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Alliant Becomes First to Try for EPAct Waiver QF Purchase Requirement

In mid-August Alliant Energy asked FERC to exempt two of Alliant's utilities, Interstate Power and Light Co. (IPL) and Wisconsin Power and Light Co. (WPL) from the QF purchase requirements contained in the Public Utility Regulatory Policy Act (PURPA). The filing came just days after the passage of the Energy Policy Act of 2005 (EPAct 2005), and took advantage of a provision in the EPAct 2005 amending PURPA and providing for waiver of QF purchase requirements if FERC finds the service territory of the utility seeking exemption to be competitive. The waiver is based on the reasoning that when...

FERC Approval of Sea Breeze Merchant Cable Project May Open Door to More Transmission

In a move intended to induce development of new or upgraded transmission, FERC has approved the proposal of Sea Breeze Pacific Juan de Fuca Cable LP to run a merchant transmission line between Washington State and Vancouver, British Columbia. As the first merchant line approved that will not be part of an existing RTO or ISO, the approval signals that FERC has become more receptive to such projects. Sea Breeze is comprised of two phases. The first, set for completion in winter 2007, connects a British Columbia Transmission Corp. substation in Victoria, B.C. with a Bonneville Power Authority...

FERC to Reprise Open Access Nearly Ten Years after Its Launch

Finding that today's electric industry has changed considerably since it "functionally unbundled" transmission services nearly a decade ago in Order No. 888 , FERC questions in a recent Notice of Inquiry (NOI) whether that bold step has sufficiently overcome the "economic self-interest of transmission monopolists, particularly those with high-cost generation assets, to deny transmission or offer transmission on a basis that is inferior to that which they provide to themselves." By opening this inquiry, FERC acknowledges that the efficacy of "functional unbundling" (as opposed to structural...

Constellation, Progress Energy Join Growing Number of Utilities Considering New Nuclear Projects

In the wake of the Energy Policy Act of 2005 , a growing number of new nuclear projects are in the works, as both Constellation Energy and Progress Energy recently announced plans to join the ranks of those utilities already considering expansion of their nuclear generation capabilities. On September 15, 2005, Constellation and French-based AREVA, Inc. announced the creation of UniStar Nuclear, a joint enterprise that will provide the business framework to oversee the development, construction, and operation of a "standardized fleet" of new nuclear power plants. Bechtel Power Corporation will...

FERC Initiates Process for Formation of Overdue Mandatory Reliability Standards

The Energy Policy Act of 2005 directs FERC to finalize by February 5, 2006, a design for a new electricity reliability organization ("ERO") over which it will have jurisdiction, and develop mandatory reliability standards and a process for enforcement of these standards. On September 1 FERC proposed criteria in a rulemaking for establishing the ERO. Public comments on the criteria are due Friday, October 7. Currently, the North American Electric Reliability Council ("NERC") administers voluntary operational standards for the bulk-power system in North America. It is widely expected that FERC...

CPUC and CEC Wrangle over Electricity Transmission Corridors

A recent meeting between the California Public Utility Commission (CPUC) and the California Energy Commission (CEC) exposed mounting tension over which should have the authority to site new transmission facilities. This is the most recent flare up in the turf battles that have undermined the Golden State's efforts to craft a plan for adding badly needed transmission facilities. The disagreement stemmed from the CEC's draft Integrated Energy Policy Report (IEPR), part of a proceeding initiated pursuant to the California legislature's 2004 request that CEC develop a strategic transmission...

Market Pricing: When and Where to Allow It?

Connecticut's Attorney General has filed a complaint asking FERC to amend the market rules in ISO-New England to replace generators' reliability-must-run ("RMR") agreements and market-based rate authority with cost-based rates, a move the complaint claims will save ratepayers in the state $1 billion over the next year. The complaint attacks what it alleges to be a "benefit-of-the-bargain" arrangement that allows generators to reap excess profits either through RMR arrangements or market-rates. Competitive conditions do not exist in the state, according to the Connecticut AG, and will not...

Court Limits FERC's Jurisdiction as Bonneville, Munis Escape Refund Liability in California Energy Crisis Case

On September 6, 2005, the U.S. Court of Appeals for the Ninth Circuit issued an order excusing the Bonneville Power Administration ("Bonneville") and other governmental entities and "non-public utilities" from any potential refund liability in the California refund proceedings. The court found that FERC did not have authority under the Federal Power Act ("FPA") to order these entities to pay refunds. The main question for the court was whether FERC's refund authority is based upon the identities of the sellers (i.e., public versus non-public utilities) or the nature of the transactions (i.e...

ENERGY POLICY ACT OF of 2005: INVESTMENT OPPORTUNITIES & COMPLIANCE CHALLENGES

The attorneys and consultants of Bracewell & Giuliani's Energy and Government Relations practices were involved in the drafting and passage of important provisions of the Domenici-Barton Energy Policy Act of 2005 . These include new laws that will open new investment opportunities in natural gas and power resource development and transportation/transmission. They also impose new performance and regulatory compliance obligations and possible penalties, both civil and criminal, on those who participate as sellers or buyers in natural gas, power and transportation/transmission markets, at...

PJM Ventures Thoughtfully into Vexatious World of Capacity Markets

The role of an electricity capacity market has been described as inducing the right amount of investment of the right type in the right locations. (Cramton/Stoft 2005). Following the contentious introduction (or proposed introduction) of capacity markets in New York and New England, the PJM Interconnection unveiled in a September 1 submission to FERC its reliability pricing model (RPM) for getting a capacity market "just right" in the Mid-Atlantic. PJM's filing with FERC came not quite a month after Congress instructed FERC to proceed cautiously with ISO New England's comparable proposal for...

Northeast LNG Projects Navigate between Scylla and Charybdis

Both the Weaver's Cove Fall River, Massachusetts project and the now-three LNG projects proposed for Maine's Passamaquoddy Bay continue to battle local and regional opposition. Recently, the Aquidneck Island Planning Commission took delivery of two commissioned reports that predicted that the Weaver's Cove LNG project would cause major traffic backups and hurt Rhode Island's marine and tourism economies. Weaver's Cove has stated that the reports were based on flawed assumptions. Weaver's Cove earlier this month also saw Mass. Governor Mitch Romney notify FERC of changed conditions surrounding...

South Carolina Regulator Considering Competitive Procurement of Power

The South Carolina Public Service Commission ("SCPSC") is considering whether utility procurement rules should be changed in the state to require a competitive RFP-based solicitation process. This inquiry grows out of a recent SCPSC decision granting local electric and gas distributor SCE&G a rate increase. The SCPSC appears reluctant to embrace competitive procurement. This is evident from the order granting SCE&G a rate increase. Even thought the Commission undertook the RFP inquiry, it also faulted the RFP concept, affirming its earlier rejection of challenges to a utility's self-...

Incentives to Sell Are Needed More than Improved Metrics, Says FTC

Reprising a message it has voiced for nearly decade, a frustrated Federal Trade Commission (FTC) lectured FERC that standardizing the measurement of available transmission capacity (ATC), as FERC proposes, is fine, but unlikely to eradicate the real problem of transmitting utilities denying available transmission capacity for use by power sellers with whom they compete. "Behavioral rules, such as rules governing calculation of ATC," instructed the competition watchdog FTC, will not effectively address transmission discrimination unless accompanied by solutions that deprive transmitting...

Reliability v. Health: Neighboring States Battle over Dirty but Needed Generator

A cross-Potomac skirmish over the competing principles of energy reliability and public health has broken out over the fate of Mirant Potomac River's 482-MW, coal-fired power plant in Alexandria, Virginia. The District of Columbia Public Service Commission's ("DCPSC") petition to FERC and the Department of Energy ("DOE") to prevent Mirant from shutting down both provoked urgent protests and drew support from regional stakeholders. Prompting the DCPSC's petition was Mirant's announcement that, because of a Virginia Department of Environmental Quality ("VDEQ") directive to remedy air quality...

Rhode Island, Wisconsin Investigate Benefits of RPS

Joining the growing number of states embracing Renewable Portfolio Standards ("RPS"), both Rhode Island and Wisconsin have begun to assess the potential benefits of and need for renewables to power their states. The Rhode Island Public Utilities Commission is reviewing a stakeholder group proposal that recommends the state begin enforcing an RPS in 2007 requiring both utilities and retail marketers to obtain 3% of their power supply from renewables. Under this proposal, utilities would be allowed rate recovery of all associated costs other than non-compliance penalties. Renewable power...