All applicants that receive awards under the section1603 program are required to report certain information annually to the Treasury Department for a period of five years. Reports are due annually, 30 days after the anniversary date of the date the property was placed in service. Failure to file can result in recapture of the grant. The form used to submit this report is now available online and can be completed and submitted through the online application system. Applicants will receive a reminder notification via email 30 days before the report is due. A copy of a sample annual report may be viewed here.

CONTACT

Philip H. Spector  
Tax Practice
212.704.6004

Craig M. Kline
Project Development & Finance Practice
212.704.6150

However, the investigation will have important implications beyond PJM and should be watched closely by the industry.  This investigation should signal to all participants in bulk power markets how FERC, and the current leadership of the Office of Enforcement, will carry out their duties and use the anti-manipulation authority granted to the agency in the Energy Policy Act of 2005.  In particular, Staff will examine the boundaries of what behaviors constitute, on the one hand, “unlawful market manipulation” as opposed to, on the other hand, trades that are merely made in compliance with a flawed market design/tariff.  Specifically, PJM told the Commission that several market participants “have been able to clear large volumes of megawatt hours of Up-To Congestion transactions with no risk of any settlement in either the day-ahead or balancing markets.  However, because such transactions were eligible for a marginal loss allocation, the cleared megawatts on the reserved transmission service resulted in a sizeable allocation of the marginal loss surplus based on the large megawatt hour quantity of cleared transactions.”

Unlike most FERC enforcement actions, which are non-public and do not provide Staff with subpoena authority, this investigation, while labeled as non-public, has been launched publicly and Staff of the Office of Enforcement has been given subpoena power by the Commission.  Pursuant to the terms of the order, the Director of the Office of Enforcement, and employees designated by the Director, shall have authority to administer oaths and affirmations, subpoena witnesses, compel their attendance and testimony, take evidence, compel the filing of special reports and responses to interrogatories, gather information, and require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records.  How Enforcement Staff conducts this investigation will likely be a template for future investigations of this type. The source of this issue appears to be the PJM Tariff power market settlement rules.  PJM has filed a tariff amendment under FPA Section 205 to fix the problem, with a  proposed  mid-September effective date.  FERC has not yet moved pursuant to Section 206 to investigate the justness and reasonableness of the tariff provisions at issue, nor has it set a refund effective date.  FERC could find that such FPA 206 refund protection is necessary to protect customers in this instance. 

Troutman Sanders’ Energy Practice Group has long been a leader in the industry and has a wealth of experience in FERC enforcement actions.  Please call us if you need any assistance regarding this matter.

CONTACT

Clifford Sikora
202.274.2966

Daniel L. Larcamp
202.274.2841

Amie V. Colby
202.274.2922

David B. Rubin
202.274.2964

Jeffrey M. Jakubiak
202.274.2892

William R. Derasmo
202.274.2922

In order to be eligible, projects under this Solicitation must: (1) manufacture commercial technology products that support generation of electricity or thermal energy from renewable resources; (2) have project costs greater than $75,000,000; (3) be able to obtain a rating of ‘BB’ or better from Standard & Poor’s or Fitch or ‘Ba2’ or better from Moody’s (without the benefit of any DOE guarantee or other credit support); (4) create or retain jobs in the United States; and (5) meet all applicable requirements of Title XVII of the Energy Policy Act of 2005, including Section 1705, the Solicitation and the Recovery Act.  Examples of the types of projects which may be eligible include: wind energy component or systems manufacturing facilities; solar photovoltaic (PV) component or system manufacturing facilities; concentrated solar power component or system manufacturing facilities; and hydropower component or system manufacturing facilities. 

It is important to note that in order to comply with the Recovery Act, a project must “commence construction” on or before September 30, 2011.  In order to “commence construction,” the project developer must (i) have all pre-construction engineering and design completed, have all licenses, permits and environmental clearances, and have engaged all contractors and ordered all equipment and supplies so that physical construction of the project can begin and proceed to completion and (ii) have commenced physical construction at the primary site of the project.

For more information or questions regarding the “Projects that Manufacture Commercial Technology Renewable Energy Systems and Components” Solicitation or any related topic, please contact Todd Coles in our Washington, D.C. office at 202-274-2810 or Todd.Coles@troutmansansders.com.
To see a copy of the Solicitation, click here.

Although the state’s renewable portfolio standards applies to both the state’s alternative retail electric suppliers and investor-owned electric utilities, only investor-owned electric utilities supplying over 100,000 Illinois customers are affected by the “ramp-up.” As a result, only two utilities are affected by HB 6202, Commonwealth Edison and Ameren Corporation (the “Affected Utilities”). 

The prior legislation required the Affected Utilities to procure 6% of its power from solar sources by June 1, 2015. Although the 6% threshold by June 1, 2015, is still in place, the Affected Utilities now have an additional requirement to purchase 0.5% of its power from solar energy by June 1, 2012, 1.5% by June 1, 2013, 3% by June 1, 2014, and 6% by June 1, 2015. Utilities that are not affected by HB 6202 are still required to procure 6% of its power from solar sources by June 1, 2015.   

HB 6202 aims to “establish strengthened targets for utilities that will be purchasing more solar energy and help homeowners who want to increase their solar energy usage,” according to a press release issued by Governor Quinn. The Governor also acknowledges that “[s]olar energy is the wave of the future, and it is important that our public utilities and homeowners are able to more easily increase their use of solar energy.”

The Illinois renewable portfolio standard, which was originally established in 2007, currently requires the state’s alternative retail electric suppliers as well as investor-owned electric utilities to supply 25% of its power from renewable resources by 2025. 75% of the renewable portfolio standard must be satisfied through wind sources and 6% of the renewable portfolio standard must be satisfied through solar sources. 

The state’s renewable portfolio standard may be satisfied through the purchase of renewable energy certificates (“RECs”). Prior to June 1, 2011, the RECs must be purchased from in-state generators, provided that they are cost-effective. If RECs are unavailable or are not cost-effective from in-state generators, then they may be purchased from states that adjoin Illinois. If RECs are not available from adjoining states, then they may be purchased elsewhere. After June 1, 2011, however, the RECs may be purchased from either renewable energy resources located in Illinois or in the states that adjoin Illinois. If the utilities are not able to purchase the certificates from in-state generators or adjoining-state generators, then the certificates may be purchased elsewhere.

For more information or questions regarding HB 6202 or any related topic, please contact Candice Columbres located in our Chicago office at 312-759-5946 or Candice.Columbres@troutmansanders.com or Craig Kline located in our New York office at 212-704-6150 or Craig.Kline@troutmansanders.com.

The full text of House Bill 6202 can be found here.

The required air permits, known as Prevention of Significant Deterioration (“PSD”) permits, are generally issued by state permitting agencies.  In issuing these permits, states act simultaneously under federal law—the Clean Air Act (“CAA”) and EPA’s regulations implementing the CAA—and state law. 

The two EPA regulations proposed on Thursday are designed to conform state laws and regulations to EPA’s new GHG requirements.  EPA has identified 13 states whose laws do not authorize them to regulate GHGs in conformity with EPA’s new GHG requirements.  EPA says that its 13-state list is based on a “tentative” review of state law and asks for comments on whether any of the laws of these 13 states do in fact authorize GHG regulation and also whether any of the laws of the other 37 states do not authorize such regulation.

EPA proposes to issue on December 1 of this year a “SIP Call” for any state that EPA finally determines does not authorize regulation of GHGs.  The SIP Call will require these states to make the necessary changes to their laws and to submit a State Implementation Plan (“SIP”) to EPA confirming that they have done so.  EPA proposes to give states up to one year to respond to the SIP Call or some lesser period of time that a state agrees to.  Some states may need the year (or even more) to respond to the SIP Call because they must undertake notice and comment rulemaking to change regulations or their legislators need to enact statutory changes.

For states that do not change their laws in response to the SIP Call, EPA proposes to impose a Federal Implementation Plan (“FIP”) under which EPA would essentially take over the state permit program.  EPA does not propose to take over the entire state program, only that part addressing GHGs.  Recognizing that there could be difficulty with processing a PSD permit application in which states retain control over non-GHG emissions and EPA controls GHG emissions, EPA invites comment on whether EPA should take over the entire state PSD program.  EPA states that it will retain control of the state PSD program, in whole or in part, only until the state conforms its laws to EPA’s requirements through a SIP submission.

EPA says the purpose of the rule is to ensure that every state has a permit program in place—whether administered by EPA, the state or both—that is capable of processing PSD permit applications with GHG conditions as of January 2, 2011 when GHG regulation commences.  The challenge of doing so, however, will be difficult, at least in some states.  Since EPA will not issue SIP Calls until December 1, 2010 and since those states that receive a SIP Call will have at least a year to respond, it appears inevitable that some states will not be able to process PSD permit applications with GHG conditions as required by EPA by January 2, 2011.  Moreover, a state response to a SIP Call is not automatically effective but must be approved by EPA through a process in which EPA must issue notice of the proposed approval and take comment.

Given these considerations, EPA recognizes that a possibility exists that, in some states and for some period of time, there could effectively be a permit moratorium and therefore a construction moratorium for sources that are subject to EPA GHG regulatory requirements.  This situation could occur for states that must change their laws but cannot do so by January 2, 2011 or those that do so in response to the SIP Call but EPA does not approve their response by January 2, 2011.  These states could only issue a PSD permit without GHG conditions, but those permits would violate federal law and could not be relied on by the permittee.  Without a valid permit, the developer could not commence construction.

EPA offers several options which it says are designed to minimize the possibility that this type of construction moratorium could come about.  It proposes to “parallel process” its approval of a state’s response to a SIP Call with the state making the needed changes in state laws.  Under this option, where a state issues notice and takes public comment on a proposed law revision as part of the process of responding to the SIP Call, EPA would simultaneously issue notice and take comment on whether the state’s proposed law revision, assuming it is finalized without change, satisfies federal requirements.  Other options proposed by EPA include states agreeing in advance to EPA taking temporary control of their PSD programs and states agreeing to temporarily act as EPA’s delegate in administering a federal PSD program, both until the states make the needed law changes.

EPA also faces the problem that some states that authorize regulation of GHG emissions may have different thresholds for regulation than EPA.  EPA’s Tailoring Rule was designed to address the problem that the CAA requires any source potentially emitting more than 100 or 250 tons per year of a regulated air pollutant (depending on the type of source) to obtain a PSD permit.  EPA concluded that these thresholds were too low for GHGs and could result in so many sources becoming subject to PSD permit requirements that the permitting system would become swamped with applications.  The Tailoring Rule increased those thresholds to much higher levels.

At least some states, however, require use of the lower thresholds, either because their laws incorporate the CAA thresholds by reference or expressly adopt them.  EPA is also requiring these states to change these regulatory thresholds.

EPA has already denied numerous requests from business associations that EPA delay the commencement of GHG regulation on January 2, 2011.  Despite the obvious difficulty, as reflected in EPA’s proposals, of ensuring that all fifty states are ready to go with GHG permitting as of that date, it seems very unlikely that EPA would change its determination to commence regulation with the beginning of the new year.

Comments on EPA’s proposals are due 30 days after they are published in the Federal Register, expected shortly.