In a recent order, FERC pulled back, for now, its decision to sharply limit the ability of retail regulators to prohibit distributed energy resource (DER) aggregators from bidding retail customer demand response (DR) into wholesale markets. Instead, the issue will be considered in an ongoing inquiry that is addressing whether to totally eliminate the ability of retail regulators to keep retail DR resource offers out of FERC-jurisdictional wholesale markets.
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FERC Focusing On Electric Transmission Incentives
FERC recently took two actions regarding its transmission rate incentives policies. FERC proposed to scale back an earlier proposed increase in the return on equity (ROE) premium allowed in the rates of transmission owners that join Transmission Organizations such as RTOs/ISOs and proposed to clamp limits on its term. The Commission also scheduled a workshop to address performance-based incentives for transmission technology deployment. Both actions were taken in the context of a March 2020 Notice of Proposed Rulemaking (NOPR) aimed at, in part, awarding rate incentives for certain beneficial transmission investments.
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FERC Upholds Rule Opening Electricity Markets to Distributed Resource Aggregators and Acts to Restrict State Regulator Interference
In two recent orders, the Federal Regulatory Energy Commission (FERC) continued its push to enable distributed energy resource (“DER”) aggregators to compete in organized wholesale electricity markets. DERs are located on the distribution system or behind the customer meter, and include electric storage resources, intermittent generation, distributed generation, demand response, energy efficiency, thermal storage, and electric vehicles and their charging equipment. Aggregators may aggregate multiple small DERs as a single resource to compete in the market.
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FERC to Address Electrification and the Grid of the Future
FERC has opened a proceeding regarding the shift from non-electric to electric sources of energy at the point of final consumption, such as to fuel vehicles and to provide heating and cooling, including process heat at industrial facilities. To that end, FERC announced an April 29, 2021 conference “to initiate a dialog between Commissioners and stakeholders on how to prepare for an increasingly electrified future.”
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FERC Rule: Some Fuel Cell Facilities May Qualify as QFs
The Federal Energy Regulatory Commission (FERC) has opened the door for fuel cell systems with integrated hydrocarbon reformation equipment to be certified as Qualifying Facility cogenerators under the Public Utility Regulatory Policies Act of 1978 (PURPA). The agency adopted a final rule that amends the definition of the useful thermal output of a QF cogenerator so that such fuel cell systems may qualify.
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FERC Proposes QF Status for Some Fuel Cell Facilities
The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) that would allow certain Solid Oxide Fuel Cell (SOFC) systems to be certified as Qualifying Facilities under the Public Utility Regulatory Policies Act of 1978 (PURPA) and thus receive regulatory benefits meant, in part, to encourage the innovation and development of cogeneration facilities. The proposal applies to SOFC systems that use heat and steam to convert natural gas to hydrogen, which then reacts with oxygen in the fuel cell to produce electricity, and then uses some of the heat and steam produced to continue converting methane into hydrogen to produce additional electricity.
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FERC Revises PURPA Rules
The FERC recently issued a final rule (Order No. 872) revising its regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA), which encourages the development of certain renewable and cogeneration facilities. PURPA, and FERC’s rules implementing it, establish benefits to those facilities by obligating electric utilities to purchase electricity from them. As discussed in a prior post to this blog, FERC considered reforming its regulations due in part to changes in the electric power industry over the last several decades.
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FERC Requests Comments on Grid Cybersecurity Initiatives
The Federal Energy Regulatory Commission (FERC) recently signaled that it is exploring ways to improve the cybersecurity of the U.S. electricity grid. On June 18, 2020, FERC issued a Notice of Inquiry (NOI) regarding whether some of its reliability standards regarding cybersecurity must be enhanced and whether the focus of its standards must change due to the threat of a coordinated cyberattack targeting geographically distributed generation resources. On June 18, 2020, FERC also issued a staff paper that suggests a framework for providing incentives in transmission rates for cybersecurity investments.
These FERC actions may presage regulatory actions that could have material operational and cost implications for all grid participants. Accordingly, FERC is seeking comments on both documents with deadlines of August 24, 2020 for the NOI and August 17, 2020 for the staff paper. Major grid participants would be well advised to evaluate the NOI and staff paper and consider responding to FERC’s request for comments.
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FERC Carbon Pricing Conference Set
The Federal Energy Regulatory Commission (FERC) has scheduled a conference on September 30, 2020 regarding carbon pricing in organized wholesale electricity markets. According to the conference notice, the purpose is to discuss “considerations related to state adoption of mechanisms to price carbon dioxide emissions…in regions with FERC-jurisdictional organized wholesale electricity markets.” This conference should be of significant interest to a wide range of market participants and their investors, plus consumers of electricity, state policymakers and other diverse interests.
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FERC Plans Conference on COVID-19 Impacts
The Federal Energy Regulatory Commission (“FERC”) has announced plans to hold a two-day technical conference on July 8-9, 2020 regarding the ongoing impacts that the emergency conditions caused by COVID-19 are having on the United States’ energy industry. FERC’s stated objective is to ensure the continued functioning of energy markets, electricity transmission, transportation of natural gas and oil and energy infrastructure reliability.
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