FERC Confirms That Its "One-Mile" Rule is a Safe Harbor for Establishing Separate Qualifying Facilities
An update from Marcus Wood, Jennifer Martin & Jason Johns:
The Federal Energy Regulatory Commission's (FERC) regulations provide that, for purposes of calculating a qualifying facility's net capacity, generating facilities are considered together as a single qualifying facility if they are located within one mile of each other, use the same energy resource, and are owned by the same persons or their affiliates. In recent years, landowners and energy purchasers have disputed whether the location of generating facilities more than one mile apart is a "safe harbor," ensuring that the facilities will be treated as separate qualifying facilities, or is instead a rebuttable presumption that may be challenged. In its Order Denying Rehearing, issued June 8, 2012 in Docket Nos. EL11-51-001, QF10-649-002, and QF10-687-001, FERC reaffirmed that the one-mile separation standard provides a safe harbor for establishing separate qualifying facilities.
In this docket, a project developer's self-certification of two wind generation facilities as separate qualifying facilities was challenged both by a local landowner and by Xcel, Inc. Protestants claimed that the two facilities should be viewed as a single larger facility, notwithstanding their more-than-one-mile separation, and that the separate certifications were not made in "good faith." While the two facilities were connected to a common substation, the generation equipment of each was separated by more than one mile from the generation equipment of the other. The landowner sought a evidentiary hearing on its challenge, which if granted would have substantially delayed the developer.
FERC affirmed an earlier ruling it made on March 15, 2012 in favor of the developer. In holdings that may be important to other qualifying facility developers, FERC held that Congress intended to encourage the development of cogeneration and small power production to reduce American dependence on fossil fuels by promoting increased energy efficiency. FERC then held that its regulation defining generating facilities as separate qualifying facilities if more than one mile apart does not create a rebuttable presumption; instead, the one-mile rule constitutes a safe harbor that the developer is entitled to rely on. While the developer can rebut the one mile presumption under certain circumstances to establish separate qualifying facilities that are less than one mile apart, the separate qualifying facility status of generating facilities more than one mile apart is fixed by FERC's rule.
FERC also affirmed that the one-mile separation rule applies to the separation between electrical generation equipment. FERC rejected claims that "collector" lines or common interconnection facilities constitute generation equipment for purposes of measuring the one-mile separation. Therefore, FERC concluded, the developer's wind turbine separation governed, even though its two qualifying facilities had collector facilities located within one mile of each other and had common interconnection facilities.
Stoel Rives LLP represented the successful developer in this FERC challenge.
The Interconnection Landscape Changes Yet Again: FERC Conditionally Accepts the California ISO's Interconnection Queue Reform Phase 2
On January 31, 2012, the Federal Energy Regulatory Commission (FERC) conditionally accepted additional reforms to the California ISO’s Generator Interconnection Procedures (GIP) that significantly change the rules that apply to developers seeking to interconnect power generation facilities in the California ISO’s balancing authority area.
The decision continues the California ISO’s efforts to reform the GIP that began in 2008, and focuses on 18 specific issues that arose from stakeholder efforts, interconnection agreement negotiations, the California ISO’s transmission planning process, or that were carried over from the previous round of reforms.
The reforms addressed the following issues and more:
• Deliverability Status
• Financial Security Deadlines
• Posting of Security and Reimbursement of Costs for Network Upgrades
• Reductions in Project Size
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To learn more about the reforms approved yesterday and how they may affect your generation development plans, please contact one of the attorneys listed below.
Maurcus Wood at (503) 294-9434 or mwood@stoel.com
Seth Hilton at (415) 617-8943 or sdhilton@stoel.com
Jason Johns at (503) 294-9618 or jajohns@stoel.com
Chad Marriott at (503) 294-9339 or ctmarriott@stoel.com
FERC Rules Against Bonneville Power Administration's Environmental Redispatch Policy
A legal update from our colleagues Steve Hall, Dina Dubson and Jason Johns:
On December 7, 2011, the Federal Energy Regulatory Commission issued an order holding that the Bonneville Power Administration violated Section 211A of the Federal Power Act by curtailing wind energy under BPA’s Environmental Redispatch policy and requiring BPA to file a revised transmission tariff within 90 days from the date of the order.
Stoel Rives Energy Regulation Report
FERC Clarifies Qualifying Facility Restrictions in Sale/Resale Transactions
On May 19, the Federal Energy Regulatory Commission ("FERC") issued an order in Idaho Wind Partners I, LLC, a docket in which wind farm owners in Idaho petitioned FERC for approval of a unique transaction that would both provide eligible Renewable Energy Credits ("RECs") to a utility in California and leave the wind farm owners in a position to make a Qualifying Facility ("QF") "put" sale at avoided cost rates on the interconnecting utility.
FERC confirmed that so long as the third party is a QF, the size, affiliation, or relative physical location of the third party has no effect on the QF status of the power being sold and repurchased. Consequently, any power that the Idaho wind farms sell to a QF and then buy back may subsequently be sold to an electric utility at avoided cost rates.
Read more on the Qualifying Facility Restrictions
SunZia Transmission Obtains Approval of Ownership Structure, Anchor Tenant Proposal
On May 20, FERC granted SunZia Transmission's ("SunZia") petition for FERC's approval of the ownership structure and transmission service plans for the SunZia Southwest Transmission Project (the "Project"). SunZia had requested that each of its investor-owners be allocated ownership rights representing 100 percent of its respective pro rata investment in the Project, and that certain of the investor-owners be able to allocate up to 50 percent of their pro rata shares of transmission capacity to anchor tenants through long-term negotiated transmission contracts. In May 2010, FERC rejected SunZia's request to allocate 100 percent of the Project's transmission capacity (as opposed to ownership rights) among the owners according to their pro rata investment in the Project's capacity and ruled that the owners do not have exclusive rights to the Project's capacity equal to their share of investment in the Project.
Read more on the Approval of SunZia Ownership Structure and Anchor Tenant Proposal
Midwest ISO Releases Group 5 Re-Study System Impact Study
On May 19, the Midwest ISO released the long-anticipated Minnesota Group 5 Re-Study Generator Interconnection System Impact Study, which Re-Study was ordered by FERC as the result of a cost allocation dispute between a wind developer (Community Wind) and the Midwest ISO with respect to the Brookings County-Twin Cities transmission line.
Read more on Midwest ISO's Group 5 Re-Study Generator Interconnection System Impact Study
A Big Day for Transmission Rate Incentives: Multiple Applications Approved, and FERC Seeks Comments on Its Policies
FERC's May 19 open meeting turned out to be positive for transmission developers, as FERC approved transmission rate incentives (or related settlements) for five transmission projects located from the Atlantic coast to the desert Southwest. FERC also issued a Notice of Inquiry on its implementation of Section 219 of the Federal Power Act, and is seeking comments on how it should modify its policies and regulations to promote increased transmission investment.
Read more on each of FERC's Approved Transmission Rate Incentives
Renewable Energy Law Alert: The Upper Midwest Reopens to Renewable Energy Development
Yesterday, December 16, 2010, the Federal Energy Regulatory Commission (FERC) conditionally approved a proposal by the Midwest Independent Transmission System Operator (MISO) that significantly changes how large transmission upgrades are funded across the MISO region.
MISO’s proposal creates a new category of transmission projects called Multi-Value Projects (MVPs) for upgrades that are determined to enable reliable and economic delivery of energy in support of public policy mandates or laws that address transmission reliability and congestion across multiple transmission zones.
MISO’s proposal is effective as of July 16, 2010 and thus applies to transmission projects identified in Appendix A of 2010 MISO Transmission Expansion Plan (MTEP).
To continue reading, click here.
If you have any questions about the order, how it may affect your generation or transmission project, or wind energy development in the Midwest, please contact one of the following attorneys:
Minneapolis, MN
Mark Hanson at (612) 373-8823 or mjhanson@stoel.com
Kevin Johnson at (612) 373-8803 or kdjohnson@stoel.com
Kevin Prohaska at (612) 373-8805 or krprohaska@stoel.com
David Quinby at (612) 373-8825 or dtquinby@stoel.com
Joe Thompson at (612) 373-8822 or jrthompson@stoel.com
Sarah Johnson Phillips at (612) 373-8843 or sjphillips@stoel.com
Portland, OR
Jennifer Martin at (503) 294-9852 or jhmartin@stoel.com
Marcus Wood at (503) 294-9434 or mwood@stoel.com
Sara Bergan at (503) 294-9336 or sebergan@stoel.com
Jason Johns at (503) 294-9618 or jajohns@stoel.com
Stoel Rives Energy Regulation Report
IN THIS EDITION:
- FERC opens a rulemaking on variable energy resources.
- FERC extends the comment deadline in the appeals by wind farms registered for transmission reliability functions.
- FERC denies a petition to protect priority to interconnection capacity rights.
FERC Opens Rulemaking on Intra-Hour Scheduling, Forecasting Requirements, and Integration Services for Variable Energy Resources
The Federal Energy Regulatory Commission (FERC) proposed amending its pro forma open access transmission tariff to correct practices that are unduly discriminate against variable energy resources (VERs) such as wind and solar energy generators. In the November 18, 2010 Notice of Proposed Rulemaking, FERC outlines measures that, if adopted, will (a) require transmission providers to offer transmission service that can be scheduled on 15-minute intervals, (b) require interconnection customers that operate VERs to provide site-specific forecasting and meteorological data to transmission providers that are deploying and/or developing power production forecasting processes, and (c) add a new rate schedule for generation regulation (i.e., integration) services. The proposed rulemaking is the first to come out of the January 2010 Notice of Inquiry on the Integration of VERs—a docket that received well over 100 comments from industry stakeholders.
Read more on the Notice of Proposed Rulemaking on VERs here.
FERC Extends Comment Period in Wind Farms’ Appeal of NERC Decision to Uphold Registration as Transmission Owners/Operators
FERC has extended the comment deadline in an appeal by two wind farms that were registered for Transmission Owner and Transmission Operator reliability functions, a potentially costly registration for the wind farms that was affirmed by the North American Electric Reliability Corporation (NERC) in October. The NERC decision and its supporting analysis, if affirmed by FERC, have the potential to broadly apply to many generation developers, owners, and operators.
Read more on the wind farms’ appeal here.
FERC Denies Puget Sound Energy's Request to Protect Interconnection Capacity Rights
In June of this year, Puget Sound Energy (Puget) filed a petition with FERC for a declaratory order to protect its rights to 1,250 MW of interconnection capacity that would eventually serve the Lower Snake River Project wind farm. Puget argued that constructing the entire interconnection capacity needed for the full project upfront was financially efficient and environmentally responsible, and that other developers should not be able to claim rights to the capacity. On November 18, 2010, FERC distinguished the petition from an earlier decision in Milford and denied Puget’s request to establish its priority rights to the interconnection capacity. FERC reasoned that the capacity over Puget’s generator lead lines must be governed by its open access transmission tariff. FERC also found that any interconnection capacity that is not appropriately reserved for Puget’s native load must be made available to other open access customers.
If you have questions about the issues addressed in this report, please contact:
Marcus Wood at (503) 294-9434 or mwood@stoel.com
Jennifer Martin at (503) 294-9852 or jhmartin@stoel.com
Jason Johns at (503) 294-9618 or jajohns@stoel.com
Sara Bergan at (503) 294-9336 or sebergan@stoel.com
California and FERC Agreement to Coordinate Hydrokinetic Project Development
From our colleague Michael O'Connell:
On May 18, 2010, California and the Federal Energy Regulatory Commission (FERC) signed a Memorandum of Understanding (MOU) to coordinate federal and state procedures and schedules for development of hydrokinetic projects off California’s coast. FERC previously entered MOUs for such coordination with Oregon, Washington and Maine.
The California-FERC MOU provides that the parties will encourage developers to seek pilot project licenses prior to a full commercial license. The footprint and number of devices deployed in California waters for testing would be limited under pilot project licenses in order to minimize environmental risk. FERC’s 2008 hydrokinetic pilot project white paper provides that pilot licenses would be issued for five years in order to allow licensees to conduct device testing and monitoring in support of studies required by applications for longer-term licenses. The California-FERC MOU also provides for consultation with stakeholders on the design of studies and other environmental matters.
According to the MOU, permits, leases and licenses issued by California agencies will require technology performance reporting and study results together with safeguards to ensure that projects will not have significant adverse effects on environmental, economic or cultural resources. The MOU parties also agree to share information from project developers regarding their facility’s energy production and “if applicable, power purchase contracts awards, during a project’s licensing application process and/or license term; provided that dissemination of the information is not otherwise protected from disclosure.” These MOU provisions are likely to raise confidentiality concerns among developers. The MOU recognizes that FERC cannot issue a license for a hydrokinetic project within California marine waters unless certain concurrences are issued or waived that a project is consistent with California’s Coastal Management Program. Any license issued by FERC will include, to the maximum extent practicable, terms and conditions determined by California agencies to be necessary to avoid, minimize and mitigate damage to fish, wildlife, and public trust resources.
The California-FERC MOU confirms state support for development of wave energy projects that can play a significant role in meeting the California’s goal of producing 33 percent of its electricity from renewable energy by 2020.
Smart Grid Favored in FERC Strategic Plan
The Federal Energy Regulatory Commission (“FERC”) highlighted smart grid technologies in its strategic plan for fiscal years 2009-2014 (the “Strategic Plan”). FERC found that our nation could potentially reduce peak electricity demand by up to 20% through the deployment of new technologies, including smart grid and demand response technologies.
In the Strategic Plan, FERC is establishing the use of smart grid technologies in 50% of all new transmission projects by 2014. This goal will be met through the (i) increased the development of smart grid standards and protocols (through a process coordinated by the National Institute of Standards and Technology) and (ii) the implementation of rate treatment policies favorable to smart grid technologies in the interim period between development and approval of smart grid standards. FERC has set the following Annual Performance Targets:
· FY2010: Assessment of transmission planning process best practices, including the potential for collaborative decision making, and issue a Notice of Proposed Rulemaking as appropriate
· FY 2011: As appropriate, issue Final Rule on transmission planning process best practices
· FY 2012: Implement Final Rule as appropriate
· FY 2013: Monitor implementation and performance
· FY 2014: Evaluate performance and seek changes as necessary
