On November 13, 2013, the Federal Energy Regulatory Commission (“FERC”) issued an order instituting a proceeding pursuant to Section 206 of the Federal Power Act to determine whether Idaho Power Company’s (“Idaho Power”) market-based rate authority in its home balancing authority area remains just and reasonable. The order responded to Idaho Power’s June 28, 2013 triennial market power analysis for the Northwest region. That submittal indicated that Idaho Power failed FERC’s market share indicative screen when the additional 300 MW of capacity associated with Idaho Power’s recently constructed Langley Gulch power plant was taken into account. In its filing, Idaho Power noted that when preparing its triennial update this summer, it realized that in the summer of 2012, it had not filed a notice of change in status within 30 days of when the Langley Gulch power plant came on-line as required by FERC’s regulations. FERC permits sellers that fail the indicative screens to rebut the presumption of market power associated with failure of the screens through the submission of a delivered price test (“DPT”) analysis. However, Idaho Power explained in its filing that it did not have time to prepare a DPT analysis prior to the June 30, 2013 due date for its triennial filing. Idaho Power submitted the DPT analysis on November 7, 2013. (more…)
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FERC institutes proceeding to determine whether Idaho Power Company can continue to sell at market-based ratesFriday, November 15, 2013 9:54 am by Stephen Hug
Customers Seek to Lower Returns for MISO Transmission Owners and also Challenge Capital Structure and Incentive AddersThursday, November 14, 2013 5:50 pm by Kaleb Lockwood
Adding to a recent spate of complaints filed at FERC seeking to reduce the return on equity (“ROE”) of various transmission owners, on November 12, 2013, several groups composed of large industrial and commercial Midcontinent Independent System Operator (“MISO”) transmission customers together filed a complaint against MISO transmission owners asking for a reduction in the MISO transmission owners’ ROE. With one exception, all MISO transmission owners currently have a base ROE of 12.38%. The complaint seeks to lower the transmission owners’ base ROE over 300 basis points below the current base ROE, to 9.15%.
The law is well settled that in regulated industries, ROEs must be set at levels sufficient to attract capital investment. Transmission owners have responded to the recent complaints seeking ROE reductions by expressing concerns that lower ROEs will result in lower levels of investment in transmission, contrary to FERC’s policy initiatives intended to encourage and sustain transmission investment. (more…)
FERC Finds that Generators Providing Reactive Power without Compensation Must Have Rate Schedule on File; Will not Exercise Enforcement Authority for Past Transgressions in Light of Current Policy ClarificationFriday, October 18, 2013 9:33 am by Sandy Rizzo and Stephen Hug
On October 17, 2013, the Federal Energy Regulatory Commission (“Commission”) issued an order finding that all generators providing Reactive Supply and Voltage Control Service (“reactive power”) must have a rate schedule on file with the Commission governing that service, even when the generator does not receive compensation for the service. Traditionally, the Commission only has required generators to file a rate schedule addressing its provision of reactive power if it received compensation for providing the service. Going forward, however, all generators providing reactive power will be required to have a rate schedule on file with the Commission governing the provision of reactive power, even if they provide this service at no charge. (more…)
Yesterday, after many weeks of speculation, the Commission issued an order extending the filing deadline of the 2013 Q3 Electric Quarterly Reports (EQRs) filings from October 31 to “a date to be determined.” This extension follows a series of similar delays and significant technical issues associated with the revised EQR filing requirements put in place by Order Nos. 768, 768-A, and 770.
As part of the preparation for the new filing requirements, FERC had made available to the public an EQR Sandbox Electronic Test Site (Sandbox) that was meant to be a testing platform to help users acclimate to and prepare for the new filing requirements and system. The Sandbox was made available on July 12 and was meant to be available until September 1. Following the testing period, the Sandbox would be taken offline to prepare it to go live well in advance of the original October 31 filing deadline. (more…)
In a 149 page opinion, the US District Court for the District of Maryland yesterday ruled in PPL EnergyPlus, LLC et al. v. Nazarian that the State of Maryland’s actions to secure the development of new power plants by setting the price to be received by a new plant in the PJM market for the next 20 years intruded on the federal government’s role to set wholesale prices and thus violates the Supremacy Clause of the US Constitution due to field preemption. This case is critically important to incumbent generators because successful state actions to suppress wholesale prices in organized markets by mandating the execution of contracts for new generation at non-market prices would undermine the ability to make merchant investments based upon expectations of future supply and demand dynamics. A similar case is pending in the US District Court for the State of New Jersey based on that state’s law requiring utilities to purchase supply from “new generators” at an established price.
In addressing the competing claims between the plaintiffs and defendant as to the authority of the federal government versus the states, the court explained as follows:
While Maryland may retain traditional state authority to regulate the development, location, and type of power plants within its borders, the scope of Maryland’s power is necessarily limited by FERC’s exclusive authority to set wholesale energy and capacity prices under, inter alia, the Supremacy Clause and the field preemption doctrine. Based on this principle, Maryland cannot secure the development of a new power plant by regulating in such a manner as to intrude into the federal field of wholesale electric energy and capacity price-setting. Furthermore, Maryland’s stated purpose to use the Generation Order to secure the existence of sufficient and reliable electric energy for Maryland residents does not permit invasion into a federally-occupied field. Where a state action falls within a field Congress intended the federal government alone to occupy, the good intention and importance of the state’s objectives are immaterial to the field preemption analysis. (more…)
On September 11, 2013, the United States Department of Energy (DOE) issued an order conditionally granting Dominion Cove Point LNG, LP (DCP) long-term, multi-contract authorization to export liquefied natural gas (LNG) by vessel from the Cove Point LNG Terminal in Calvert County, Maryland to non-Free Trade Agreement (non-FTA) countries (Cove Point Order). DCP is the fourth company to receive conditional authorization from the DOE to export LNG to non-FTA countries and the third company to receive such authorization in the past four months. (more…)