On July 7, the Federal Energy Regulatory Commission (FERC) approved a stipulation and consent agreement between FERC’s Office of Enforcement, the North American Electric Reliability Corporation (NERC) and Arizona Public Service Company (APS) resolving FERC and NERC’s joint investigation into APS’s involvement in the September 8, 2011 Southwest Blackout. The Southwest Blackout was a system disturbance in the Pacific Southwest that affected transmission in Arizona, California and Mexico, and ultimately caused a complete blackout of San Diego. FERC and NERC found that APS violated certain of the Transmission Operations (TOP) group of NERC Reliability Standards, and that these violations resulted in cascading outages in which 2.7 million customers, or approximately 5 million people, lost power for several hours. FERC and NERC concluded that APS failed to prepare for this type of event by not performing a unique day-ahead study for September 8 and by not coordinating its day-ahead studies with neighboring transmission operators, including the Imperial Irrigation District and the California Independent System Operator. APS has neither admitted nor denied the violations in the stipulation and consent agreement. (more…)
WE KNOW ENERGY®
Robert E. Pease and Caitlin Tweed
Stephen Hug and Serena Rwejuna
On June 19, 2014, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Proposed Rulemaking (“NOPR”) proposing to revise its standards for evaluating applications to sell energy, capacity, and ancillary services at market-based rates, as set forth in Order No. 697 and subsequent orders. FERC’s revisions have two primary goals: (1) to streamline the horizontal and vertical market power analyses that public utilities are required to submit when filing an application for market-based rate authority or a triennial market power update; and (2) increase the transparency of information that sellers report to FERC as part of the market-based rate process, including the seller’s affiliates and corporate structure and its interest in generation and transmission assets. (more…)
On Friday, April 25, approximately two dozen intervenors filed comments regarding PacifiCorp’s proposed amendments to its Open Access Transmission Tariff (“OATT”) to permit its participation in the California Independent System Operator Corp.’s proposed Energy Imbalance Market (“EIM”).
The CAISO EIM is the first proposed organized market structure across a multi-state footprint in the West, which is otherwise largely OATT-defined. PacifiCorp has contracted with the CAISO to be the first EIM participating balancing authority. The design and implementation of the new market requires substantial amendments to both the CAISO and PacifiCorp tariffs, and all proposals must be approved by the Federal Energy Regulatory Commission (“FERC” or “Commission”) as just, reasonable, non-discriminatory and non-preferential under the Federal Power Act. CAISO filed its proposed tariff amendments on February 28, and PacifiCorp filed its proposed OATT amendments on March 25. (more…)
While the Federal Energy Regulatory Commission (“FERC” or the “Commission”) has never required a uniform structure for reactive power compensation, in light of the growing number of new technologies, particularly wind and solar photovoltaic generation facilities, the changing landscape of the electricity industry and emerging reliability concerns, the Commission held a workshop on April 22, 2014 to examine the third-party provision of reactive supply and voltage control and regulation and frequency response services. The Commission is seeking more information on the technical, economic and market issues concerning the provision of these particular ancillary services before it determines if, and how, it will revise its regulations to increase transparency around payment for these services. The roundtable discussion led by FERC Staff involved various stakeholders including representatives for independent system operators, electric associations, and electric generators. (more…)
David Perlman and Jessica Miller
This week the Federal Energy Regulatory Commission (FERC) put to rest any doubt that transmission rights pursuant to a pre-Order No. 888 transmission service agreement are subject to the FERC’s open access regime when the agreement is modified or becomes obsolete. In the same order, FERC found that a so-called “resale tariff” is only permissible where a jurisdictional transmission provider seeks to resell transmission rights on a non-jurisdictional transmission provider’s facilities—where the resale could not be facilitated under a FERC-approved Open Access Transmission Tariff (OATT).
FERC’s February 27, 2014 order rejected a December 30, 2013 filing by SoCal Edison Company (SCE). SCE’s filing attempted to modify transmission rights it has held since 1966 under a transmission services agreement with Arizona Public Service Company (APS). The 1966 agreement arose in connection with SCE and APS’s joint ownership interests in two generating units at Four Corners in New Mexico. Pursuant to the agreement, APS constructed and operated a 500 kV transmission line from Four Corners to the Arizona-Nevada border, and SCE paid APS cost-based transmission service charges for rights to all of that line’s transmission capacity, for purposes of transmitting SCE’s portion of the units’ output to California. In 2013, SCE transferred to APS its ownership interests in the Four Corners units, so SCE no longer needed the transmission capacity it had held for more than four decades for purposes of transmitting its Four Corners capacity. (more…)
In an unusual move, on February 21, 2014 the Court of Appeals for the Third Circuit (“Third Circuit”) asked the U.S. Attorney General for his opinion as to whether the Federal Power Act (“FPA”) preempts New Jersey’s Long Term Capacity Pilot Program (“LCAPP”), a finding made by the United States District Court for the District of New Jersey (“District Court”) in PPL EnergyPlus, LLC v. Hanna, which is now pending on appeal before the Third Circuit.
In recent years, states including New Jersey and Maryland, through different mechanisms, have instituted requirements that the state utilities serving retail customers must purchase power from “new generation” to be located within each respective state’s borders. In New Jersey, such generation would be guaranteed a long-term contractual payment so long as the generation cleared the PJM capacity market. Bidding as low as possible would best guarantee the units would clear. Because generators are not paid what they bid, but the payments are based on the clearing price of the most expensive unit to clear, having units bid at levels that do not reflect their cost recovery needs was perceived by the generation community as an effort to reduce payments made for capacity. (more…)