In response to concerns regarding the changing nature of the nation’s energy supply portfolio and the emergence of promising energy storage technologies, the Commission in recent years issued several notices of inquiry, notice of proposed rulemaking, and policy statements regarding various energy storage and ancillary service supply issues. Additionally, the Commission considered but ultimately declined to pursue the Department of Energy-initiated rulemaking on grid resiliency and reliability. On February 15, 2018, however, the Commission took concrete action by issuing a pair of Final Rules, addressing (i) storage participation in regional markets; and (ii) the provision of primary frequency response, a critical grid support service. Continue Reading FERC Issues Final Rules on Electric Storage Participation in RTOs/ISOs and Primary Frequency Response for New Generators
In 2017, there were a record number of solar policies debated in state legislatures and commissions, with nearly every state considering some kind of solar policy or rate change. Recently, the North Carolina Clean Energy Technology Center (NCCETC) released its 50 States of Solar report which reviews solar policies and initiatives across the nation. In its report NCCETC found that there were 249 state actions on solar policies in 2017: 34% were related to residential fixed charges and minimum bill increases, 27% were distributed generation (DG) compensation policies, and 12% were community solar policies. The actions took place in 45 States plus the District of Columbia. That is up by 17% from 212 actions in 2016 and 42% from the 175 actions in 2015. Continue Reading State-level Solar Policy Actions up 17% in 2017
On January 18, 2018, FERC approved California Independent System Operator Corporation’s (“CAISO”) changes to its resource adequacy program to, among other things, (1) allow capacity located in a local capacity area, but procured as system capacity, to provide system substitution capacity during forced outages and (2) cap a load serving entity’s (“LSE”) monthly local capacity requirement at its monthly system capacity requirement.
CAISO and the local regulatory authorities within its footprint administer the resource adequacy program to ensure that LSEs procure enough transmission system capacity to meet their forecasted load, plus a reserve margin set by their local regulatory authority. Additionally, LSEs are required to procure local area capacity—capacity capable of meeting capacity requirements in a transmission-constrained area and that is also located within that area—and flexible resource adequacy capacity—resources that can ramp up and down quickly to manage variability. Moreover, LSEs must submit annual and monthly resource adequacy plans to CAISO demonstrating that they have procured enough capacity to meet their forecasted load and reserve margin, while scheduling coordinators for resource adequacy resources submit annual and monthly supply plans that CAISO uses to verify that LSEs are meeting their resource adequacy requirements. Continue Reading FERC Approves Changes to CAISO’s Resource Adequacy Program
The House and Senate Conference Committee reached agreement on the Tax Cuts and Jobs Act (TCJA) last Friday, December 15, 2017. The text of the bill (the Conference Agreement) is available here. Prior coverage of the House bill and a prior version of the Senate bill is available here and here, respectively.
PTC and ITC
The Conference Agreement, following the Senate bill, will not change the PTC or ITC from the current law phase-down.
Corporate Tax Rates
The Conference Agreement will lower the highest corporate tax rate to 21% beginning in 2018.
On Monday, the California Public Utilities Commission (CPUC) released its Renewables Portfolio Standard Annual Report announcing that the State is on track to meet its renewables portfolio standard (RPS) requirement of 50% ten years ahead of schedule. The California RPS sets a requirement that 33% of electricity retail sales be served by renewable resources by 2020, and 50% by 2030. But with aggressive investment in renewables the State’s three large investor owned utilities (IOUs) may achieve the 50% goal by the 2020 deadline, ten years early. Continue Reading CPUC: California May Achieve The 50% RPS Goal By 2020, 10 Years Ahead of Schedule
The California Independent System Operator Corp. (“CAISO”) is moving forward on a slate of proposals which are intended to enhance grid reliability. These proposals include addressing issues related to generation retirement, entering into a specific reliability must-run contract, modifications to incentives related to the resource adequacy program, as well as adjusting the compensation given to its Board of Governors (the “Board”). On November 2, 2017, the Board approved the four proposals, and CAISO will file any resulting tariff related changes with FERC at a later date. Continue Reading CAISO Board Approves Proposals to Enhance Grid Reliability
Yesterday the Joint Committee on Taxation released a description and revenue estimate of the Senate Finance Committee Chairman’s mark up of the Tax Cuts and Jobs Act. The Senate Finance Committee has not released bill language yet but may do so as early as next week. The Senate bill differs in significant respects from the House bill, which we summarized here.
PTC and ITC
Unlike the House bill, the Senate bill would not change the PTC or ITC.
Corporate Tax Rates
Like the House bill, the Senate bill would lower the highest corporate tax rate from 35% to 20%. However, the Senate bill would not reduce the rate until tax years beginning after 2018, one year later than the House bill. Continue Reading Impact of Senate Tax Reform Bill on Renewable Energy Projects
Southern California Edison (SCE) released The Clean Power and Electrification Pathway, a blueprint for California to reduce greenhouse gas emissions and air pollutants. SCE explains that a clean power and electrification pathway is the best approach to meet California’s 2030 and 2050 climate goals, reducing 1990 levels of greenhouse gas emissions by 40 and 80 percent respectively. The plan largely revolves around three economic sectors: electricity, transportation and buildings. By 2030, the plan calls for California’s electric grid to be supplied by 80% carbon-free energy, at least 7 million electric vehicles in California and one-third of space and water heaters in California to be electric powered. Essentially, the plan proposes to produce an electric grid with more carbon-free energy that will supply high-polluting industries. Other pathways to decarbonization, including renewable natural gas and hydrogen, were also analyzed but were determined to be more expensive than the clean power and electrification pathway. For more information, see SCE’s full plan here.
Originally posted on Troutman Sanders’ Washington Energy Report
On October 4, 2017, FERC issued two separate orders clarifying its jurisdiction under sections 203 and 205 of the Federal Power Act (“FPA”) related to certain project development activities. In Ad Hoc Renewable Energy Financing Group, FERC granted a petition for declaratory order and confirmed that certain tax equity interests in public utilities do not constitute “voting securities” for purposes of FPA section 203 and therefore do not require prior FERC approval. Separately, in ALLETE, Inc., FERC disclaimed jurisdiction under FPA section 205 over certain pre-construction activities and thereby found that ALLETE, Inc. did not need to file three pre-construction agreements with the agency. Continue Reading FERC Issues Orders Clarifying Jurisdiction Over Specific Project Development Activities
Originally posted on Troutman Sanders’ Washington Energy Report
On October 4, 2017, FERC issued two separate orders clarifying its jurisdiction under sections 203 and 205 of the Federal Power Act (“FPA”) related to certain project development activities. In Ad Hoc Renewable Energy Financing Group, FERC granted a petition for declaratory order and confirmed that certain tax equity interests in public utilities do not constitute “voting securities” for purposes of FPA section 203 and therefore do not require prior FERC approval. Separately, in ALLETE, Inc., FERC disclaimed jurisdiction under FPA section 205 over certain pre-construction activities and thereby found that ALLETE, Inc. did not need to file three pre-construction agreements with the agency.
In Ad Hoc Renewable Energy Financing Group, Petitioners filed a petition for a declaratory order requesting that FERC find that: (1) tax equity interests are not voting securities, but rather passive interests in accordance with FERC’s AES Creative Resources precedent; (2) assuming such interests are passive interests, the issuance or transfer of such interests does not require prior authorization under section 203 of the FPA; and (3) the acquisition of such interests by a holding company, therefore, qualifies for a blanket authorization under FERC’s regulations. In the AES Creative Resources case, FERC held that certain tax equity interests in public utilities do not constitute “voting securities” for purposes of FERC’s market-based rate regulations under FPA section 205. In granting the petition for declaratory order filed by Petitioners, FERC noted that its finding that tax equity interests were passive and did not require prior-approval under section 203 of the FPA was limited to the types of securities addressed in the AES Creative Resource proceeding.
In the ALLETE, Inc. proceeding, FERC found that three agreements governing pre-construction activities were not jurisdictional. On March 10, 2017, ALLETE filed, pursuant to FPA section 205, three agreements entered into with Manitoba Hydro and its subsidiary, Manitoba Limited, for the design, construction, and operation of the Great Northern Transmission Line. Specifically, the three agreements addressed the rights and obligations of the parties during the early stages of the project prior to energization of the transmission line. ALLETE contended that the agreements did not need to be filed with FERC because they concerned “preliminary scoping, study, pre-construction activities, and cost-sharing and, therefore, do not significantly affect rates and services” under FERC’s “rule of reason,” which allows FERC to exercise its discretion to allow utilities to forgo specific filings which deal with “practically insignificant” matters. FERC agreed with ALLETE and disclaimed jurisdiction over three agreements. FERC concluded that the matters within the agreements were only tangentially related to FERC’s jurisdiction under FPA section 205(c) and therefore, under FERC’s rule of reason, the agreements need not be filed.