Logo for print
Toggle navigation MENU MORE

Insights

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...

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...

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...

TVA Considers Open Access Policy As Customers Defect

Hopkinsville Electric System has become the latest Kentucky distribution system to give the Tennessee Valley Authority ("TVA") the five-year notice required to terminate its long-term agreement with federal power company and begin shopping around for other energy suppliers. In the wake of several recent terminations, TVA has begun to examine the implications of opening up access to its transmission grid. FERC took up the same issue in an August 3 order [East Kentucky Power Cooperative, Inc., 112 FERC ¶ 61,160 (2005)], directing TVA to allow East Kentucky Power Cooperative to interconnect with...

FERC Scurries to Conclude California Refunds Case

With an order issued August 8, FERC has stepped up its efforts to bring to a close the four-year-old refund proceeding that grew out of the 2000-2001 California energy crisis. The order clarifies how generators and other suppliers should seek to prove the costs they incurred in supplying power to the California ISO ("CAISO") and the California Power Exchange ("CalPX") during the refund period (October 2, 2000 through June 20, 2001) exceeded the mitigated market clearing price established by FERC. These suppliers now have detailed guidelines as to the types of data they need to provide to...

California Merchant Generators, IOUs Put Forth Market Reform Plan

Two of California's investor-owned utilities ("IOUs") along with six merchant generators quietly unveiled on August 17 a plan to reform California's struggling power markets at a closed-door meeting in Sacramento. Pacific Gas & Electric Co., Southern California Edison Co. ("Edison"), AES Corp., Duke, NRG, Mirant, Dynegy, and Reliant secretly developed the plan. Governor Arnold Schwarzeneggar also encouraged the proposal, in the hopes that the development of a strong energy policy will amount to the decisive action on energy policy that will placate California voters still smarting from...

Reconsider Exelon-PSEG Merger, NJBPU Urges FERC

Apprehension over the effect of the Exelon-PSEG merger continues, as the New Jersey Board of Public Utilities ("NJBPU"), along with several other regional interests, including New Jersey's Ratepayer Advocate and Pennsylvania's Office of the Consumer Advocate, asked FERC to rehear its July 1 order approving the merger and instead set the merger for hearing. The NJBPU argues in its request that FERC violated Section 203 of the Federal Power Act ("FPA") by failing to determine affirmatively that the merger is in the public interest in advance of authorizing the transaction. Instead, complained...