FERC, CFTC, and State Energy Law Developments

Effective April 1, energy storage resources will have more options to participate in ISO New England’s (ISO-NE’s) markets, subject to new rules accommodating storage resources that were approved by the Federal Energy Regulatory Commission (FERC) on February 25. The new market rules reflect a first of their kind in ISO-NE, and are a product of ISO-NE’s work to build on existing rules initially designed for pumped storage hydroelectric resources.

FERC adopted a new rulemaking on February 21 that will substantially simplify requirements applicable to persons holding “interlocking” director and/or officer positions involving more than one public utility, or a public utility and an electric equipment supplier.[1]

Under the Federal Power Act, a person may not hold a director or officer position with one public utility and simultaneously hold another “interlocking” director or officer position with (1) any other public utility; or (2) certain suppliers of electrical equipment, without first receiving FERC authorization.[2] Pre-incumbency applications to FERC are required for interlocks, except in cases in which only certain positions with affiliated public utilities are held, and in those cases pre-appointment affidavit filings and disclosures must be publicly submitted to FERC as “informational reports.”[3] In general, even affiliated utility appointments must also be annually reported to FERC; FERC’s interlock requirements include both initial application (or informational reports) and annual disclosure filings.[4] If an incumbent position-holder is to be appointed to a new entity within a group of affiliated public utilities, then new affidavit filings and “informational reports” will typically be required.

An amendment to FERC’s M&A statute, Section 203 of the Federal Power Act (FPA), was signed into law on September 28, 2018. (See our prior blog post.) Public Law 115-247 (PL 115-347 or the Amendment) makes a minor but helpful change to one provision of FPA Section 203 by immunizing one particular class of transactions from pre-consummation FERC M&A application and approval requirements.

On February 21, 2019, FERC adopted the rulemaking[1] that the Amendment directs:

  • Mergers or consolidations of public utility facilities that are valued at under $1 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC
  • Likewise, mergers or consolidations of public utility facilities that are valued above $1 million but not above $10 million may be undertaken without the parties first obtaining FPA Section 203 authorization from FERC, but are subject to a reporting requirement
  • The reporting requirement applicable to those merger transactions falling within the $1 million to $10 million range directs that the form of notice to the Commission be submitted within 30 days following the facility merger or consolidation, and include the following information:[2]
    • The exact name of the public utility and its principal business address
    • A narrative description of the transaction, including
      • the identity of all parties involved in the transaction, whether such parties are affiliates, and all jurisdictional facilities associated with or affected by the transaction;
      • the location of such jurisdictional facilities involved in the transaction;
      • the date on which the transaction was consummated;
      • the consideration for the transaction; and
      • the effect of the transaction on the ownership and control of such jurisdictional facilities.
  • Mergers or consolidations of public utility facilities that are valued above $10 million will continue to require formal, pre-consummation FPA Section 203 applications and orders, unless some other exemption or blanket authorization applies in a particular case
  • The new rulemaking will become effective 30 days after its publication in the Federal Register, or likely in late March 2019.

The new rulemaking will simplify certain asset transfers but does not in any way change or relax Commission Section 203 requirements relating to changes in the voting ownership interests of a public utility, and to direct and indirect “dispositions” of control. Those requirements were not affected by the Amendment.


[1] Implementation of Amended Section 203(a)(1)(B) of the Federal Power Act, Order No. 855, 166 FERC ¶ 61,120 (2019).

[2] 18 C.F.R. § 33.12 (2019).

The New Jersey Board of Public Utilities (BPU) recently released its first annual report on the development of offshore wind in New Jersey (the Report). The Report comes one year after Governor Phil Murphy released Executive Order No. 8, which directed the BPU and other agencies to implement the Offshore Wind Economic Development Act (OWEDA).

The New Jersey Board of Public Utilities (BPU) approved the nation’s largest single-state offshore wind solicitation in the United States on September 17, 2018, with an Order opening up an application window for the solicitation of 1,100 megawatts (MW) of offshore wind capacity. Stakeholders anticipate additional procurements in light of the BPU’s announcement that it intends to solicit an additional 2,400 MW, in two tranches of 1,200 MW, by 2022.

The first application window closed on December 28, 2018. Three applications were submitted to the BPU. Successful applicants in the current procurement will receive state subsidies in the form of Offshore Wind Renewable Energy Credits (ORECs). To be eligible for BPU approval, applicants will need to demonstrate that, among other things, their project (i) will have a positive net in-state economic and environmental benefit; (ii) will have a “reasonable ratepayer impact;” and (iii) is likely to be constructed on time and on budget.

In a narrow 50-49 vote, the US Senate on December 6 confirmed Bernard L. McNamee, the current head of the US Department of Energy’s Office of Policy, to join the Federal Energy Regulatory Commission. Mr. McNamee, the third Republican on the five-member Commission, was nominated by President Donald Trump in October to fill the vacant seat formerly occupied by former Commissioner Robert Powelson, who stepped down earlier this year. Once Mr. McNamee is sworn in, the Commission will return to full strength, with two Democratic and three Republican appointees.

The Senate Energy and Natural Resources Committee on November 15 favorably advanced the nominations of Dr. Rita Baranwal (Assistant Secretary of Energy (Nuclear Energy)) and Bernard McNamee (Member, Federal Energy Regulatory Commission) to the full US Senate.

For years, the US electric power industry has witnessed a steady uptick in the total capacity of deployed energy storage resources. Part of that growth is attributable to more favorable economics for storage projects, a trend that is set to continue in the coming years—a recent study by Bloomberg NEF forecasted that the global energy storage industry will see $620 billion in new investments by 2040. While the development of stationary batteries is expected to be outpaced by other storage applications, such as electric vehicles, the study also suggests that rapidly sliding capital costs for battery systems will be advantageous for utility-scale projects.

The Federal Energy Regulatory Commission (FERC or the Commission) Office of Enforcement (OE) issued its 2018 Report on Enforcement on November 15. The report provides a review of OE’s activities during fiscal year 2018 (FY 2018), which begins October 1 and ends September 30 annually. Like last year, the report reveals likely areas of focus for FERC enforcement in the coming year, and provides guidance to the industry based on the wide variety of enforcement matters that are otherwise non-public by synthesizing some of the more disparate developments from audits, market surveillance, and other enforcement activities for the benefit of industry stakeholders.

A new market registration option is among the changes SPP is likely to propose in next month’s mandatory compliance filing.

We reported last week on steps that ISO New England has taken to finalize tariff revisions to meet the directives of Order No. 841, the Federal Energy Regulatory Commission’s (FERC or Commission) final rule on electric storage participation in Independent System Operator (ISO) and Regional Transmission Organization (RTO) markets. Order No. 841 requires RTOs and ISOs to submit proposed models that permit electric storage resources to participate in organized capacity, energy, and ancillary service markets by December 3, 2018 (read a more comprehensive overview of the final rule here). At the end of October, Southwest Power Pool, Inc. (SPP) moved closer towards meeting that goal when its board approved tariff revisions developed in response to FERC’s Order No. 841 directives, which should represent new opportunities for some of the 2.5 GW of pending electric storage resources in SPP’s generator interconnection queue.