Driven by the entry of renewable generation resources locating far from load centers and the new demands placed on the grid by their differing characteristics, the Federal Energy Regulatory Commission (FERC) launched a comprehensive review of its policies regarding regional transmission planning, interconnection and cost-allocation.  In an Advance Notice of Proposed Rulemaking (ANOPR), the agency requested public comments on its current policies and offered potential areas for reform with a view toward anticipated future generation.  According to FERC Chairman Richard Glick, "(a) piecemeal approach to expanding the transmission system is not going to get the job done.We must take steps today to build the transmission that tomorrow's new generation resources will require."

This initiative is likely to result in specific proposals from FERC and ultimately reform of its rules and policies that could substantially change how the electric grid is planned and paid for.  Accordingly, the ANOPR should be of interest to any company with a current or anticipated interest in, or use of, grid facilities.

This is the second initiative in as many months that FERC has taken a big step toward addressing the kind of grid needed for renewable generation  As discussed in a prior post to the blog, last month FERC established a Joint Federal-State Task Force on Electric Transmission with state and local regulatory agencies to address barriers to transmission planning and development, opportunities for states to coordinate on regional transmission solutions, and barriers to interconnecting new resources.

The ANOPR

After providing a comprehensive discussion of its current policies regarding transmission planning, cost allocation and interconnection, FERC says "it is now appropriate to examine whether the existing regional transmission planning and cost allocation and generator interconnection processes adequately account for the transmission needs of the changing resource mix."  Accordingly, the ANOPR identifies the following major aspects as potential areas for reform.关于每一方面,ANOPR请求评论当前政策的适当性并同时建议潜在的改革。

This is the twenty-fourth in our series, "The ABCs of the AJP."

In 2020 alone, the United States suffered 22 separate extreme weather and climate-related disasters that each caused at least $1 billion in damages, for a total of more than $100 billion in losses.  That staggering statistic is not an anomaly, as climate change continues to result in more and more extreme weather events every year.  For example, the Texas freeze that rocked the state earlier this year and killed more than one hundred people, also shut down the state's significant petrochemical industry, disrupting supply chains nationwide, and caused an estimated $80 billion to $130 billion in direct and indirect economic losses.数以百计的死亡者为 < a hrefss/www.npr.org/2021/07/climbs-in-crips-northWest/

Given the escalating human and economic costs of extreme weather events, it is no surprise that the Biden Administration's American Jobs Plan (AJP) prioritizes climate resiliency, a topic which has also been covered in a prior blog post.  Significantly, the AJP pledges that: "Every dollar spent on rebuilding our infrastructure during the Biden administration will be used to prevent, reduce, and withstand the impacts of the climate crisis."  The AJP also proposes to spend $50 billion on investments to specifically improve the resiliency of the nation's infrastructure, highlighting the importance of protecting critical infrastructure and services, defending vulnerable communities, and "[m]aximiz[ing] the resilience of land and water resources to protect communities and the environment."

As for protecting vulnerable communities, the AJP points out that "[p]eople of color and low-income people are more likely to live in areas most vulnerable to flooding and other climate change-related weather events" and "[t]hey also are less likely to have the funds to prepare for and recover from extreme weather events."  To improve resiliency for those communities most vulnerable "physically and financially to climate-driven disasters", the AJP proposes increased investments through existing programs, such as FEMA's Building Resilient Infrastructure and Communities program and HUD's Community Development Block Grant program, new initiatives at the Department of Transportation, as well as "a bipartisan tax credit to provide incentives to low- and middle-income families and to small businesses to invest in disaster resilience, and transition and relocation assistance to support community-led transitions for the most vulnerable tribal communities."

Separately, the AJP would provide $500 million in grants and loan funds to renovate tens of thousands of multifamily homes to make them more resilient to extreme weather events.

Finally, the AJP proposes investing in nature-based resiliency, such as by restoring "our lands, forests, wetlands, watersheds, and coastal and ocean resources", as a means of wildfire and drought mitigation, among other goals.  The Administration also suggests that such restoration and resilience project funds would follow the guidelines of the proposed Outdoor Restoration Force Act (S.近些年来,人们更加关注自然基础建设的潜在利益,值得注意的是,美国土木工程师学会首次使用s/informstructioncard.org/solups/reslience/历经数年研究分析 来自世界各地的专家 今年夏美Army Corps of Engineers is set to release first-of-their-kind guidelines for nature-based resilience projects.

Beyond the AJP, protecting against extreme weather has been a priority of the Biden Administration from the beginning.  A few days into his presidency, President Biden signed a sweeping climate Executive Order which, among other things, directed federal agencies to develop climate resiliency plans.  More recently, on May 24, 2021, the Administration announced a plan to invest $1 billion in protecting communities through FEMA's Pre-Disaster Building Resilient Infrastructure and Communities program.  As with other actions taken by the Administration, this increased investment "seeks to categorically shift the federal focus from reactive disaster spending and toward research-supported, proactive investment in community resilience so that when the next hurricane, flood, or wildfire comes, communities are better prepared."  Along with the increased funding, the Administration also announced plans to develop and launch "a new NASA mission concept for an Earth System Observatory" to better forecast and monitor natural disasters.

At this point, it is unclear whether or how Congress will act to implement the Biden Administration's proposals to protect against extreme weather.  However, there are some signs of bipartisan interest in such legislation.  For example, after the Texas freeze in early 2021, a bipartisan group of members of the Texas congressional delegation introduced the Power On Act (S.1432 帮助保护电网基础设施不受极端天气影响。此外,2019年,参议院环境与公共工程委员会一致通过了2019年美国交通基础设施法(sgp/crs/misc/IF11300.pdf>$100dm/a问题很可能成为双党优先处理点,特别是当德克萨斯冻结事件在全国各地变得司空见惯时。 双党重心对极端天气事件进行保护后,所有美国人和企业都应从更多保护中受益,避免事件造成的损害、损失、中断和人类代价。

In voting on the May 20 orders, the Commissioners were split on whether the National Environmental Policy Act ("NEPA") requires further analysis of the climate significance of the greenhouse gas emissions calculated for the pipeline projects.  A majority of Commissioners compromised by merely providing GHG data for information purposes without determining their significance.

As discussed in a prior post to this blog, in March, 2021, FERC approved a pipeline project certificate in an order that considered "the significance of the project's GHG emissions and their potential impact on climate change," and stated that if a project's GHG emission impacts are significant, they "would be considered along with many other factors when determining whether a project is required by the public convenience and necessity."  Two recent orders that discussed GHG emissions, however, noted that "analysis of greenhouse gas emissions is offered for informational purposes only, does not inform any part of this order's holding, and shall not serve as precedent for any future certificate order."

After an extremely tense debate at its open meeting on May 20th, FERC narrowly approved a Northern Natural Gas project in Minnesota (Docket No.CP20-503) as well as a Tuscarora Gas Transmission project in Nevada (Docket Number CP20-486).4-1表决接受James Danly专员修改命令草案动议,以明确FERC在批准两个项目时没有为其温室气体排放法开新例委员会随后表决3-2批准证书Chairman Glick and Commissioner Clements dissented in part on the grounds that the Commission should have issued an environmental impact statement ("EIS") to determine the significance of the emissions from these projects and the impact on climate change and thus FERC did not satisfy its duty under the National Environmental Policy Act ("NEPA").  They added that finding a project's GHG emissions to be significant is not a "death knell" for that project and FERC may very well conclude that the project's benefits outweigh even significant adverse impacts and may also order mitigation of adverse impacts.

In the May 20 Northern Natural order, the Commission did provide information concerning the projected downstream emissions from the projects and also compared them to the projected emissions in the United States, but issued an Environmental Assessment ("EA") instead of an EIS.发货公司全部为本地配送公司,北方发现工业和住宅用能源需求增长。EA估计项目运营产生的最大潜在温室气体排放量为每年42,814公吨二氧化碳当量(CO2e)。 FERC发现该项目的servations c 后续年份中项目运毒量和下游燃气量可能增加0.016%.s/sites/defails/2021-05/C-3.pdf.>Tuscarora命令 in subsequent years, the project operations and downstream combustion of gas transported by the project could potentially increase emissions by 0.0052%.^[2] The emissions from the project would represent 0.83% and 1.08% of Nevada's 2025 and 2030 GHG inventory goals, respectively.^[3]

Again, both orders noted that the analysis of greenhouse gas emissions is offered for information purposes only, does not inform any part of the order's holding, and shall not serve as precedent for any future order.

[1] FERC found that the annual GHGs from operation of the project, including the downstream combustion of the gas transported by the project, are 925,244 metric tons per year CO2e.  To provide context to the GHG estimate, 5.769 billion metric tons of CO2e were emitted at a national level in 2019 (inclusive of CO2e sources and sinks).  See Northern Natural order at Paragraph 33.

[2] FERC noted that although the national emissions reduction targets expressed in the EPA's Clean  Power Plan were repealed, EPA, Repeal of the Clean Power Plan!现有电用生成单元温室气体排放修改排放指南实施规程 84美联储瑞格3252032202019年7月8日巴黎气候协议瑞格7619年1月27日2021年4月21日宣布目标2030年净温室气体排放比2005年水平减少50%至52%。21, 2021), https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/United%20States%20of%20America%20First/United%20States%20NDC%20April%2021%202021%20Final.pdf.  See Tuscarora order at note 47.

[3] Nevada's 2005 CO2 emissions were 50.1 million metric tons.  U.S.能源信息管理局,能源相关CO2排放数据表 (表1-国元二氧化碳逐年排放,未调整(1990-2018年),/s/www.eia.gov/envice/emissions/state/见第29段Toscarora命令

This post is the 13th in a series, "The ABCs of the AJP."

As made clear by its name, the Biden Administration intends for its "infrastructure" plan to be a jobs plan.  As is also apparent from the Administration's proposal, it views requirements to ensure that goods are actually made in America as critical to creating new American jobs.  According to the White House, "by ensuring that American taxpayers' dollars benefit working families and their communities, and not multinational corporations or foreign governments, the plan will require that goods and materials are made in America."  Such rules should also help give the United States a boost in its competition with other countries, particularly China.

The federal government has long used such requirements that certain goods or materials are made in America, also known as domestic content preferences, to support American manufacturing and job creation.  These preferences usually fall into two buckets: "Buy America" and "Buy American" rules.

Buy America rules date back to 1978, when Congress began implementing restrictions on certain federally funded infrastructure projects, under which the funding recipients are generally required to ensure the final product is assembled in the United States and that a certain percentage of the project costs are for component and subcomponent parts made in the United States.这些规则对美国内部机构资助的基础设施赠款一般适用对铁、钢和某些制造品如机车类限制交通部也应用到环境保护局资助的水基项目上。

单指1933年美国买法和其他相关立法,对联邦政府直接实际采购的货物适用相似的国内内容限制这些规则的影响受国家在某些贸易协定下的义务限制 。

Wife美国就业计划不完全详解政府建议改变现有内容偏好的方式,计划的一大部分将通过向地方和州政府项目提供联邦资助来实施,项目可适用Buy America规则。iden政府似乎支持增加购入美州保护并扩展至传统交通市场之外。

With respect to limiting the ROE premium, all three Republican commissioners issued separate statements.  Commissioner Christie voted in favor of the proposal but issued a concurrence basically taking aim at any premium added to a utility's allowed ROE.  Commissioners Chatterjee and Danly both dissented from the proposal, arguing that it is inconsistent with the relevant statutory provision and cuts against FERC's policy objectives.

FERC's actions should be of interest to utilities, transmission-only companies, market participants who pay transmission rates, customers and investors interested in developing transmission projects.

Background

In 2005, Congress added section 219 to the Federal Power Act (FPA) directing FERC to provide by rule incentive-based rates (1) for new electric transmission facilities that either ensure reliability or reduce the cost of delivered power by reducing transmission congestion, and (2) for utilities and other transmission providers that join a Transmission Organization (TO), such as a Regional Transmission Organization (RTO).[1]  FERC generally approves rate incentives for investments in transmission projects that present special risks or challenges, not routine investments.  FERC also awards a 50-basis point adder to the ROE in the rates of transmission owners that join a TO in recognition of the benefits, risks, and associated obligations of such membership (the TO Incentive).

As discussed in a prior post to this blog, in March, 2020, FERC issued a Notice of Proposed Rulemaking (2020 NOPR) that proposed, among other things, to (1) discard the risks and challenges approach for evaluating incentive requests and instead focus on the benefits of new transmission investment, and (2) increase the TO Incentive from 50 to 100 basis points.  FERC observed that planning, operating, and maintaining transmission infrastructure had changed considerably and that the types of needed transmission projects, and the rate treatments to incent them, must evolve to reflect the changes.

Modifying the TO Incentive

In a recent Supplemental NOPR, a divided FERC seeks comments on an additional proposal that would keep the TO Incentive at 50 basis points and subject it to a three-year term limit.

The Supplemental NOPR notes that although ratepayer benefits and utility risks and  responsibilities from Transmission Organization participation have increased, many benefits accrue to transmission owners, such as access to more developed organized markets.  Accordingly, the current 50-basis points TO Incentive, not the 100-basis points proposal in the 2020 NOPR, continues to appropriately correspond to the benefits of utilities joining TOs.

FERC also proposes to limit the term of the TO Incentive to a period of three years after a utility turns over operational control of its transmission facilities to the TO.委指出,规约只指向鼓励实体“加入”,因此FERC有权限限制鼓励加入而非保留加入According to the NOPR, an indefinite incentive may not be needed to incentivize a utility to join a TO, and may not appropriately balance utility and ratepayer interests, given the substantial benefits of TO membership to participating utilities and the large impact the incentive has on ratepayers.  The proposed 3-year limit would apply to transmission owners whose rates now include the TO Incentive.  Those owners would need to remove the incentive from their rates if the proposed term limit is adopted.

The Supplemental NOPR also requests comments on whether the TO Incentive should be limited to utilities that join a TO voluntarily.For example, should the incentive apply where participation in the TO is mandated by the state and/or other relevant electric retail regulatory authority?  In addition, FERC wants comments on alternative, non-ROE incentives that are more appropriate for the TO Incentive.

The Supplemental NOPR only addresses the TO Incentive and does not address the other proposals in the 2020 NOPR.

Concurrence

Commissioner Christie says the Supplemental NOPR "moves in the right direction." He takes aim at any premium added to a utility's allowed ROE: "ROE adders needlessly burden consumers with substantial additional costs without demonstrable evidence that they actually incentivize the particular action they are aimed at incentivizing."  In addition, Commissioner Christie notes that the public utility cost-of-service model is aimed at preventing the exercise of market power by charging a price higher than the market price, and adding basis points to the allowed ROE "makes the regulator not the guardian against market power, but the facilitator of it."  Commissioner Christie agrees with the Supplemental NOPR's request for proposals for alternative, non-ROE incentives.

Dissents

Commissioners Chatterjee and Danly dissented from the Supplemental NOPR.

Commissioner Chatterjee, who was FERC chair when the 2020 NOPR was issued, disagrees with the proposed limits on the TO Incentive.  He says that FPA section 219 does not limit incentives to utilities that "newly" or "voluntarily" join a TO and thus the proposal is inconsistent with the statute.  In addition, the Supplemental NOPR does not address FERC's prior findings to not limit the incentive to new TO members.Commissioner Chatterjee also argues that the proposal is contrary to the current Administration's federal clean energy goals, which will require "robust organized markets and an enormous amount of investment in transmission."  He says RTOs provide a platform for a successful energy transition but can only remain viable if existing utility members remain in RTOs, and lowering overall ROEs "may push investment away from transmission projects and towards other sectors of the economy or to lower risk projects."

Commissioner Danly dissents on somewhat similar grounds.  He argues that the Supplemental NOPR is inconsistent with the statute, which directs FERC to provide incentives to a utility "that joins" a TO, not to encourage utilities "to join" a TO or that "voluntarily" joins a TO.  In addition, Commissioner Danly argues the proposal "contradicts fourteen years of precedent interpreting unchanged statutory text."  He also argues that reducing the benefits to utilities that join TOs "is not the signal we should be sending to utilities that, to date, have resisted RTO participation."

Comments on the Supplemental NOPR are due 30 days after the date of publication in the Federal Register, and reply comments are due 45 days after such publication.

The transmission incentive workshop

FERC also announced a September 10, 2021 workshop "to discuss certain performance-based ratemaking approaches, particularly shared savings, that may foster deployment of transmission technologies"  More specifically, the workshop will address how to calculate ex ante and ex post benefit analyses for transmission technologies seeking incentives and issues associated with modeling approaches for various transmission technologies.  More details will be provided in a supplemental notice.

[1] The term Transmission Organization includes an RTO, Independent System Operator,  "independent transmission provider, or other organization finally approved by the Commission for the operation of transmission facilities."

The Federal Energy Regulatory Commission (FERC) has for the first time ruled on whether the greenhouse gases (GHG) emitted during the construction and operation of a proposed natural gas pipeline has a significant impact on climate change in determining whether to authorize a project as consistent with public convenience and necessity under Section 7 of the Natural Gas Act.  In earlier orders, FERC concluded that it was unable to assess the significance of a project's GHG emissions or those emissions' contribution to climate change.  In a recent order approving Northern Natural Gas Company's proposal to replace a pipeline segment, FERC stated that is no longer the case and then assesses the significance of the project's GHG emissions and their contribution to climate change.

In a press release on the order, FERC Chairman Glick said "(a) proposed pipeline's contribution to climate change is one of its most consequential environmental impacts and we must consider all evidence in the record—both qualitative and quantitative—to assess the significance of that impact.  I look forward to continuing to work with my colleagues as we refine our methods for doing so."

The Northern Natural order is significant because it reflects a willingness to consider the GHG impact of the construction and operation of a pipeline project on climate change and adopts a method for doing so.  This development must, however, be kept in perspective.  The GHG assessment in this case found no significant impacts and the GHG analysis drew dissents from two commissioners.  It remains to be seen how FERC will address projects with significant GHG impacts that may raise issues of mitigation or even rejection of a project and how FERC will address authorizations for LNG export terminals.

The Northern Natural order

The National Environmental Policy Act of 1969 (NEPA) requires FERC to consider whether a proposed natural gas pipeline project will have a significant impact on the environment.  In an apparent pushback to the prior claims of an inability to assess (GHG) emissions or those emissions' contribution to climate change, the order notes that "NEPA does not require that the studies, metrics, and models—scientific and otherwise—on which an agency relies be universally accepted or otherwise uncontested" but instead "permits agencies to rely on the best available evidence, quantitative and qualitative, even where that evidence has certain limitations."

For the Northern Natural project, FERC compared the project's reasonably foreseeable GHG emissions to the total GHG emissions of the United States as a whole.  The order notes that this comparison  provides "a reasoned basis to consider the significance of the project's GHG emissions and their potential impact on climate change."  Based on the record, the order finds that the project's contribution to climate change would not be significant.

Going forward, FERC says it will "consider all appropriate evidence regarding the significance of a project's reasonably foreseeable GHG emissions and those emissions' contribution to climate change." If GHG emission impacts are significant, they "would be considered along with many other factors when determining whether a project is required by the public convenience and necessity."

Dissents

Commissioners Danly and Christie  both concurred with the order's approval of Northern Natural's project but dissented on the application of the GHG impact analysis.

Commissioner Danly's lengthy dissent argues that the order violates the Administrative Procedure Act by reversing FERC's longstanding determination that it is unable to assess the significance of a project's greenhouse gas (GHG) emissions or their contribution to climate change without sufficient reasoning.The dissent says the reversal disregards a pending Notice of Inquiry (NOI) that seeks comments on the issue and the order announces a "fragmentary standard that provides no clarity because it fails to establish either a replacement framework or a threshold for when emissions will be deemed ‘significant.'"  Commissioner Danly also argues that the Natural Gas Act does not grant FERC the authority to be an environmental regulator.

Commissioner Christie issued a short dissent objecting to the analysis of "the purported impact on climate change" of the project's GHG emissions.  His dissent also argues that the GHG impact analysis is a "major question of law" to be considered in a pending NOI and that it "is unfair and premature at best" to decide it "in this order with its limited participation."

FERC's opt-out provision for aggregations of demand response resources is rooted in its established policy allowing retail regulators to prohibit demand response resources from bidding into wholesale markets.  In a separate order, FERC opened a proceeding to consider eliminating that opt-out provision as well.

Commissioners Danly and Christie are not on board with trimming the scope of the opt-out provision, and, in separate statements, said they would expand the opt-out provision.

FERC's orders should be of interest to a wide range of electricity market participants, including utilities, generation companies, investors in storage and other electricity resources and electricity customers.

Order No.2222 rehearing

Background

As discussed in a prior post to this blog, Order No.2222市场规则必须容留DER聚合物参与,这些规则必须解决:(1)DERs通过聚合直接参加RTO/ISO市场的资格问题;(2)DER聚合物定位需求在地理上尽可能可行RTO/ISO、DER聚合器、分发工具和相关电商零售监管机构之间的协调。

参与FERC批发市场分配系统或零售客户表后的资源联邦电力法赋予FERC跨州批发电权,而州则拥有发电配电设施以及零售销电权。2222,FERC拒绝质疑其强制实施拟议改革的权力,并拒绝允许零售管理机构授权或禁止DERs和/或DER聚合器参与RTO/ISO市场的请求(即分别选入或选出)。ferc.gov/sites/default/files/2021-03/E-1.pdf2222-A)提供几点澄清,但维护第221-A号命令的规定2222除外允许零售管理机构选择退出规定。响应重听请求,委员会排除选择退出规定DER聚合值i.e/em>,那些由不同类型资源组成,包括需求响应而非完全需求响应。

FERC开通程序说明从非电源向电源转换至最终消费点,如燃料车辆和提供供热和冷却,包括工业设施流程热量To that end, FERC announced an April 29, 2021 conference "to initiate a dialog between Commissioners and stakeholders on how to prepare for an increasingly electrified future."

While discussion at the conference could be fairly wide-ranging, it will likely focus on the impact of electrification on grid investment and operation and on wholesale electricity markets.  FERC's notice for the conference lists the following general topics:

• Projections, drivers, and risks of electrification in the United States.
• How electrification may influence or necessitate additional transmission and generation infrastructure.
• Whether and how newly electrified sources of energy demand (e.g., electric vehicles, smart thermostats, etc.) could provide grid services and enhance reliability.
• The role of state and federal coordination as electrification advances.

The conference will be Commissioner-led and held electronically.  More information on the conference will be announced by FERC in a supplemental notice.