FERC Order 845 reforms interconnection process

U.S. utility regulators have issued an order adopting a final rule reforming the procedures through which electric generators obtain interconnections to the utility grid. The Federal Energy Regulatory Commission's Order No. 845 adopts a final rule which implements ten specific reforms designed to provide interconnection customers better information and more options, in the hopes that transmission providers will better be able to focus on interconnection requests that are likely to reach commercial operation.

Generally speaking, generators need to interconnect to the utility grid (and to consumers) for their power to be valuable. Under the Federal Power Act, many generator interconnections are subject to regulation by the Commission. In December 2016, the Commission issued a Notice of Proposed Rulemaking proposing 14 sets of reforms to its interconnection regulations. In that notice, the Commission cited changes to the electric power industry since the Commission issued its Order No. 2003 governing interconnections, and concerns including long queues and delays for interconnection studies, and a lack of certainty around timing and costs.

As a result, in 2016 the Commission preliminarily found that the interconnection process may hinder the timely development of new generation, and thereby stifle wholesale competition, resulting in rates, terms, and conditions that are not just and reasonable or are unduly discriminatory or preferential. The Commission also preliminarily found the interconnection process could result in uncertainty and inaccurate information, and a potential for discrimination as new technologies enter the market.

Now, following a technical conference and 63 public comments, the Commission issued its order adopting the final rule on April 19, 2018. The final order adopted many of the Commission's 2016 proposals, while deviating from that earlier proposal in some regards.

Among other items, the final rule includes two sets of reforms designed to improve certainty for interconnection customers, four aimed at promoting more informed interconnection decisions, and four designed to enhance the interconnection process.

The Commission also decide to revise its pro forma Large Generator Interconnection Procedures and  Large Generator Interconnection Agreement, to mitigate concerns about systemic inefficiencies, discriminatory utility practices, and time spent on interconnection requests that are unlikely to reach commercial operation.

The final rule, codified as 18 C.F.R. Part 37, will become effective 75 days after its publication in the Federal Register.

Natural Gas Pipeline Permitting Reform Act

Last week, the U.S. House of Representatives voted to pass a bill to expedite federal review of some spects of proposed natural gas pipelines.  Known as H.R. 161, the Natural Gas Pipeline Permitting Reform Act is officially summarized as providing for the "timely consideration of all licenses, permits, and approvals required under Federal law with respect to the siting, construction, expansion, or operation of any natural gas pipeline projects."  If enacted into law, what would H.R. 161 do?

Congress debates proposed reforms to the natural gas pipeline permitting process.

Relatively brief for federal legislation, the printed draft of H.R. 161 comes in at just 3 pages.  Overall, it defines and accelerates the timelines for federal approvals of some proposed natural gas pipelines.  If enacted, the bill would give the Federal Energy Regulatory Commission one year to decide whether or not to issue a pipeline permit, following which other federal agencies would have 90 days to issue any ancillary permits.

The pipelines that would benefit from this bill are those that have applied to the Federal Energy Regulatory Commission under Section 7 of the Natural Gas Act (15 U.S.C. 717f) for a certificate of public convenience and necessity, and have used the Commission's "prefiling" process.

First, H.R. 161 amends Section 7 of the Natural Gas Act to require the Federal Energy Regulatory Commission to approve or deny an application for a certificate of public convenience and necessity for a prefiled project not later than 12 months after receiving a complete application that is ready to be processed.

Second, H.R. 161 requires any agency responsible for issuing any license, permit, or approval required under Federal law in connection with a prefiled project for which a certificate of public convenience and necessity is sought under the Natural Gas Act to approve or deny the issuance of the license, permit, or approval not later than 90 days after the Commission issues its final environmental document relating to the project.  Generally speaking, if such as agency cannot complete its review process within this timeline, it is compelled to deny the license, permit, or approval, but H.R. 161 would allow the Commission to extend the 90 day deadline by an additional 30 days.  H.R. 161 also changes federal law to provide that in the case of agency inaction within the 90 day time period or extra 30 day period, the requested license, permit, or approval shall take effect upon the expiration of 30 days after the end of such period.

On January 22, the House voted 253-169 in favor of the bill.  It now goes before the Senate.  But on January 20, the Executive Office of the President issued a statement of administrative policy stating, "If the President were presented with H.R. 161, his senior advisors would recommend that he veto the bill."  In that administrative policy statement, the administration acknowledged the need for additional energy infrastructure and supports the timely consideration of project applications, but notes risks from that H.R. 161.  These risks include effective limits on public participation in pipeline review processes, and that agencies may be forced to make decisions based on incomplete information or information that may not be available.  The executive branch's statement also cites a FERC report that since Fiscal Year 2009, FERC has completed action on 91 percent (512 out of 563) of all pipeline applications that it has received within one year of receipt, with the remaining decisions involving complex proposals that merit additional review and consideration.

Will the Natural Gas Pipeline Permitting Reform Act be enacted into law?  How will its enactment -- or non-enactment -- affect proposed new natural gas pipelines, and the customers they would serve?

June 9, 2011 - Connecticut restructures its regulation of energy

In an attempt to lower electricity rates and promote clean energy, Connecticut's state legislature has passed legislation reforming key regulatory agency structure.  Governor Dannel Malloy is expected to sign the bill later this month.

Connecticut has high electricity prices.  According to the Energy Information Administration, Connecticut had the second-highest prices in the nation in 2009 -- an average retail price of 18.06 cents per kilowatt-hour.  Only Hawaii has more expensive electricity.  (EIA's most recent monthly data, for February 2011, keeps Connecticut in second place.)

To address this concern, the bill, S.B. 1243, shuffles energy regulatory responsibilities into a new agency, the Department of Energy and Environmental Protection.  (DEEP -- quite a catchy acronym.)  DEEP would be formed by merging the existing state Department of Environmental Protection with the Department of Public Utility Control, and the energy staff from the Office of Policy and Management. Proponents argued that giving one agency comprehensive responsibility for energy policy would ensure consistent regulation.  Connecticut has not had such a one-stop shop for energy policy in over 30 years.

As an example of how DEEP can provide one-stop shopping, S.B. 1243 also creates an Office of Energy Efficient Business within DEEP.  This office is designed to help businesses connect with opportunities, technology and funding for energy efficiency and renewable energy projects.

The bill also creates the Clean Energy Finance and Investment Authority (CEIFA).  CEIFA's stated purpose is to facilitate private capital investment in clean energy projects by pursuing maximal leveraging of public dollars.  In this role, CEIFA succeeds the Renewable Energy Investment Board, the statutorily-created entity that has been managing the Connecticut Clean Energy Fund.  

In recognition of the role that long-term contracts can play in hedging volatility and reducing electricity costs, S.B. 1243 would require DEEP to develop an annual plan for competitive solicitations and procurement of energy and wholesale electricity market products "that will enable each electric distribution company to manage a portfolio of contracts to reduce the average cost of standard service while maintaining standard service cost volatility within reasonable levels."

Will the agency shuffling lead to a tangible improvement in Connecticut's development and implementation of energy policy?  Will Connecticut's embracing of state-sponsored energy procurement reduce ratepayer costs?  With strong legislative support and the Governor's signature expected shortly, time will tell whether S.B. 1243 represents a step forward for Connecticut's energy policy.