Regulation and Legislation – Page 3 – Global Power Law & Policy

President Trump Imposes Tariffs on Imported Solar Modules and Cells

Jan 23 2018

President Trump announced the imposition of tariffs on imported crystalline silicon photovoltaic (“CSPV”) modules and cells, as previously recommended by the U.S. International Trade Commission. The tariffs will be effective February 7, 2018.

Importers will be required to pay a tariff in the amount of 30 percent of the entered value in the first year, declining by 5 percent a year in each of the second, third, and fourth years. With respect to CSPV solar cells, the first 2.5 gigawatts imported in each year will be exempted from the tariff. These tariffs are in addition to the antidumping and countervailing duties relief previously imposed by the U.S. Department of Commerce on Chinese solar imports.

For U.S. solar developers and installers, the initial 30 percent tariff is expected to add 10 to 15 cents per watt to the final installed price. Green Tech Media Research (“GTM”) has predicted this will cause a reduction of approximately 10 percent in U.S. installed solar capacity. The tariffs do not apply to technologies other than CSPV, specifically thin film modules. Therefore manufacturers of thin film products such as Solar Frontier and First Solar may see increased relative market share.

The biggest impacts on projects are expected in the utility-scale solar sector, which is largely dependent on being competitive with other generation sources. Residential solar is viewed as more resilient and less sensitive to price changes.

Some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding. In particular, manufacturers based in Singapore or Canada may benefit, if the President’s proclamation reflects the approach taken by a majority of the ITC Commissioners to exclude these countries from the tariff program.

China, South Korea, and other countries with exports subject to the tariffs will likely file complaints before the World Trade Organization (“WTO”). It is unclear what position the current Administration would take in response to an adverse WTO decision, if any. In any case, the WTO dispute settlement process itself could take anywhere from two to four years to complete.

Companies should consider steps to mitigate impacts of these tariffs. Reportedly over two gigawatts of modules have already been procured for 2018 projects in the United States. Accessing stockpiles of solar equipment may aid in reducing economic impacts.

The formal proclamation signed today by President Trump provides for exclusion of particular products from the safeguard measure. Procedures for requests for exclusion will be published in the Federal Register within 30 days. Companies may want to review the product exclusion process and consider whether an exclusion request is warranted.

New York Signals Continued Support for Energy Storage as Governor Signs Procurement Target Legislation

Dec 08 2017

By Buck Endemann, Bill Holmes, and Mike O’Neill

On November 29, 2017, New York Gov. Andrew Cuomo (D) signed Assembly Bill A6571. Passed by the New York legislature in June 2017, this legislation directs the New York Public Service Commission (PSC) to undertake two efforts: (1) institute a proceeding to establish the Energy Storage Deployment Program within 90 days; and (2) set a target by January 1, 2018, for the installation of qualified energy storage systems across the state by 2030.

DOE Directs FERC to Issue Grid Resiliency Rules Providing Cost Recovery for Traditional Baseload Generation

Sep 29 2017

By Molly Suda, William M. Keyser, Donald A. Kaplan and Elizabeth P. Trinkle

UPDATE 10/5/17: On October 4, 2017, pursuant to authority delegated to the Director of the Office of Energy Policy and Innovation, FERC Staff issued a request that comments filed regarding DOE’s proposed rulemaking address specific questions “in order to assist Staff in understanding the implications of the proposed rule.” The request includes several categories of questions regarding the proposed rule, including the need for reform; eligibility (including with respect to the 90-day fuel supply requirement); implementation concerns; and impact on wholesale market rates. The request also asks commenters to address the timeline for compliance with a final rule; the impact of the proposed rule on consumers; and any alternative approaches that could be taken to accomplish the goals of the proposed rule.

UPDATE 10/3/17: On October 2, 2017, FERC issued a Notice Inviting Comments on DOE’s proposed rulemaking. Initial comments are due on October 23, 2017. Reply comments are due on November 7, 2017. FERC has docketed the proceeding at RM18-1-000.

On September 28, 2017, using the Secretary of Energy’s authority under Section 403 of the Department of Energy Organization Act, the Department of Energy (“DOE”) proposed a rule for final action by the Federal Energy Regulatory Commission (“FERC”). The rule would allow certain traditional baseload generators, such as coal and nuclear plants, to “fully recover costs” to maintain the reliability and resiliency of the electric grid. DOE is requiring FERC to consider and take final action on the proposed rule within 60 days after publication in the Federal Register. In the alternative, Secretary of Energy Rick Perry urges FERC to issue the proposed rule as an interim final rule, effective immediately. The proposed rule has the potential to significantly impact the wholesale electricity markets, implicate a host of issues related to pricing, and draw strong objections from the oil and gas industry.

Halftime in California — Which Climate and Environmental Bills Are on the Board?

Sep 21 2017

By Buck B. Endemann and Molly Suda

The California legislature conducts its business in two-year sessions starting on the first Monday in December following an election. Last Friday, September 15, 2017, marked the last day for the California legislature to pass bills before a long interim recess lasting until January 3, 2018. Over the past nine months, the first half of the 2017–2018 legislative session saw a flurry of bills fueled by climate goals and the speculation of eroding federal support for environmental regulation.

Below is a summary of the primary successful and not-so-successful climate and environmental bills that were debated right down to the halftime whistle. On the whole, California made incremental progress in funding clean transportation efforts and incentivizing the deployment of energy storage systems, distributed energy resources, and energy efficiency strategies. While some of California’s grander schemes like the 100% Renewable Portfolio Standard (RPS) and California Independent System Operator (CAISO) regionalization fell short, Senate President Pro Tem Kevin de León has vowed to carry those efforts into the second half of the 2017–2018 session. K&L Gates’ energy and environmental attorneys will continue to monitor California’s progress toward its bold climate and environmental goals.

Energy Department Seeks Input on Regulatory Reform

Jun 12 2017

By Tim L. Peckinpaugh, David L. Wochner, David L. Benson and Kathleen L. Nicholas

On May 30, the Department of Energy (“DOE”) published a request for information (“RFI”) soliciting guidance on potential regulations that should be modified or repealed to reduce burdens and costs. This is part of a government-wide initiative to overhaul the federal government’s regulatory regime, set in motion with an executive order signed by President Trump just after his inauguration. This RFI also comes after President Trump signed an executive order, “Promoting Energy Independence and Economic Growth,” which seeks to review all regulatory actions that hamper the domestic production of fossil fuels and nuclear energy.

To read the full alert on K&L Gates HUB, click here.

Senate Finance Committee Releases New technology-neutral Energy Credits Legislation

May 05 2017

By Elizabeth C. Crouse and Mary Burke Baker

On Thursday, Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, released new technology-neutral energy credits legislation that would revolutionize the existing Investment Tax Credit and Production Tax Credit provisions. The legislation features a graduated credit rate schedule based on the level of carbon emissions as compared to a carbon emissions baseline (keyed to “current” national average carbon emissions) that would be available without regard to technology or energy input. In a move that is consistent with cutting-edge energy innovations and responsive to the needs and concerns of many large power consumers and utilities, the credits would expressly be available for energy storage and carbon capture technology installed at power plants placed in service before January 1, 2019. Energy storage would include hydroelectric pumped storage, thermal storage, fuel cells, and–crucially–batteries, among others. Under Wyden’s legislation, the maximum credit rates would be 30% for the ITC and, for the PTC, 2.3 cents per kilowatt hour of electricity produced. In addition, the PATH Act “sunset” provisions on the PTC and ITC would be repealed and the proposal would temporarily extend other energy provisions during a transition period.

The proposed legislation would also create a technology-neutral clean fuel production credit, homeowner versions of the ITC, performance-based incentives for energy efficiency improvements to residential and commercial buildings, and clean energy bonds generally based on existing government bonds frameworks.

Although there are differences of opinion in the Congress on whether the tax code should offer energy incentives, Sen. Wyden’s proposal could come into play this year either as part of tax reform or the infrastructure debate. Senate Democrats recently released a blueprint for infrastructure that includes technology neutral energy reform.

Members of the K&L Gates LLP policy group are closely monitoring this and other tax and energy regulatory reform matters.

FERC to Discuss Interaction Between Competitive Wholesale Energy Markets and State Energy Policies

Mar 09 2017

By Molly Suda and William M. Keyser

The Federal Energy Regulatory Commission (“FERC”) has scheduled a technical conference on May 1 and 2 to discuss and obtain input on the interaction between competitive wholesale markets and state energy policies. In recent years, several states that are part of organized wholesale energy markets have adopted legislation or policies to support or promote certain generation resources or resource types. As a result of these state policy initiatives, FERC has been forced to grapple with questions about state versus federal jurisdiction and the effect of the state policies on competition and prices in the organized wholesale energy markets. The technical conference offers an open forum to discuss potential solutions and find ways to reconcile states’ interests with interests in preserving the benefits of regional competitive wholesale markets. Read More

CAISO Urges Flexibility and Coordination to Advance Distributed Energy Resource Aggregations at FERC

Feb 20 2017

By Buck B. Endemann, William M. Keyser, and Molly Suda

Introduction

As previously covered by this blog, on November 17, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) to remove barriers so that electric storage resources and distributed energy resource aggregations can better participate in the capacity, energy, and ancillary services markets operated by Regional Transmission organizations (“RTOs”) and independent system operators (“ISOs”). This post will focus on the response to those proposals submitted by the California Independent System Operator (“CAISO”), particularly as they relate to distributed energy resource aggregations.

FERC defines distributed energy resource aggregators as entities that aggregate one or more distributed energy resources, such as electric storage resources, distributed generation, thermal storage, and electric vehicles (collectively, “DERs”), and offer those resources into wholesale markets. The NOPR called for comments on what types of market rules should be established to provide DERs with more certainty and to remove barriers to entry.

The California Independent System Operator (“CAISO”) is one of the largest ISOs in the nation, responsible for managing about 80 percent of California’s electricity flow. Having recently received FERC approval of its own DER aggregation participation model, CAISO has a head start on incorporating DER aggregations into its energy and ancillary services markets.[1] In fact, in a statement issued concurrently with the NOPR, Acting FERC Chairman Cheryl LaFleur specifically identified CAISO’s DER aggregation rules as a model to study and evaluate any lessons learned from CAISO’s implementation of those rules.

CAISO submitted its comments on FERC’s proposal on February 13, 2017. With its recent experience in developing a DER program, CAISO’s comments offer insights that may guide FERC as it works toward a final rule.[2] Overall, CAISO’s comments strongly support incorporating DER aggregations into the nation’s energy and ancillary services markets, so long as each RTO/ISO is given the flexibility to develop participation models that reflect regional and regulatory preferences in generation, transmission, and distribution assets. CAISO also predicts that the roles and responsibilities of transmission and distribution operators will experience significant change in the coming years, and that FERC, electric grid operators, and market participants can best encourage innovation and resiliency by avoiding any overly-prescriptive models that stifle DER participation.[3]

FERC Issues Order to Delegate Further Authority to Staff in Absence of Quorum

Feb 06 2017

By Sandra Safro, William Keyser, and Molly Suda

On February 3, 2017, FERC issued an Order Delegating Further Authority to Staff in Absence of Quorum, which provides for further delegations to enable FERC to continue to carry out various obligations under the Natural Gas Act (NGA), Federal Power Act (FPA), and Interstate Commerce Act (ICA). In pertinent part, the delegation order states the following:

Delegations Generally.
- The delegations of authority are effective during the Delegation Period, which starts on February 4, 2017, and continues until 14 days after the date on which a quorum is reestablished.
- Delegations are made to the relevant office director, who may further delegate to his or her designee.
Pre-Existing Delegations. All pre-existing delegations of authority by the Commission to its staff remain effective, including the Secretary’s authority to toll the time for action on rehearing requests (also referred to as tolling orders)and the authority of the Director of Office of Energy Market Regulation (OEMR) authority to accept uncontested tariff or rate schedules that would result in rate increases.
Continuation of Activities Related to Safety. Limited Commission operations can continue, including inspecting and responding to incidents at LNG facilities and jurisdictional hydropower projects, and other activities involving the safety of human life or protection of property.
Further Delegations Regarding Rate Proceedings.
- With respect to contested rate and other filings under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA, the Director of OEMR shall have authority to:
  - Accept and suspend filings and make them effective, subject to refund and further Commission order; or
  - Accept and suspend filings and make them effective, subject to refund, and to set them for hearing or settlement judge procedures.
- With respect to initial rates or rate decreases under Section 205 of the FPA where suspension and refund protection is not available, Commission Staff may institute a proceeding to protect customer interests pursuant to Section 206 of the FPA.
- The Director of OEMR may accept uncontested settlements.
Further Delegation Regarding Uncontested Requests for Waivers. The Director of OEMR may take appropriate action on uncontested filings seeking waivers of the terms and conditions of tariffs, rate schedules, and service agreements (including requests for waiver of capacity release and capacity market rules) made under Section 4 of the NGA, Section 205 of the FPA, and Section 6(3) of the ICA.
Further Delegation Regarding Extensions of Time. Commission Staff may extend the time for action on matters where extension is permitted by statute, including extensions of a 180-day period for applications for prior approval under Section 203 of the FPA.

FERC’s order is intended to prevent filings made to the Commission from going into effect by operation of law after a certain period of time as defined by statute. However, it also creates uncertainty, because any contested rate filings approved by Staff and allowed to go into effect will be subject to refund and further review by a Commission having up to three new members once a quorum is reached. It also may result in more filings being set for hearing and settlement judge proceedings, including potentially all initial rate filings that are contested.

Treasury Guidance Clarifies and (Again) Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC

Dec 22 2016

By Elizabeth C. Crouse, Charles H. Purcell, Won-Han Cheng, and Alex Weber

Notice 2017-04, issued on December 15, 2016, clarifies and expands the beginning of construction and continuity safe harbors applicable to certain alternative energy projects, including wind installations. Like Notice 2016-31, released on May 5, 2016, Notice 2017-04 concerns only projects that qualify for the Production Tax Credit (“PTC”) under Code Section 45 and, by extension, many projects that qualify for the Investment Tax Credit (“ITC”) through Code Section 48(a)(5). You may read more about the provisions and consequences of Notice 2016-31 in our previous e-alert.

To read the full alert, click here.

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