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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...

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...

FERC Revises Business Practices Standards for Pipelines and Proposes New Standards for Electric Utilities

On May 9, 2005, FERC issued complementary orders adopting revised business practices for natural gas pipelines and proposing similar standards for electric utilities. The orders largely adopt standards proposed by the North American Energy Standards Board (NAESB). The Final Rule for gas pipelines adopts several standards developed by the Whole Gas Quadrant (WGQ) of NAESB, including WGQ's recommended practices for creditworthiness and gas quality reporting. The creditworthiness standards provide procedural rules by which pipelines should deal with their customers with respect to credit issues...

New Hampshire Representative Seeks Delay of MTBE Liability Waiver to Grandfather N.H. Groundwater Contamination Lawsuit

Even though he voted for the controversial provision in the US House of Representatives' latest energy bill that would relieve manufacturers of gasoline-additive methyl tertiary butyl ether (MTBE) from liability, Representative Charles Bass (R-NH) is reportedly currently drafting an amendment that would delay the waiver's effective date. Bass faces pressure from his home state to delay the liability waiver in order to preserve groundwater contamination lawsuits filed by the State of New Hampshire and local officials against MTBE manufacturers. By saving his home state's lawsuits, Bass's...

Court Rejects Industrial Consumers Challenge to New York ISO's Design for Pricing Capacity Reserves

Over the spirited and multifaceted objections of industrial power consumers "• represented by the Electricity Consumers Resource Council ("ELCON") "• a US appeals court upheld FERC orders allowing the New York ISO ("NY ISO") to replace a flat-rate price for installed capacity with a price set equal to a downward-sloping demand curve. The sum of ELCON's arguments boiled down to a complaint that the new prices were simply too high and would unduly burden New York consumers. But the court agreed with FERC that the downward-sloping demand curve price would induce needed investment in generating...

Illinois Commerce Commission Conference on Sustainable Energy

The Electric Policy Committee of the Illinois Commerce Commission met May 11 to hear electric utility proposals for implementing a sustainable energy plan in the Land of Lincoln. The proposals were developed in response to Governor Rod Blagojevich's "Sustainable Energy Plan," a proposal submitted last February to the Commission. The Governor asked the Commission to find a way to implement the Plan, which includes a set of goals and recommendations. Commissioner Robert Lieberman leads the initiative to develop the plan, which is expected to be issued in final form in June. The Governor's...

We Energies of Wisconsin Awaits Key Court Ruling on Air and Water Permits

We Energies, a utility serving Wisconsin and Michigan's Upper Peninsula, is facing legal challenges on numerous fronts to its proposed "Power the Future" project, a $2.15 billion proposal to develop Wisconsin's first coal power plant to be built in decades. We Energies is battling state agencies over air and water permits, as a docket of lawsuits have been filed attempting to overturn the permits and derail the project. The company's battles have attracted nationwide attention and have implications for the development of similar coal-fired projects in other states. In 2004, Wisconsin state...

FERC to Begin Revising Order 888 this Summer

FERC will formally begin revising its landmark order requiring open-access transmission by issuing a notice of inquiry within the next few weeks. Chairman Pat Wood has indicated that the notice will issue before his June 30 departure. The impetus for change began last summer, when then-newly appointed Commissioner Joseph Kelliher suggested that the agency needed to evaluate whether Order 888 should be broadened to protect against transmission market power. Kelliher began an informal process to determine whether the open-access transmission tariffs of jurisdictional utilities' were sufficient...

California Assembly Considers Reductions in Greenhouse Gas Emissions Despite Concerns by Industry Groups

The Golden State is currently considering a bill (AB 1365) that will set greenhouse gas ("GHG") emission reduction targets of seven percent by 2010 and ten percent by 2020, in relation to the state's 1990 GHG emission levels. The Assembly Natural Resources Committee passed the bill on April 25, in the face of public opposition by industry groups. These groups expressed concerns over emissions targets and indicated their preference for a more wide-ranging effort on the part of the state's EPA to pursue GHG emission reduction standards. The industry groups primarily opposed the deadlines, which...

Seeking the Best of Old and New, FERC Solicits Ideas on How to Create Long-term Transmission Rights in Markets With Locational Pricing

Taking another look at a controversial feature of restructured electricity markets, the Federal Energy Regulatory Commission ("FERC") recently invited the public to comment on how long-term transmission rights could exist in markets that manage congestion with locational pricing. While market participants in restructured markets can purchase Financial Transmission Rights ("FTR") to hedge against congestion costs, FTRs have a term of only one year. In contrast, the life of a generating stations and the term of a typical power purchase agreements extend over many years, possibly decades. This...

Mexican High Court Rejects Congressional Auditors' Challenge to Private Generation and Sales of Power

Private power south of the border narrowly escaped in April a congressional audit committee invalidating as unconstitutional their generation and sale of power to the national electricity monopoly, the Comisión Federal de Electricidad ("CFE"). At the request of Mexican President Vicente Fox, the Mexican Supreme Court by a 6-to-5 vote ruled that the audit committee of the opposition-dominated Congress did not have authority to rule on the constitutionality of the power purchase contracts between CFE and private generators. Had the high court affirmed the audit committee and ruled against...

California Assembly Again Considers Retail Choice for Large Customers

The California State Assembly is considering the possibility of returning retail choice to the state, after its suspension during the 2000-2001 energy crisis. Assembly Bill 1704 ("AB 1704"), introduced by Assemblyman Keith Richman (R-Granada Hills), would establish a core/non-core retail market in California. Under the proposal, utility customers who use more than 200 KW ("non-core" customers) could choose either to take service from direct-access providers or remain with their investor-owned utility, while individual and small commercial customers would continue receiving service from the...

U.S. Supreme Court Will Not Review Decision Prohibiting Courts from Ruling on Wholesale Power Prices

Fallout from the 2000-2001 western energy crisis persisted in April. In a case involving one of the relatively smaller claims to arise out of the crisis, on April 18, 2005, the US Supreme Court denied the petition of the State of California for review of a lower court ruling that only FERC can decide whether the state was unlawfully double-billed for wholesale power. In a claim filed in state court in 2002, California alleged that certain generators violated the state's unfair business competition laws by double-billing the California Independent System Operator ("CAISO") over $100 million...

FERC Asks for Comments on the Roles of RTOs and ISOs in Establishing Reference Prices for Mitigation

On April 1, 2005, FERC invited comments on the roles of Regional Transmission Organizations ("RTO"), Independent System Operators ("ISO"), or their market monitors in establishing reference prices to be used to lower or "mitigate" wholesale power prices deemed to be non-competitive. Public comments were due to FERC by May 2, 2005. Several RTOs and ISOs "• including the New York ISO, ISO-New England, California ISO, and the Midwest ISO "• use "conduct and impact" tests in their wholesale day-ahead and real-time electricity markets to determine whether to apply mitigation to assure just and...

U.S. District Court Finds Filed Rate Doctrine also Applies to Market-Based Rates in Natural Gas Markets

On April 8, 2005, the U.S. District Court for the District of Nevada found that the filed rate doctrine prohibited federal and state antitrust and unfair competition claims against sellers of natural gas. In In Re W. States Wholesale Natural Gas Antitrust Litig., the Court affirmed FERC's exclusive authority to determine the reasonableness of wholesale natural gas prices under the Natural Gas Act, even in the context of a price-deregulated natural gas market. The court's decision joins other recent legal decisions protecting the price expectations of market-based sellers of both natural gas...