Energy Legal Blog

In a policy shift intended to encourage the development of transmission lines for renewable power, on February 19, FERC issued an order allowing merchant transmission developers to set aside a portion of new lines’ capacity for so-called “anchor” customers for an initial term of 25 years.  In that order, FERC approved proposals by Chinook Power Transmission, LLC and Zephyr Power Transmission, LLC to charge negotiated rates for two new 500-kV direct current transmission lines from Montana and Wyoming, respectively, to the Las Vegas, Nevada area.  The proposed lines, which are expected to be completed in 2014, could bring up to 3,000 MW of wind generation to the Desert Southwest region, an area of the country in desperate need of additional generation.  Chinook and Zephyr have entered into agreements with a wind generation developer that will share a portion of the initial transmission development costs, in exchange for reserving up to 1500 MW of capacity, subject to the successful negotiation of a precedent agreement. (more…)

Congress did not in the Energy Policy Act (EPAct) of 2005 confer on FERC federal “backstop” authority to overrule timely state decisions denying applications to site and construct proposed interstate transmission lines, a divided (2-1) panel of a U.S. appeals court ruled February 18 in the much-anticipated case of Piedmont Environmental Council v. FERC. The issue of FERC’s authority to override state denials will likely be further appealed.

The majority decision by Judge Blane Michael of the Richmond-based U.S. Court of Appeals for the Fourth Circuit overturned a 2006 FERC rulemaking interpreting new section 216 that Congress in EPAct 2005 added to the Federal Power Act. That section created two new federal powers. First it empowered the Secretary of Energy to designate as a national interested electric transmission (NIET) corridor any area where the transmission grid is determined to be capacity constrained or congested. Second, for the first time in the history of federal regulation of the power industry, it conferred on FERC “backstop” federal authority to permit within a designated NIET corridor the siting and construction of new or modified interstate electric transmission lines, but only in circumstances detailed in the new section 216. One such circumstance arises when FERC finds that a state commission or other state permitting authority “has withheld approval for more than 1 year after the filing of an application seeking approval” for a proposed transmission line. Contrary to a majority of FERC commissioners, the court majority concluded that “withheld for more than one year” does not comprise scenarios where a state denies a construction and siting application consistent with state law within one year from the filing of the application. Agreeing with FERC Commissioner Suedeen Kelly, who dissented from the agency’s 2006 rulemaking, interpreting the statutory phrase “withheld for more than one year” to encompass a timely denial is a “nonsensical” and therefore impermissible reading. (more…)

FERC issued an order February 12 denying approval of an uncontested settlement agreement negotiated between FERC Enforcement Staff and trader Amaranth Advisors.  The settlement agreement was filed November 24 of last year and intended to resolve all the issues arising from the FERC’s July 26 order demanding that Amaranth show cause why it should not be required to disgorge nearly $300 million allegedly garnered from market manipulation.  FERC stated in its February 12 order that “[h]aving considered the gravity of the alleged violations, the potential remedies for those violations if proven to have occurred, and the remedies offered in the Settlement, the Commission concludes that the settlement is not in the public interest and hereby rejects it.” (more…)

Despite the economic crash, a number of states are continuing to push ahead with various renewable energy and climate change initiatives.  (more…)

The Texas PUC finalized its proceeding to award development rights for the construction of as many as 2,900 miles of new transmission lines to carry wind-generated power. Wind resources are being developed primarily in western Texas, remote from urban centers in the rest of the state. (more…)

Consumer advocates and LNG opponents may take comfort in the recent appointment of Commission Jon Wellinghoff as the new acting FERC Chairman.  As a Commissioner he has distinguished himself through a spate of dissents opposing rate incentives for transmission developers and opposing LNG projects, notably the Sparrow’s Point and the Bradwood Landing projects. (more…)