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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 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...

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...

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...

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...

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...

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...

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...

Benefits of ISOs and RTOs "“ ISO-NE Results Show Lower Prices, Increased Investment and Improved Efficiency, Reliability and Environmental Action

In its recently published "Progress of New England's Restructured Electric Industry and Competitive Markets: The Benefits of ISOs and RTOs," ISO-New England ("ISO-NE") lauds the long-term performance of its power market. Since the market's inception in 1999, New England wholesale electricity prices have declined by 5.7 percent, after adjustments for fuel costs, and the fuel-adjusted price decline experienced from 2001-2004 was 11 percent. Also during this time, ISO-NE estimates that more than $9 billion was invested in new power plants, and up to $4 billion was invested in transmission...

FERC Seeks to Rectify Imbalance in OATT with New Rule Giving Lift to Wind

To integrate wind and other intermittent resources energy more completely into wholesale power markets, FERC has proposed a new rule that would relax the imbalance penalties that generators pay under the pro forma open-access transmission tariff ("OATT"). The proposed new generator imbalance service schedule is intended to address the unique characteristics and constraints of intermittent resources such as wind, solar and run-of-river hydro facilities that rely on the weather, and therefore have a limited ability to predict or control their output. Comments on the proposed imbalance rule are...

Kansas Creates Electric Transmission Authority to Ensure that the Lights Stay on in the Sunflower State

Early in April, the Sunflower State followed Wyoming's lead in the creation of a state electricity infrastructure authority by passing the Kansas Electric Transmission Authority Act ("Act") and creating the Kansas Electric Transmission Authority ("Authority"). According to the Act, the Authority is responsible for ensuring the reliable operation of the state's integrated electrical transmission system and facilitating the consumption of the state's energy through improvements in Kansas ' electric infrastructure. The Act permits the Authority to accept federal agency grants for operation, and...

FERC Audits Two Market-Based Rate Sellers "“ Reaction to Ninth Circuit Lockyer Decision Concerning Reporting Requirements for Market-Based Rate Sellers?

FERC announced in April that it would begin auditing power sellers with market-pricing authority for compliance with demanding quarterly reporting requirements. The audits plainly come in response to the dubious court decision in Lockyer v. FERC and signal to all market-price sellers the need to heighten their attention to accurate quarterly reporting both in the past and going forward. Last September, the Ninth Circuit US Court of Appeals ruled that wholesale power sales under a market-based tariff, if not individually detailed in quarterly filings with FERC, were "pragmatically" sales with...

New England Set to Implement Day-Ahead Demand-Response Market Beginning June 1

The New England Power Pool and the ISO New England finally won FERC approval in April to expand their demand-response bidding beyond real-time to the day-ahead market ¾ the Day-Ahead Load-Response Program or DALRP. This approval joins other recent regulatory recognitions that conservation can often prove the least-cost answer to perceived supply shortages. When the new program goes into effect June 1, a firm-demand New England customer can elect to become a demand resource by registering in one of ISO-NE's load-response programs and then be able to offer demand reduction in the day-ahead...