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Update on EPA’s Clean Power Plan

Apr 27 2016

Late last month, the United States Environmental Protection Agency (“EPA”) submitted briefs to the United States Court of Appeals for the District of Columbia in support of its Clean Power Plan (“CPP”) rule. The agency’s briefs were filed in response to a challenge against the rule brought by industry groups and states (“Petitioners”). Amici curiae briefs on both sides of the issue were also filed by several cities, states, advocacy groups, and companies. The D.C. Circuit will hear oral arguments on the legality of the CPP in June. In February, the United States Supreme Court stayed the implementation of the CPP until the resolution of these legal challenges.

FERC Staff Seeks Comments on Participation of Electric Storage Resources in Wholesale Electricity Markets

Apr 22 2016

Last week, the Federal Energy Regulatory Commission (“FERC”) opened a proceeding in Docket No. AD16-20 for FERC Staff to consider a wide range of issues related to electric storage resources, including whether barriers exist in the United States’ organized wholesale energy markets that are frustrating the participation of electric storage resources in those markets and leading to unjust and unreasonable wholesale electricity prices. The new proceeding was also a topic of discussion during FERC’s monthly meeting on Thursday, April 21, 2016, with each Commissioner expressing significant interest in the energy storage issues to be considered and studied by FERC Staff. For purposes of the proceeding, FERC Staff has taken a broad view of electric storage resources, defining such resources to include all facilities “that can receive electric energy from the grid and store it for later injection of electricity back to the grid . . . regardless of their size and storage medium, or whether they are interconnected to the transmission system, distribution system, or behind a customer meter.”

To kick-off the proceeding, FERC Staff sent letters to California Independent System Operator Corp., ISO New England, Inc., Midcontinent Independent System Operator, Inc., New York Independent System Operator , PJM Interconnection L.L.C., and Southwest Power Pool, Inc. (collectively, the “RTOs and ISOs”), requesting that by May 2, 2016, they submit information about current market rules and procedures applicable to electric storage resources’ participation in each respective market. In a concurrent notice issued in the same docket, FERC Staff also invited other comments on whether current market rules are blocking the participation of electric storage resources in the organized markets and whether there are specific rule changes that could facilitate the participation of such resources. FERC Staff is asking other commenters to specifically address the RTOs’ and ISOs’ May 2, 2016 responses, and set May 23, 2016 as the deadline for such other comments. The types of data requested from the RTOs and ISOs and the related topics on which FERC Staff is seeking comment are outlined below.

Eligibility to participate in the organized wholesale electric markets. FERC Staff has asked each of the RTOs and ISOs to explain whether electric storage resources are currently eligible to participate in capacity, energy, and/or ancillary services markets, and if not, what justifies their ineligibility. FERC Staff is also seeking comments on whether clarification of particular market rules or tariff provisions would remove undue barriers to the participation of electric storage resources.
Minimum technical criteria and performance requirements to participate in the organized wholesale electric markets. In addition to requesting information from the RTOs and ISOs on the current technical criteria and performance requirements (e.g., minimum capacity sizes, bid sizes, or run times) that must be met to participate in the wholesale markets, FERC Staff is seeking input on whether certain technical criteria or performance requirements are unjustified and unfairly prevent market participation by electric storage resources. FERC Staff has also requested input on alternative minimum criteria or eligibility requirements and the potential effect of such alternatives on system reliability and market operations.
Bid parameters applicable to electric storage resources. The operational capabilities of electric storage resources to receive, store, and later sell electricity distinguish electric storage resources from conventional generation. Thus, FERC Staff is seeking input on whether current market rules for bid parameters could and should be revised to better reflect electric storage resources’ operational capabilities, and whether making such revisions would improve RTOs’ and ISOs’ ability to model and dispatch electric storage resources. Given the broad array of technologies encompassed by FERC Staff’s definition of electric storage resources, FERC Staff also asks that commenters address whether specific technologies warrant different bid parameters or whether a general set of rules could apply to all types of electric storage resources.
Electric storage resources interconnected at the distribution level and aggregation of electric storage resources. FERC Staff recognized that electric storage resources may be able to participate in the wholesale markets despite being interconnected at the distribution level. Therefore, FERC Staff is seeking input on what market opportunities are or should be available for distribution-connected electric storage resources and the impact of electric storage resources participating in the wholesale markets while simultaneously providing distribution-level services. FERC Staff has also asked the RTOs, ISOs, and other commenters to address opportunities and means to aggregate multiple electric storage resources into a single resource that serves as the wholesale market participant.
Energy purchases by electric storage resources and pricing of energy purchases by electric storage resources. FERC Staff asked the RTOs and ISOs to explain the current bid requirements for electric storage resources that are purchasing energy and whether they must pay the locational marginal price for their energy purchases or instead pay a different rate for their receipt of energy from the grid. FERC Staff is also interested in understanding whether the appropriate pricing of energy purchases may be affected by what services the electric storage resources are providing or whether the electric storage resources is interconnected to the transmission system, distribution system, or behind the meter.

This proceeding is yet another signal that energy storage issues are at the forefront of FERC’s regulatory initiatives. As noted in a prior blog post, FERC is already scheduled, in a technical conference on May 13, 2016, to address issues and potential impediments to the interconnection of electric storage resources. Parties interested in the development and deployment of electric storage resources will want to be involved in these proceedings and keep a close eye on the issues raised by commenters. These proceedings and the issues spotlighted for FERC could be precursors to new rulemakings and regulatory changes with the potential to affect the development and direction of new or expanded markets and revenues streams for electric storage resources. We will certainly be monitoring these proceedings and will keep you posted.

Next Steps for Community Solar After the Passage of Oregon’s Landmark Clean Energy Legislation

Apr 12 2016

Oregon’s landmark “Clean Electricity and Coal Transition Plan,” Senate Bill 1547 (SB 1547), was recently signed into law by Governor Kate Brown. Among other things, the new law increases Oregon’s renewable portfolio standard to 50 percent by 2040 and requires Oregon’s investor-owned utilities to eliminate coal-fired resources from the electricity allocated to Oregon’s ratepayers by 2030. We will be posting an analysis of the new law shortly, but in this post we wanted to focus on the part of SB 1547 that will establish a community solar program in Oregon.

U.S. Senate Currently Debating Legislation to Reauthorize the FAA, Extend Energy Tax Credits

Apr 11 2016

The U.S. Senate is currently debating legislation to reauthorize the Federal Aviation Administration (FAA). It is likely that the bill will contain a tax title including energy tax provisions. There is increasing support for an extension of the Investment Tax Credit for biomass, geothermal and fuel cells. Also under discussion are other proposals, including tax credits for biofuels, carbon capture and sequestration.

Some conservative groups are voicing opposition to any renewable energy tax provisions. However, key Senate Republicans and Democrats indicate that an agreement is close.

Timing for House action on a FAA bill and possible tax title is unclear.

We will provide an update next week.

Washington State Legislation May Facilitate Cost Recovery for Coal Plant Retirement

Apr 05 2016

With a partial veto from Governor Inslee on April 1, 2016, Washington State has enacted legislation that may help Puget Sound Energy (PSE) recover costs associated with the decommissioning and remediation of its interest in the Colstrip coal-fired plant, which is located southwest of Billings, Montana. PSE owns half of the older two units of the Colstrip plant. Engrossed Substitute Senate Bill (SB) 6248 expressly authorizes the Washington Utilities and Transportation Commission (WUTC), after a hearing, to allow a utility to “to place amounts from one or more regulatory liabilities into a retirement account” for decommissioning and remediation costs for the older two units. Thus the WUTC now has the express authority to allow PSE to use certain tax credits to help cover decommissioning and remediation costs at the Colstrip plant instead of returning those tax credits to customers over time.

FERC Schedules Technical Conference to Explore Generator Interconnection Issues

Apr 01 2016

On March 29, 2016, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Technical Conference announcing that it will hold a technical conference on May 13, 2016, to explore generator interconnection issues faced by interconnection customers, transmission owners and transmission operators across the United States. The issues discussed during the technical conference could have significant implications for the generator interconnection process.

Robert J. Grey Joins K&L Gates

Mar 30 2016

K&L Gates is pleased to announce that Robert J. Grey has joined the firm as partner in the Washington, D.C. office.

Bob Grey has 40 years of energy and utility law experience, advising on regulatory, compliance, and corporate governance matters, as well as on various business acquisitions and mergers and spinoff initiatives. A member of our Energy practice and the Global Boardroom Risk Solutions initiative, Bob will focus on issues involving senior corporate leaders and board members. He joins the firm from PPL Corporation, where he served as executive vice president, general counsel, and chief legal officer. Previously, he was a partner at K&L Gates legacy firm Preston Gates & Ellis LLP.

Read the press release here.

Critical Habitat and the Endangered Species Act: Newly Enacted Regulations Threaten to Expand the Government’s Role and Discretion in the Permitting Process

Mar 02 2016

In the summer of 2014, we reported on the U.S. Fish and Wildlife Service’s and the National Marine Fisheries Service’s (collectively, the “Services”) proposed changes to regulations implementing the Endangered Species Act (“ESA”). As we indicated then, the proposals had the potential to expand the need to consult with the Services under the ESA, thereby making it possibly more difficult, time-consuming, and expensive to obtain permits from federal agencies such as the U.S. Army Corps of Engineers. Among the proposed changes was an amendment to the definition of “destruction or adverse modification” of critical habit.

Not quite two years later, on February 11, 2016, the Services issued a final rule adopting a new definition of “destruction or adverse modification” under the ESA. The new rule takes effect on March 14, 2016. According to the Services, it should not alter the ESA consultation process and does not require the reevaluation of “previously completed biological opinions.” As we foreshadowed in summer 2014, however, the new rule could impact the amount and substantive results of future consultations with the Services.

Read the full alert on K&L Gates HUB

High Court Grants Stay of Clean Power Plan

Feb 10 2016

On February 9, 2016, in an historic and unprecedented decision, the U.S. Supreme Court blocked the U.S. Environmental Protection Agency (“EPA”) from implementing the Clean Power Plan (“CPP”) while the rule is challenged in lower courts. The decision is a victory for twenty-nine states and state agencies, along with several industry and trade groups (the “Petitioners”), who appealed the D.C. Circuit’s January 21, 2016 decision not to stay the CPP.

The Petitioners argued to the Supreme Court that the EPA does not have the Clean Air Act authority to implement the CPP, which they assert would reorganize the entire electric power sector of the U.S. economy. The petitioners persuaded the U.S. Supreme court that there was a reasonable probability that four justices would agree to hear the case, that there was a fair prospect that the majority of the court would find that the CPP was unlawful, and that irreparable harm would have resulted from the denial of the stay.

FERC Issues Staff White Paper on Guidance Principles for Clean Power Plan Modeling; Suggests Stakeholder Engagement to Consider Reliability Issues

Feb 02 2016

On January 19, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Staff White Paper[1] outlining four guiding principles to assist transmission planning entities – including regional transmission organizations (“RTOs”), independent system operators (“ISOs”) and electric utilities – in analyzing the Clean Power Plan (“CPP”) promulgated by the U.S. Environmental Protection Agency (“EPA”).[2] The CPP requires each state to demonstrate that it has considered electric system reliability issues in developing its state emissions reduction plan. The EPA explained that one particularly effective way for states to make such a demonstration is by consulting with the relevant RTO, ISO, or other transmission planning entities and documenting this consultation process in their state plans.

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