The Nickel Report

On May 17, 2018, the Federal Energy Regulatory Commission (Commission) held its May 2018 open meeting. Highlights of the meeting include:

PURPA

In his opening remarks, Chairman McIntyre announced that the Commission would soon be turning to a review of its long-standing policies under the Public Utilities Regulatory Policies Act of 1978 (PURPA). He noted that the Commission had initiated a review of these policies in 2015-2016 and had held a technical conference on certain PURPA issues in 2016.  He has directed Commission staff to restart the initiative so the Commission can determine what, if anything, should be done to improve and update the policies.  The other commissioners were supportive of this initiative.  Commissioner Powelson pushed for an expedited review of the PURPA policies, referencing the previously developed record.  Commissioner Glick indicated that any changes to policies should address issues raised not only by industry, but also by qualifying facility developers.  The commissioners also acknowledged that more substantial changes to PURPA would have to be addressed by Congress.

Summer 2018 Energy Market and Reliability Assessment

Commission staff presented a summary of its Summer 2018 Energy Market and Reliability Assessment. Per the assessment, “most regions appear prepared for the expected summer demand.”  The assessment drew attention to particular challenges in CAISO due to lower than usual hydro production and natural gas availability in Southern California and in ERCOT due to tight capacity conditions.

Commissioner Glick Pipeline Dissent (163 FERC ¶ 61,124; Docket No. CP17-476-000)

The Commission granted Gulf South Pipeline Company, LP’s requested certifications (with certain exceptions) for authorization to construct and operate the Westlake Expansion Project to provide the new Lake Charles Power Plant with incremental natural gas transportation service. Commissioner Glick dissented, in part “because I do not believe the Commission can find that the Project is in the public interest without determining the significance of the Project’s contribution to climate change.”  He took issue with the Commission’s failure to assess the effect of the project’s downstream greenhouse gas emissions when finding that the project would have no significant impact on the environment.  He reiterated his position that the Social Cost of Carbon provides a mechanism for translating a project’s contribution to greenhouse gas emissions into physical effects on the environment for purposes of evaluating the project’s impact on climate change.  Finally, Commissioner Glick indicated in the open meeting his concern that, in refusing to address the impact of greenhouse gas emissions, the Commission was increasing the risk that courts would vacate their decisions and send back orders granting the certificates.

Revised Reliability Standard Regarding Geomagnetic Disturbance Events (163 FERC ¶ 61,126, Docket No. RM18-8-000)

The Commission approved Reliability Standard TPL-007-2 concerning Transmission System Planned Performance for Geomagnetic Disturbance Events, along with the associated violation risk factors and violation severity levels, implementation plan and effective date of the standard.

As summarized in the order, “Geomagnetic disturbance events (GMDs) occur when the sun ejects charged particles that interact with and cause changes in the earth’s magnetic fields,” which interaction “can cause geomagnetically induced currents (GICs) to flow in an electric power system and, depending on various factors affecting the intensity of the current, can result in a risk of voltage instability or voltage collapse, as well as equipment loss or failure.”

The Commission approved the modifications to existing Reliability Standard TPL-007-1 that were developed and submitted by NERC in response to the Commission’s directives in its Order No. 830. The revisions require applicable entities to: “(1) conduct supplemental GMD vulnerability assessments and thermal impact assessments; (2) obtain GIC and magnetometer data; and (3) and meet certain deadlines for the development and completion of tasks in corrective action plans.”  While approving these revisions, the Commission determined that the modifications did not fully address its directives in Order No. 830 and directed NERC to develop and submit further modifications to the reliability standard “to require applicable entities to develop and implement corrective action plans to mitigate vulnerabilities revealed by conducting supplemental GMD vulnerability assessments.”  The Commission also sought comments on two options it is considering regarding the applicable entity’s ability to exceed corrective action plan deadlines.

Other Highlights

• Chairman McIntyre and Commissioner Chatterjee both drew attention to the report on blackstart resource availability developed by FERC and NERC staff and issued on May 2, 2018.
• Chairman McIntyre and Commissioners Chatterjee and Glick also mentioned the Commission’s receipt of considerable comments in its resiliency proceeding, which the commissioners are reviewing closely. Commissioner Glick stated that they need to first identify that a problem exists before defining and developing solutions.  He noted, in particular, that “my concern has been and continues to be that some are viewing this proceeding as an opportunity to promote market changes that they couldn’t otherwise get through the RTO stakeholder process or that would actually increase revenues for economically challenged generation facilities without actually enhancing grid resilience.”