FERC, CFTC, and State Energy Law Developments

FERC has requested comments on whether to revise its policy for establishing the length of license terms for hydroelectric projects located at non-federal dams. If FERC ultimately makes longer license terms easier to achieve, not only would it revise extremely longstanding policy, but it could significantly reduce the economic burden of licensing hydro projects. Given the number of hydro projects up for renewal in the coming years, an extension of the license term could make relicensing more financially attractive.

Under FERC’s current policy, projects at non-federal dams receive a 30-year term where there is little or no authorized redevelopment, new construction, or environmental mitigation and enhancement. A 40-year term is provided for a license involving a moderate amount of such activity, and for projects with an extensive amount of such activity, a 50-year license term is applied. This tiered licensing policy is intended to balance a number of economic and environmental factors that arise in the context of hydroelectric project development.

Recent proceedings have called into question the length of a new license and the factors FERC weighs when setting a license term. While FERC has yet to deviate from its policy, the agency now appears open to doing so and is actively seeking comment on whether it should embrace any of the following options:

  • Retain the existing license term policy.
  • Add to the existing license term policy the consideration of measures implemented under the prior license such that the expense of prior investments receives some weight.
  • Replace the existing license term with a 50-year default license term, which is the standard term for projects at federal dams.
  • Add a more quantitative cost-based analysis to the existing license term policy.
  • Accept longer license terms negotiated in an applicable settlement agreement.

FERC’s request for comments asks for comments on specific questions related to each possible policy change.

Comments are due January 24, 2017.

Moving to embrace and encourage the role of energy storage resources in energy markets, FERC is proposing to require each RTO and ISO to enable the participation of electric storage resources in their organized wholesale markets. Under FERC’s proposal, each RTO and ISO would develop market rules that recognize the physical and operational characteristics of electric storage resources and ensure that they are eligible to provide all capacity, energy, and ancillary services that they are technically capable of providing in electric markets. As part of the same proposal, FERC is also proposing to require each RTO and ISO to establish distributed energy resource aggregators as a type of market participant to reduce barriers to their participation in organized electric markets. Read our full LawFlash for more details: FERC Proposes to Integrate Electric Storage into Organized Markets.

We will discuss this NOPR in further detail during an upcoming webinar on November 29.

On July 21, FERC modified its pro forma Small Generator Interconnection Agreement (SGIA) to require newly interconnecting small generating facilities to ride through abnormal frequency and voltage events and not disconnect during such events. Under the final rule, each public utility transmission provider that has an SGIA must submit a compliance filing within 65 days of the date that the final rule is published in the Federal Register to demonstrate that it meets the requirements set forth in the rule.

The final rule also allows entities to seek “independent entity variations” from the revisions to the pro forma SGIA. Additionally, the Commission stated that transmission providers that are not public utilities would have to adopt the requirements of this final rule as a condition of maintaining the status of their safe harbor tariffs or otherwise satisfying the reciprocity requirement of Order No. 888.

The Commission did not adopt specific frequency and voltage ride-through parameters, but instead will allow for the development of appropriate system-specific standards, which may be based on work by recognized standards-setting bodies such as the Institute of Electrical and Electronics Engineers (IEEE).