Energy Law Archives - Page 2 of 5 - The National Law Forum

China Proposes “RoHS 2” Framework for Comment

On May 15, 2015, China’s Ministry of Industry and Information Technology (“MIIT”) released a latest Draft for Comments (“May 2015 Draft”) of the “Management Methods for the Restriction of the Use of Hazardous Substances in Electrical and Electronic Products” (“Methods”) (Draft for Comments in Chinese). The new Methods is designed to replace the existing regime, promulgated in 2006 and commonly referred to as “China RoHS.” The May 2015 Draft is now open for public comments until June 17, 2015. It makes several important proposed changes to the existing China RoHS regulation.

Since 2010, the Chinese government has attempted to push forward an updated RoHS regulation, and MIIT has released several draft revisions, but none have been enacted. The May 2015 Draft generally retains the requirements on both materials restrictions and information disclosure, but makes several important changes:

It aligns its scope with the EU RoHS 2. The new open scope of covered “Electrical and Electronic Products” (“EEP”) is not limited to “electronic information products” but would now extend to all electrical and electronic equipment (“EEE”) that meets voltage specifications. The definition is almost identical to that of EEE in the EU RoHS 2 Directive, except that it excludes “devices involved in electrical power production, transmission and distribution.”;
The May 2015 Draft will remove the current “manufactured for export” scope exclusion;
The renamed “Compliance Management Catalogue” will likely, once issued in the future, include the hazardous-substance content limits (to date not yet imposed under China RoHS 1).
With respect to certification, the May 2015 Draft proposes a new, multi-agency, two-step system to replace the current program. Products on the “Compliance Management Catalogue” will first go through a “conformity assessment” process. After the conformity assessment, that assessment will be subject to a subsequent verification mechanism, which will be developed later by MIIT along with Finance and other ministries.

It remains unclear how the new conformity assessment and the following verification mechanism will operate in practice. The language implies that the MIIT may need to take further actions to specify the details of these programs;

The May 2015 Draft will remove the disclosure requirement for product packaging materials from the existing regulation.

It remains to be seen whether this May 2015 Draft will be finalized as the new China RoHS 2 regulation and whether the above changes will remain in the enacted rules. Parties that are interested in submitting comments on this Draft may do so via either of the two approaches listed here (in Chinese).

Mr. LaMotte graciously acknowledges the assistance of Shengzhi Wang, a summer associate with the Firm, in the preparation of this Alert.

ARTICLE BY K. Russell LaMotte of Beveridge & Diamond PC

DOE Highlights the Need to Modernize Aging US Energy Infrastructure

The first installment of the Obama Administration’s comprehensive survey and analysis of the US energy sector provides a detailed roadmap for modernizing the energy transmission, storage, and distribution system to make it more secure and resilient to the effects of climate change while taking advantage of recent advances in energy and information technologies.

On April 21, the Obama Administration released the first comprehensive survey and analysis of the United States’ basic energy infrastructure needs for the 21st century. The Quadrennial Energy Review (QER), announced by Vice President Joe Biden and Secretary of the Department of Energy (DOE) Ernie Moniz, provides a critical analysis of vulnerabilities in the energy transmission, storage, and distribution systems in the United States. The report also includes policy recommendations to modernize these systems and to make them more secure and resilient to the effects of climate change and more flexible in response to recent advances in energy and information technologies.

The first QER report includes several specific recommendations for investments in energy infrastructure upgrades and new policies designed to promote responsible development of domestic energy sources and to facilitate more timely environmental review and permitting decisions. Priorities outlined in the report will likely shape legislative and administrative actions that could affect markets and shape commercial opportunities in the energy sector. Key recommendations include the following:

Reducing siting and permitting times for energy infrastructure projects

Updating existing energy infrastructure, especially natural gas pipelines, to improve safety and enhance the delivery of abundant domestic supplies of natural gas

Modernizing and standardizing the electric grid

Enhancing the nation’s ability to respond to energy supply emergencies

Background

On January 9, 2014, President Barack Obama directed an interagency Task Force, which included members from all relevant executive departments and agencies, to submit a QER report every four years beginning in 2015.[2] The reports are intended to undertake a rigorous review of existing federal energy infrastructure and policy and to provide an integrated set of recommendations on how best to transform US energy production, delivery, and consumption systems at the local, state, and federal levels. The QER is a key component of the Obama Administration’s Climate Action Plan and is designed to ensure that new federal energy policy meets the nation’s economic, environmental, and energy security goals by providing an “analytically based, clearly articulated, sequenced and integrated actions, and proposed investments over a four-year planning horizon.”[3]

This first installment of the QER recognizes that the US energy landscape is undergoing an unprecedented transformation in the way that we generate, deliver, use, and even think about energy. These fundamental changes present challenges and opportunities to public- and private-sector stakeholders that are addressing, for example, the technical challenges associated with the influx of large quantities of variable energy resources; heightened safety concerns; the political challenges associated with competing energy, environmental, and economic policy goals; and the regulatory challenges posed by the complex, multilayered network of permitting authorities and regulations that govern the US energy system. To accommodate the interests of those most affected by these challenges, the DOE hosted 13 stakeholder engagement meetings across the country to gather public input for the QER.

Opportunities and Challenges

The first QER report focuses on US infrastructure for transmission, storage, and distribution (TS&D) of energy, because these basic components of the energy delivery system will shape supply and end-use patterns and practices for decades. Further, the federal government has recognized that once built, this infrastructure is relatively inflexible, and thus getting it right from the outset will determine whether the government can collectively meet the nation’s energy, national security, and climate change objectives.

The QER report outlines a multiyear roadmap to guide federal actions at the legislative, executive, and administrative levels that relate to energy infrastructure investments, siting and permitting, electricity market integration, workforce development, and heightened grid security.

Improvements to TS&D Infrastructure Siting and Permitting

Although it is important to consider the changing energy mix and how best to integrate new technologies onto the electric grid, for example, this cannot be achieved without improving interagency coordination and transparency for project planning and siting—an issue addressed in the final chapter of the QER report. The cost, time, and complexity of siting and permitting large infrastructure in the federal system will be a serious hurdle to implementing the QER’s infrastructure recommendations. Currently, there are “more than 35 distinct permitting and review responsibilities across more than 18 Federal agencies and bureaus, implemented by staff at headquarters and hundreds of regional and field offices.” To make this system less onerous for developers, the Obama Administration has committed to reducing permitting timelines for major infrastructure projects by half while also improving outcomes for communities and the environment. But, as the QER recognizes, it is still an open question whether, absent additional legislative authority and congressionally appropriated funding, these reforms can be accomplished.

To that end, the QER adopts five key recommendations to assist with the siting, permitting, and review of infrastructure projects: (1) allocate resources to key federal agencies; (2) prioritize meaningful public engagement through consultation with American Indian tribes, coordination with state and local governments, and facilitation of nonfederal partnerships; (3) expand landscape- and watershed-level mitigation and conservation planning; (4) enact statutory authorities to improve coordination across agencies; and (5) adopt Administration proposals to authorize the recovery of costs for review of project applications.

Even if all these recommendations are followed, however, meaningful change may remain elusive unless the Administration sustains cabinet-level leadership and support for such reforms. Further, most of the decisions necessary to permit infrastructure projects are made by state or local agencies or in local field or state offices of federal agencies. To obtain truly transformative changes in energy infrastructure siting and permitting, the key agency staff at the state, local, and regional levels must be personally invested and dedicated to the Administration’s priorities.

Additional QER Recommendations

Other QER chapters identify important opportunities to modernize, expand, replace, or transform the TS&D system so that it better accommodates changes in energy supply, integrates forward-looking information and security technologies, and meets increasing demand for new consumer services. This includes recommendations for smart grid technology and distributed generation, as well as modernization of the strategic petroleum reserve and the safety challenges of methane gas. Key recommendations include the following:

Increase the resilience, reliability, safety, and asset security of the TS&D infrastructure by establishing DOE programs to accelerate natural gas pipeline replacement and maintenance and to provide competitively awarded grants to states that demonstrate innovative approaches to TS&D infrastructure enhancements, with a particular focus on resilience and reliability improvements.

Modernize the electric gridby spearheading DOE coordination with the standards organizations, other federal agencies, industry, state officials, and others to establish standards that enhance connectivity and interoperability on the electric grid.

Address environmental aspects of the TS&D infrastructure by commencing a coordinated effort between the DOE and the Environmental Protection Agency to improve quantification of emissions from natural gas TS&D infrastructure.

Next Steps

Building on the foundation laid by the Blueprint for a Secure Energy Future and the Climate Action Plan, the QER represents another step in the Administration’s efforts to leverage US domestic energy resources while strengthening energy security, reliability, and climate resiliency. Although the QER is only advisory, it recommends several specific legislative actions that would change the landscape for future and ongoing energy sector development, including funding the Interagency Infrastructure Permitting Improvement Center, a pilot version of which is currently housed in the Department of Transportation; restore appropriations to the various federal agencies responsible for infrastructure siting, review, and permitting; and update Strategic Petroleum Reserve (SPR) release authorities to allow the SPR to be used more effectively to prevent serious economic harm to the United States in case of energy supply emergencies. The QER report may also reignite stalled congressional efforts to accelerate natural gas pipeline repair to prevent explosions and accidents, decrease costs to consumers, and reduce methane leaks that contribute substantially to the US “carbon footprint.”

If nothing else, the QER report serves as a stark reminder of how much work there is to do to create the energy infrastructure necessary to support the modern economy, and of the many opportunities for innovative companies to contribute to that process. In light of the complex landscape and shifting federal priorities regarding TS&D infrastructure development, siting and security, companies doing business in this sector will benefit from counsel with the breadth and depth of experience necessary to develop a successful strategy and the acumen and relationships to execute it.

ARTICLE BY

Steve W. Black

Sarah M. Keane

Kelly M. Gorton

Morgan, Lewis & Bockius LLP

Troubles for Massachusetts Town’s Wind Turbine

In the long-running dispute between the Town of Falmouth and the neighbors to the Town’s wind turbine that powers the municipal wastewater treatment facility (WWTF), score one for the neighbors. The Massachusetts Appeals Court reversed the decision of Barnstable Superior Court Justice Robert C. Rufo in Drummey v. Town of Falmouth, 87 Mass. App. Ct. 127 (2015), finding that the Town was required to obtain a special permit from the Falmouth Zoning Board of Appeals to install the wind turbine on Town land.

Claiming harm from sound pressures and noise from the turbine’s operations, the plaintiffs first sought the building commissioner’s enforcement of the Zoning Bylaw. They alleged that the town violated the Bylaw by failing to secure a special permit for the turbine’s construction and maintenance. The building commissioner denied their request. The plaintiffs appealed to the ZBA and the Superior Court, both of which affirmed the building commissioner’s ruling.

Notwithstanding that the Bylaw provides that a petitioner may apply for a special permit to construct a windmill, the Superior Court found that this provision did not “apply in the limited circumstance where the Town itself desires to construct and operate a windmill for municipal purposes in a district where all such purposes are permitted as of right.” The Court explained that the turbine was a “municipal purpose” that fell within the enumerated community service uses permitted as of right in the Bylaw, which includes: “All municipal purposes, including the administration of government, parks, playgrounds, recreation buildings, Town forests, watershed, water towers and reservoirs, beaches, fire and police stations and armories.” Although turbines were not expressly included in the list of municipal purposes, the Superior Court found the list to be illustrative and not exclusive.

On appeal, the Appeals Court first recited the rule of law that the interpretation of a town’s bylaw raises a question of law. As such, the Court “reviews the judge’s… interpretations of zoning bylaws, de novo[anew or afresh].” It remarked that, as in other districts of the Bylaw, windmills were specifically designated in the public use district as an accessory use by special permit. Therefore, it logically followed that windmills could not have been intended to fall within the list of more general municipal uses allowed as of right. While the Superior Court’s understanding of the non-exclusive nature of the list was accurate, the Appeals Court found that that characterization of the list “did not adequately consider the weight that must be given a specific by-law provision that has been drafted to take into account the public welfare.” Specifically, the Bylaw included “a comprehensive scheme” for wind turbines including controls on their placement and impact on the town. In effect, the lower court erroneously reviewed the key Bylaw provision in isolation, not in context as the law requires.

The Court vacated the judgments of the Superior Court and remanded the case to the Superior Court for entry of new judgments consistent with its opinion. The Town has filed an application for further appellate review, which is pending before the Supreme Judicial Court.

ARTICLE BY

Brian C. Levey

Beveridge & Diamond PC

Energy Storage Conference Offers Lessons Learned and Path Forward

The “Storage Week 2015″ summit held in San Diego, CA this week brought together policymakers, regulators, electric utility executives, system vendors, consultants, and other stakeholders to discuss the remarkable progress made in the last few years to deploy and integrate energy storage technologies. The 8th annual event provided insights and practical advice regarding applications ranging from large-scale, grid-connected energy storage projects, to distribution level and behind-the-meter storage opportunities. Noteworthy from the beginning of the conference was the fact that a significant percentage of the attendees were project developers and financiers which suggests that the energy storage sector is finally moving away from conceptual discussions and into actual deployment.

Much of the discussion at the conference focused on the efforts to integrate energy storage in organized electricity markets from New York to Texas to California. Representatives from ISOs, RTOs, utilities, and project developers provided an overview of the progress that has been made in these parts of the country, lessons learned to date, and insights into the continuing evolution and deployment of energy storage.

Given both the location of the conference and recent regulatory and industry developments, energy storage in California figured prominently in the discussion. California PUC (CPUC) Commissioner Carla Peterman provided the keynote address and discussed the progress made since passage of AB 2514 in 2010 which required the CPUC to adopt energy storage system procurement targets for certain California electric utilities. Comr. Peterman and many other speakers discussed the market dynamics and industry response associated with the CPUC’s 2013 decision requiring the state’s utilities to work toward acquiring 1.325 GW of transmission-connected, distribution-connected, and behind-the-meter energy storage resources. These policy-driven changes have enabled California and its utilities and consumers to begin to develop valuable experience with energy storage technologies, contractual arrangements, and regulatory approaches. Representatives from the CPUC, the California independent system operator (CAISO), utilities, and project developers all emphasized that flexibility is the key at this early stage. Further developments in California will be guided by this experience as well as CAISO’s Energy Storage Roadmap which focuses on increasing revenue opportunities for energy storage, reducing interconnection costs, and streamlining regulatory processes to improve certainty for energy storage providers and users.

Two key themes emerged throughout the various conference presentations and discussions.

First, the success of energy storage will depend largely on the development of regulatory and market approaches that recognize and reward the multiple benefits that energy storage technologies can provide. Energy storage can be both a generation asset and a transmission asset. It can provide grid balancing and stability through power supply management, frequency regulation, and voltage stability. It can provide demand response and load reduction benefits. Regulations should accommodate the multi-purpose nature of energy storage. As one speaker commented, “Regulation should not stand in the way of innovation.”

Second, technology and industry developments will continue to create new opportunities for energy storage. Declining prices for both renewable energy and energy storage technologies, a changing generation mix due to coal plant retirements and natural gas-fired replacements, and fundamental changes that are driving the utility-customer relationship from the provision of a commodity (i.e., kWh) to the complex, interactive “internet of energy” — these and numerous other factors align well with the multiple roles energy storage can play.

With few exceptions, there was little discussion of the role of and opportunities for energy storage outside of organized markets, particularly in the western United States outside of CAISO. While the dynamics of organized markets don’t exist in many western states, many of the same operational realities do. For example, western utilities struggle with the same challenges associated with integrating renewable resources and the now famous (or infamous) “duck curve” – two challenges well-suited for energy storage solutions.

This raises the question, “What is the future of energy storage in the western U.S. outside of organized markets?” Will the traditionally fiercely independent West chart its own, unique course for energy storage on a state-by-state basis? Will western states pursue some form of regional cooperation that facilitates deployment of energy storage? Or will energy storage continue to evolve in these states on a voluntary, utility-by-utility basis as it essentially has to date? Whichever course is followed, western states and utilities can take advantage of the learning curve and experiences gained by their colleagues in the organized markets to determine what approach to energy storage will work best for the west and its wide-open spaces.

ARTICLE BY

Thomas J. Dougherty

Lewis Roca Rothgerber LLP

The President’s FY2016 Federal Budget Request: Programs Relevant to Tribal Energy Development

The White House transmitted its Fiscal Year 2016 Budget Request to Congress on February 2, 2015. Overall, the budget includes over $7.4 billion in funding for clean energy technology programs across the federal agencies. Most relevant to Indian tribes, tribal utilities, and tribal business are funding requests to continue existing energy and related environmental programs, as well as a few new initiatives, that support clean energy development and climate change resiliency efforts on tribal lands. Starting with the Department of Energy, the budget requests $20 million for the Office of Indian Energy for financial and technical assistance, capacity building, and deployment of energy, energy infrastructure, microgrids, and energy efficiency projects. A newly proposed initiative is theTribal Energy Loan Guarantee Program, with a request of $11 million. The loan guarantee program would provide underwriting and credit subsidies for loan guarantees for tribally owned energy generation projects.

In the Department of Agriculture budget request, the Rural Energy for America Program, which tribes and tribal enterprises are eligible to participate in, maintains a budget request of $10 million to provide grants and loans for deployment of renewable energy and energy efficiency projects. The Rural Utility Service request includes $14 million for High Energy Costs grants, and $6 billion in additional lending authority to support the deployment of rural utility renewable energy generation, energy efficiency projects, transmission and distribution power lines. Under the USDA Substantially Underserved Trust Areas (SUTA), tribes are now eligible for RUS grants and loans. Additional USDA budget requests include programs that can be leveraged for energy development and climate change adaptation, such as the Forest Service Stewardship Contracting ($14 million), National Resource Conservation Service Technical Assistance ($1.5 billion), Farm Service Agency Conservation Program ($311 million).

The budget request for the Department of the Interior, which includes the Bureau of Indian Affairs, the Bureau of Reclamation and the Bureau of Land Management, is approximately $140 million for energy development, water energy conservation, and tribal hydro infrastructure improvement. These programs include the Office of Indian Energy and Economic Development, with a budget request of approximately $50 million for energy, mineral, workforce development and loan guarantee program. The BIA also proposes $50 million for climate change resiliency efforts on tribal lands. And, the BIA has requested $27 million for resource management for Indian irrigation and dams that provide power to Indian tribal lands. The BOR requested $161 million for water energy conservation grants. Lastly, the Office of Surface Mining has requested $1 billion for states and tribes for reclamation of abandoned mine lands.

The Environmental Protection Agency has proposed a new initiative, with a $4 billion request, called the Clean Power State Incentive Fund. This Fund would provide financial assistance to states and tribes to support their obligations under the proposed Clean Power Plan. Tribes also participate in the Indian General Assistance Program, which has a budget request of $96 million. And, tribes are eligible to participate in the Brownfield Program, a technical assistance program for state, local and tribal governments to determine better uses – including renewable energy projects – for brownfields. The Brownfield Program request is $110 million.

Additional budget proposals that may be of interest to tribes include a permanent renewable energy production tax credit, which would be expanded to include solar technology and would be refundable. The President has also proposed a new “Carbon Dioxide Investment and Sequestration Tax Credit” to support the commercial deployment of carbon capture, utilization, and storage technologies. Finally, the President has proposed the “POWER + Plan” to help communities dependent on coal and fossil energy resources adapt to the changing energy landscape. Over $55 million is proposed for Department of Labor, Department of Agriculture, EPA, Department of Commerce programs under this effort.

As Congress begins its annual budget and appropriation committee efforts, tribes and tribal enterprises are encouraged to monitor these efforts.

ARTICLE BY

Pilar Thomas

Lewis Roca Rothgerber LLP

Study Quantifies Agency Costs in Fuel Pass-Throughs

A 2015 American Economic Review Paper highlights the higher fuel costs passed through by regulated coal-fired power plants versus their deregulated counterparts. The paper looked at regulated power plants that have become deregulated, and found that the deregulated plants “save about $1 billion a year compared to those that remained regulated . . . because a lack of transparency, political influence and poorly designed reimbursement rates led the regulated plants to pursue inefficient strategies when purchasing coal.” The study attributes the savings to the fact that the deregulated plants have a strong incentive to shop around on price.

Interestingly, however, natural gas power plants in the study that became deregulated did not experience the same drop in fuel procurement costs:

Although power plants that burned natural gas were subject to the exact same regulations as the coal-fired plants, there was no drop in the price paid for gas after deregulation. Cicala attributed the difference to the fact that natural gas is sold on a transparent, open market. This prevents political influences from sneaking through and allows regulators to know when plants are paying too much.

There’s also a lesson about the air-quality compliance choices that utilities face at the margin:

What’s different about the buying strategy of deregulated coal plant operators? Cicala dove deep into two decades of detailed, restricted-access procurement data to answer this question. First, he found that deregulated plants switch to cheaper, low-sulfur coal. This not only saves them money, but also allows them to comply with environmental regulations. On the other hand, regulated plants often comply with regulations by installing expensive “scrubber” technology, which allows them to make money from the capital improvements.

Ultimately, Dr. Cicala draws the correct conclusion:

“Regulations are not created equal. Instead of debating for or against ‘regulation’ in general, it would be more productive to figure out how to separate the good from the bad,” said the author of the study, Asst. Prof. Steve Cicala from the Energy Policy Institute at Chicago. “If we know what forces make a regulation unsuccessful, then we can avoid designing new ones in a similar way.”

Senate Approves Energy Tax Extenders

On Tuesday, December 16, 2014, the U.S. Senate passed the tax extenders bill by a vote of 76-16, extending a number of energy tax incentives through the end of the year. The Senate’s passage of H.R. 5771 followed the U.S. House of Representatives’ (House) approval earlier this month (see our post on December 8), and the bill is expected to be signed into law by President Obama as early as this week.

The $42 billion bill includes extensions through the end of the year of nearly $10 billion in energy tax incentives, including the New Market Tax Credit in Section 45D, the Production Tax Credit in Section 45 (the PTC), and the bonus depreciation rules in Section 168(k).

Many were disappointed that some of the tax incentives – including the PTC – were extended retroactively only through the end of the year, meaning that tax payers have just a few weeks left to take advantage of them. There would have been far more certainty for companies looking to invest in renewable energy projects if the tax incentives were extended for one or more years beyond the end of 2014. Several lawmakers suggested that the two week extension was better than nothing, but the short extension period means that Congress has merely punted the need for greater tax reform in this area into 2015. As it stands, the energy tax incentives extended by this bill will have expired by the time Congress returns to Washington, D.C., on January 6, 2015, following its winter break. That means that Congress may be in the same place again next year under pressure to pass a year-end bill – instead of focusing on more comprehensive reform and a possible phase-out of the PTC.

ARTICLE BY

Heather Cooper

McDermott Will & Emery

Department of Interior Announces January Auction Date for Martha’s Vineyard Wind Energy Leases

On November 24th, the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) announced that it would be auctioning off four commercial leases for the Wind Energy Area (WEA) south of Martha’s Vineyard on January 29th. The area to be leased, which is identical to the area proposed in the Proposed Sale Notice published this past June, encompasses more than 1,160 square miles of open water – a tract larger than the state of Rhode Island. The project is slated to become the largest off-shore wind tract in federal waters in the United States.

Martha's Vineyard Wind Energy

If and when it is fully developed, the Martha’s Vineyard WEA has the potential to increase wind generation capacity by four or five Gigawatts (GW). According to the BOEM, which framed the announcement as part of the Obama Administration’s ongoing efforts to curb carbon pollution and mitigate climate change, a fully-developed Vineyard WEA would support 800 turbines and produce enough energy to power 1.4 million homes in the United States. Secretary of the Interior Sally Jewell said the auction will “triple the amount of federal offshore acreage available for commercial-scale wind energy projects,” making it the largest competitive wind energy lease sale to date.

Several advocacy organizations, including the New England Fishery Management Council and the Massachusetts Audubon Society, had previously voiced concerns about possible harm to aquatic and aviary life, but the Bureau’s most recent Environmental Assessment (EA) concluded that “reasonably foreseeable environmental effects associated with the commercial wind lease issuance and related activities would not significantly impact the environment.”

Twelve companies are qualified to bid for the four leases, including Deepwater Wind New England, EDF Renewable Development, Energy Management, Fishermen’s Energy, Green Sail Energy, IBERDROLA RENEWABLES, NRG Bluewater Wind Massachusetts, OffshoreMW, RES America Developments, Sea Breeze Energy, US Mainstream Renewable Power (Offshore) and U.S. Wind. For more information about the auction announcement, please visit the BOEM’s website.

ARTICLE BY

Sahir Surmeli

Jordan M. Collins

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

FERC Approves Fourth Settlement for 2011 Southwest Blackout Against Western Area Power Administration

On November 24, 2014, FERC approved a settlement with Western Area Power Administration – Desert Southwest Region (Western-DSW) related to its involvement in the blackout in the southwestern U.S. on September 8, 2011. This blackout left more than 5 million people in Southern California, Arizona, and Baja California, Mexico without power for up to 12 hours. According to FERC’s press release on the Western-DSW settlement, this is the fourth settlement arising out of this blackout.

We have reported on two prior settlements, one involving Arizona Public Service Company on July 7, 2014 and one involving Imperial Irrigation District. A third settlement involved Southern California Edison Company and was approved on October 21, 2014. Two other investigations involving the California Independent System Operator and Western Electric Coordinating Council remain outstanding.

The settlement with Western-DSW is unique in that it involves no monetary penalty. This is in keeping with the DC Circuit’s recent decision in Southwestern Power Administration et al. v. FERC, 763 F3d 27 (DC Cir 2014) (SWPA). As we previously reported, the Court in SWPA held that FERC could not impose monetary penalties on a federal power marketing administration for Reliability Standards violations. This is in marked contrast to the $650,000 monetary civil penalty assessed against Southern California Edison Company and the $2,000,000 monetary civil penalty assessed against Arizona Public Service Company. Similarly, the settlement with Imperial Irrigation District involved a monetary civil penalty of $3,000,000. FERC reached this settlement with Imperial Irrigation District three weeks before the SWPA decision was issued, and it is not clear whether that decision, which was based on federal sovereign immunity precedent, would extend to state public power entities like Imperial Irrigation District. As with the other three settlements, the Western-DSW settlement provided for investment in significant reliability improvements, but unlike the other three settlements, the Western-DSW settlement does not identify a monetary value for Western-DSW’s reliability improvements.

The Western-DSW settlement involved four alleged violations involving three Reliability Standards. These alleged violations arose out of a fault on a major transmission line owned and operated by Arizona Public Service Company and Western-DSW’s inability to handle the resulting increased flows on parallel transmission paths in which Western-DSW owns and operates transmission facilities. These increased flows resulted in voltage deviations and overloads on Western-DSW’s system which in turn required load shedding. After its investigation, FERC and NERC staffs found that Western-DSW had violated the following requirements:

TOP-004-2 R1, because Western-DSW did not operate its system within established system operating limits

TOP-004-2 R2, because Western-DSW did not operate its system to prevent severe low voltage conditions and loss of load that resulted from the loss of the Arizona Public Service Company line

TOP-008-1 R2, because Western-DSW did not operate its system to prevent system operating limit violations by identifying and studying the contingency related to the loss of the Arizona Public Service Company line

VAR-001-1 R9 because Western-DSW did not maintain sufficient reactive resources to support its voltage in the event of a contingency related to the loss of the Arizona Public Service Company line

While stipulating to the facts surrounding the September 8, 2011 event, Western-DSW noted in the settlement that it neither admits nor denies that it violated any Reliability Standards.

Although as noted above the settlement does not identify any monetary penalties, the “Remedies and Sanctions” section of the settlement describes at length several reliability improvements instituted by Western-DSW. To improve its operations within established system operating limits, Western-DSW committed to perform seasonal, next-day and real time studies to verify its system operating limits and interconnection reliability operating limits, to coordinate with its neighboring transmission systems and with its reliability coordinator on any areas of concern related to those limits, and to establish alarms, procedures and trainings related to real-time study of these limits. Western-DSW also committed to similar efforts associated with monitoring real-time voltage and reactive power support, and it joined with other facility owners to install a total of 90 MVar of reactive support. As with the other settlements arising out of the September 8, 2011 Southwest Blackout, the Western-DSW settlement included reliability improvements that do not appear directly related to the underlying alleged violations; these improvements addressed areas such as: situational awareness, long term planning, enhancing operational studies to predict system performance within appropriate phase angle limits.

Although the settlement makes clear that many of the reliability improvements committed to by Western-DSW are complete, the settlement provides that Western–DSW will submit status two semi-annual reports to FERC and NERC staffs regarding its mitigation activities and its ongoing compliance with the Reliability Standards.

ARTICLE BY

Joel G. deJesus

Schiff Hardin LLP

Federal Energy Regulatory Commission (FERC) Delays Electric Quarterly Reports (EQRs) Filing Deadline

On October 10, 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. Commission Staff encouraged filers to utilize the Sandbox “as often as possible” and to contact Staff with questions and concerns during the planned six week testing period. From the beginning of the testing period, there were significant and wide-ranging problems encountered with the Sandbox. After vocal feedback from industry, the Commission extended the Sandbox availability from September 1 to September 15. It was hoped that this extension would allow ample time to address and resolve the problems and allow filers additional time to test a functioning Sandbox. Unfortunately, the issues were not resolved, and on September 13 the Commission extended the availability of the Sandbox “until further notice.”

Since the indefinite extension of the Sandbox availability, filers have continued to experience difficulties. As a result of these ongoing issues, the Commission has implemented a similar indefinite extension of the filing deadline.

Article By:

Elisabeth M. Drabkin

Bracewell & Giuliani LLP

Tag: Energy Law

China Proposes “RoHS 2” Framework for Comment

Like this: