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FERC Provides More Guidance on Status Changes that Power Sellers with Market-Pricing Authority Must Report

FERC relented in June to market participants' demands and provided additional examples of those types of changes in status that, if not reported to the agency, could cause a power seller to forfeit its market-pricing authority. The resulting message was a classic example of a regulator seeking to point those it regulates in a salutary direction, while at the same time striving mightily not to fence itself in through overly descriptive examples of applicable conduct. FERC provided several illustrations of the types of contracts and events that would and would not trigger the reporting...

FERC Administrative Law Judge Issues Initial Decision Largely Adopting ISO-New England Proposal for Locational ICAP

The contentious battle over capacity markets in New England moved a step closer to conclusion when a FERC judge recently upheld for the most part the details of ISO-New England's locational ICAP ("LICAP") proposal. See UPDATE (09/30/2002). LICAP would replace the simpler ICAP regime that allowed load-servers to satisfy their ICAP obligations without regard to whether the capacity was actually deliverable where needed. The judge found that use of LICAP and demand curves for capacity pricing was the only proposed methodology that would appropriately compensate generators needed for reliability...

FERC Takes a Second Look at the Independent Ownership and Operation of Power Transmission Systems

Hoping to encourage the formation of independent transmission companies ("ITC"), FERC adopted in June a new Policy Statement on the ownership of ITCs. The Policy Statement addresses the types of ownership structures that are eligible for ITC status. The Policy Statement clarifies that FERC will consider ITC proposals from applicants in which market participants have passive minority equity interests, based on FERC's evaluation of certain criteria. Under the Policy Statement, FERC will consider proposals involving passive participation of up to 49 percent ownership by a single market...

FERC Proposes Changes to Accounting and Financial Reporting Rules to Gain Further Insight into RTO Operations

Responding to the increasingly controversial issue of escalating RTO and ISO operating costs, FERC has proposed a new rule that would change its accounting and financial reporting requirements for public utilities, including independent system operators and regional transmission organizations (collectively "RTOs") that file financial reports with FERC. Specifically, FERC is seeking more detailed information about regional transmission and RTO market operation assets, RTO revenues, and other market-related expenses. FERC states it is proposing the rulemaking to accommodate the industry...

Ohio Governor Statements Harbinger Possible Electric Industry Re-regulation

Storms of re-regulation in the Buckeye state appear to be building as Ohio Governor Bob Taft (R) hinted in a speech delivered at the NAE Regional Conference held on June 3 in Cleveland that unless competition in the electric industry registers a pulse, re-regulation could be in the state's future. De-regulation in Ohio began in 1999 when S.B. 3, the Electric Restructuring Bill was passed providing customer choice effective January 1, 2001. The results of de-regulation have been mixed; local government aggregation programs, primarily in Northern Ohio where FirstEnergy operates, have won some...

Environmental Study Proposes Increased Wind Energy Development on Public Lands

Wind energy developers may obtain greater access to many promising wind energy sites on federal lands in the Western U.S. based on the proposals of the U.S. Department of the Interior, Bureau of Land Management ("BLM"). BLM has released a final programmatic environmental impact statement ("EIS") addressing the environmental, social and economic impacts associated with developing wind energy on public lands in Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. Cumulatively, these western states have great wind power potential. The EIS...

FERC Investigates Oklahoma Gas & Electric for Market Power; Oklahoma Regulator Proposes Competitive Bidding

Both Oklahoma state regulators and FERC recently indicated that changes in the way Oklahoma utilities get power be in order. At a June 6 hearing, the Oklahoma Corporation Commission ("OCC") directed its staff to put together a notice of proposed rulemaking ("NOPR"), which would direct the state's utilities to procure power through a competitive bidding process, and convene a prudence review of the 2003 costs of the state's two largest electric utilities, Oklahoma Gas & Electric Co. ("OG&E") and American Electric Power-Public Service Co. of Oklahoma ("PSO"). The NOPR would explore a...

Wind Interconnection Standards Final

In June FERC took further steps to aid wind energy development. It finalized technical specifications in a new rule for interconnecting wind energy generators to the transmission grid. The new specifications supplement FERC's earlier creation of a standard interconnection agreement and standard procedures for generator interconnections, which jurisdictional transmission providers must follow. Because of the unique operating characteristics of wind energy generators, FERC exempted wind energy interconnections from certain requirements of the interconnection rule. T he new rule is intended to...

Harsh Admonition for Over 200 Late Filers of Market Power Updates

FERC on May 25 issued a stern warning to over 200 companies possessing market-pricing authority, but who had become delinquent in filing their triennial updated or revised market power analysis. File the update within 60 days, FERC admonished, or risk losing market-pricing authority. All power sellers dependent on market-pricing authority need to heed this warning with care. FERC also instituted a section 206 investigation to determine whether the rates charged by these companies remain just and reasonable. By cracking down on late filers, FERC hopes to see more companies file the triennial...

Proposed Rule Would Allow e-Filing of Interlocking Directorates, 20 Largest Utility Purchasers Information

Amid a flurry of rulemaking activity at the end of May, FERC issued a Notice of Proposed Rulemaking (NOPR) on May 27, 2005, seeking comments on whether it should provide for the electronic filing of required information on interlocking positions (FERC Form 520 and Form 561) and a public utility's annual report of its twenty largest energy purchasers (FERC Form 566). Without advance FERC approval, Federal Power Act (FPA) § 305(b) prohibits individuals from holding positions as an officer or director at more than one public utility, or from holding officer or director positions simultaneously...

FERC Says the Court Was Confused in Affirming Generator Interconnection Decision on Remand

Responding to a judicial demand that FERC explain an apparent change in policy, FERC decreed on May 6 that its 2002 order providing GenWest LLC (GenWest) transmission credits for network upgrades built to interconnect with Nevada Power Company's (Nevada Power) grid was no change at all. Beginning with FERC's mid-1990s orders mandating that transmission-owning utilities open their systems to third parties, FERC has generally required that the costs of constructing upgrades to interconnect a customer be spread across all network customers, provided the upgrades are beneficial to the...

FERC Pushes Ahead on Prevention of Market Abuse and Works to Increase Transparency in Energy Markets

FERC issued a series of proposals and rules May 25 that will streamline and assist FERC in collecting various kinds of information, as well as a change to the calculation of that essential metric: available transfer capacity ("ATC") on the transmission grid. FERC Chair Pat Wood expressed his belief that these orders would benefit both customers, by improving market transparency, and the electric industry, by ensuring that FERC's reporting requirements are "useful and necessary." Two of the issuances included two Notices of Inquiry ("NOI"). In Docket No. RM05-16 , FERC issued a NOI seeking...

Dominion Successfully Integrates into PJM

On May 1, 2005, at 12:01 a.m., Dominion, the largest utility in Virginia , successfully transferred operational control of its 6,000-plus miles of high-voltage transmission lines to PJM Interconnection, LLC (PJM). Dominion's transfer follows the integration of the Duquesne Light transmission system earlier this year, as well as the Commonwealth Edison, American Electric Power, and Dayton Power & Light transmission systems, which occurred in 2004, making PJM the nation's largest regional transmission organization. As a result of the transfer, PJM now manages the dispatch of generation and...

FERC Issues Small Generator Interconnection Rule

In its Order No. 2006, issued May 12, FERC established standard procedures for interconnecting generators no larger than 20 MW. This order continues the process begun in Order No. 2003 of standardizing the terms and conditions of open-access interconnection service. The new procedures apply to small generators seeking to interconnect with transmission systems that are subject to an open-access tariff at the time the generator's request is made. Order No. 2006 requires public utilities to amend their open-access transmission tariffs ("OATTs") to include a Small Generator Interconnection...

Reductions of Power Plant Emissions on the Minds of State Regulators

Reducing power plant emissions seems to be the priority du jour , as several state regulatory agencies consider plans to comply with the EPA's new clean air interstate rule ("CAIR"). Passed in March of this year, CAIR permanently caps sulfur dioxide ("SO2") and nitrogen oxide ("NOx") emissions in the eastern United States , by providing for SO2 rductions of 70 percent and NOx reductions of 60 percent by 2015. This past April, the Ozone Transport Commission ("OTC"), a multi-state organization created under the Clean Air Act encompassing the Northeast and the Mid-Atlantic states and the...