FERC

The Federal Energy Regulatory Commission (FERC) has announced two conferences to address issues raised by the increasing deployment of electric storage resources and their use in electricity markets.  One conference will address a proposal by a Regional Transmission Operator (RTO) to treat an electric storage facility as a transmission-only resource if it can resolve specific transmission issues.  The second conference will discuss issues raised by hybrid resources, i.e., a storage resources paired with a generation resources.  These conferences should be of interest to a wide range of electricity market participants, including utilities, generation companies, customers and investors in storage and other electricity resources.
Continue Reading FERC Conferences to Address Electric Storage Issues

The Federal Energy Regulatory Commission (FERC) has proposed substantial changes to its policies for awarding ratemaking incentives for new transmission investment.  The most fundamental change is that FERC would no longer award incentives based on a proposed project’s risks and challenges but would instead award them based on its economic and reliability benefits.  In addition, the incentive for a higher return on equity for project investment would be potentially more generous than under the current policy.  FERC’s proposal should be of interest to utilities, transmission-only companies, market participants who pay transmission rates, customers and investors interested in developing transmission projects.
Continue Reading FERC Considering Changes to Transmission Incentives

The Midcontinent Independent System Operator (MISO), a Regional Transmission Organization (RTO), has proposed to the Federal Energy Regulatory Commission (FERC) tariff provisions that would treat electric storage facilities as transmission-only facilities if they provide the preferred solution to a transmission issue in MISO’s regional planning process.  This is the first such proposal by a wholesale electric market operator.  Up to now, storage facility requests to qualify as transmission facilities have been few and case-specific.  Treatment as a transmission resource provides additional deployment opportunities for storage resources and allows them cost recovery through cost-based transmission rates instead of relying on energy market revenues.  Standardized tariff-based terms and conditions for qualifying as a transmission resource should provide an easier path to such treatment.
Continue Reading Proposal to Treat Electric Storage as Transmission Now Before FERC

As described previously in this blog, FERC in 2018 adopted a rule aimed at clearing away obstacles to participation by electric storage resources in wholesale markets administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).[1]  FERC has issued orders addressing the compliance filings of two RTOs: the PJM Interconnection (PJM) and Southwest Power Pool (SPP).  The FERC compliance orders will be of keen interest to storage resources and other market participants in PJM and SPP.
Continue Reading FERC Approves Electric Storage Resource Practices in Two Regions

The FERC recently issued a Notice of Proposed Rulemaking (NOPR) to reform its regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA), which encourages the development of certain small generation and cogeneration facilities.  PURPA and FERC’s rules implementing it over the years establish a number of benefits to those facilities and set obligations for electric utilities to purchase electricity from them.  FERC now concludes that, due to changes in the electric power industry over the last several decades, it is time to revise some of its PURPA rules.  But FERC’s proposals are certain to be controversial.  Notably, one of the three FERC Commissioners dissented from the NOPR.

The NOPR should be of interest to a wide range of electricity market participants, including utilities and investors in cogeneration and certain types of small scale generation facilities.
Continue Reading FERC Proposes Changes To PURPA Rules

FERC has streamlined its rules so that generators in the organized markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) no longer need to demonstrate a lack of horizontal market power in order to charge flexible market-based rates.  Instead, FERC will rely on existing market monitoring and mitigation measures in place in those markets to guard against exercises of market power.  This rule will be of interest to power generators; it will significantly simplify the market power filings required of generating resources in RTO/ISO markets.

The new rule was proposed earlier this year, as described in a post on this blog.  FERC adopted the rule as proposed but made a few minor clarifications.
Continue Reading FERC Lowers Regulatory Burdens for Electricity Sellers in RTO/ISO Markets

The Federal Energy Regulatory Commission (FERC) has issued an order denying all requests for rehearing of its rule aimed at clearing away obstacles to participation by electric storage resources in wholesale markets administered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).[1]  Electric storage resources often complement renewable resources when the sun is not shining and the wind is not blowing.  Easing the entry of storage is likely to have a growing impact on electricity markets and the mix of resources used to meet demand in those markets.  Accordingly, FERC’s action should be of interest to a wide range of electricity market participants including utilities, generation companies, and investors in storage and other electricity resources and electricity customers.
Continue Reading FERC Denies Rehearing on Electricity Storage Rule

Setting the return on equity (ROE) that utility stockholders may earn from providing certain services, primarily electric transmission and pipeline services, is a fundamental aspect of FERC’s cost-of-service regulatory regime.[1]  FERC has used the same basic method to determine ROE since the 1980s but recently made some reforms that applied to a few electric transmission cases.  Now FERC has issued a Notice of Inquiry (NOI) seeking public comments regarding those reforms and whether reforms should also be applied to interstate gas and oil pipelines.

The ROE along the with debt interest rate is applied to a utility’s invested capital in setting the revenue to be collected by rates and is a principal driver of profitability.  By the same token, an appropriate ROE policy that balances both investor and consumer interests is critical to achieving FERC’s overarching mission of ensuring just and reasonable rates.  Accordingly, changes in the way FERC sets the ROE should be of great importance to energy consumers and to any company or investor with an interest in an electric utility, gas pipeline, or oil pipeline that is subject to FERC’s cost-of-service regulation.
Continue Reading FERC Considering Reforms to ROE Determinations

FERC has approved a final rule that sets a $10 million threshold for requiring FERC prior approval of public utility mergers and consolidations and requires public utilities to simply notify FERC of mergers and consolidations with a value over $1 million but less than $10 million.  The changes place mergers and consolidations under the same value threshold as other types of transactions and eliminate the need for low-value mergers and consolidations to secure FERC approval.  This new rule will be of interest to entities that anticipate merging or consolidating facilities that are subject to the jurisdiction of FERC.
Continue Reading FERC Approves Notice Requirement For Public Utility Mergers and Acquisitions Under New Monetary Threshold

FERC recently proposed to streamline its market power rules so that generators in markets operated by Regional Transmission Organizations and Independent System Operators would no longer need to demonstrate a lack of horizontal market power in order to charge flexible market-based rates.  Instead, FERC will rely on the existing market monitoring and mitigation measures approved for those markets to guard against exercises of market power.

This proposal will significantly simplify the regular market power filings required of generating resources in RTO/ISO markets.  FERC estimates that, after the proposal is in effect, the total estimated annual reduction in cost burden to respondents will be $2,226,388, or $42,406 per respondent
Continue Reading FERC Proposes to Reduce Regulatory Burdens for Electricity Sellers in RTO/ISO Markets