timelines for Filing State Implementation Plans. Will EPA delay or ease the threshold for granting waivers of the one-year requirement for filing single-state implementation plans or two-years for multi-state implementation plans?
- Credits for Early Action. Will EPA enable states to obtain credits or adjustments in baseline periods for early emission reduction actions that have already occurred or for acceleration of emission reductions achieved prior to 2020?
- Adjustments to the Four Building Blocks. Will EPA modify the four building blocks used to calculate each state’s achievable emission reductions, including changes in assumptions regarding achievable emission reductions under each building block?
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Supreme Court Decisions Raise Questions about Future Judicial Scrutiny of EPA’s Clean Power Plan
Two of the Supreme Court’s major, end-of-term decisions turn on the deference the Court gives to agency determinations of the meaning of ambiguous clauses in complex regulatory statutes, applying the familiar Chevron framework. The Court’s less deferential applications of Chevron raise important questions about the deference courts might be expected
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U.S. Appeals Court Rejects, as Premature, Challenge to EPA’s Clean Power Plan
Today, the United States Court of Appeals for the District of Columbia Circuit refused to review challenges of EPA’s authority to adopt comprehensive regulations of carbon emissions from exiting power plants. A coal company, joined by 12 States, had asked the Court of Appeals to prohibit EPA from finalizing its
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