FERC Rejects DOE Grid Resiliency Proposal and Institutes New Proceeding

by Reed Smith
Contact

Reed Smith

In a unanimous order issued January 8, 2018, the Federal Energy Regulatory Commission (Commission) ended further consideration of the Department of Energy’s (DOE) controversial Notice of Proposed Rulemaking on Grid Reliability and Resilience Pricing (NOPR) in Docket No. RM18-1-000. Nonetheless, the Commission pledged to continue its inquiry into grid resiliency, albeit on different terms than previously set out in the NOPR.

On September 29, 2017, DOE directed the Commission to consider modifications to pricing structures in RTO- and ISO-administered wholesale electricity markets in order to bolster electrical generation sources that are capable of maintaining 90 days of fuel onsite, a strategy purportedly designed to improve grid resilience. The fuel supply requirements tended to favor coal-fired and nuclear generation facilities.

After receiving feedback from hundreds of stakeholders, the Commission rejected the DOE’s approach to grid resiliency. The Commission held that it did not have a sufficient record to justify adopting the NOPR’s resiliency proposals. Under section 206 of the Federal Power Act (FPA), proponents of the NOPR had the dual burden of first demonstrating that the existing pricing structures utilized in RTOs and ISOs across the country are unjust and reasonable, and second that the DOE NOPR’s proposals are a just and reasonable alternative.

The Commission concluded that record did not show that the existing RTO and ISO tariffs are unjust, unreasonable, unduly discriminatory or preferential, nor did it demonstrate that the NOPR’s recommended remedy was just, reasonable and not unduly discriminatory or preferential. In a separate concurrence, Commissioner Cheryl A. LaFleur observed that the DOE NOPR simply “presumed a resilience need and proposed a far-reaching out-of-market approach to ‘solve’ it.” Commissioner Richard Glick, also writing in support of the Commission’s order, found that “[t]he Proposed Rule had little, if anything, to do with resilience, and was instead aimed at subsidizing certain uncompetitive electric generation technologies.” The Commission found that the NOPR’s advocates failed to meet their burden under section 206 of the FPA and, therefore, terminated the rulemaking docket that had been initiated to consider the NOPR.

The Commission simultaneously opened a new proceeding, Grid Resilience in Regional Transmission Organizations and Independent System Operators, in Docket No. AD18-7-000 “to examine holistically the resilience of the bulk power system” in regions of the country operated by RTOs and ISOs. Recognizing that “resilience remains an important issue,” the Commission intends to develop a clearer understanding of what RTOs and ISOs currently do to assure or strengthen grid resiliency. To that end, the Commission’s refined resiliency analysis will: (1) develop a common understanding of what resilience of the bulk power system means and requires, (2) determine how RTOs and ISOs assess resilience in their respective regions and (3) use this information to evaluate whether additional Commission action regarding resilience is necessary.

The Commission proposes to define “grid resiliency” as:

The ability to withstand and reduce the magnitude and/or duration of disruptive events, which includes the capability to anticipate, absorb, adapt to, and/or rapidly recover from such an event.

By providing a preliminary definition, the Commission established an important baseline to begin a methodical and comprehensive debate over the issue of grid resiliency. Indeed, grid resiliency encompasses more than an evaluation of generator availability. As Commissioner Glick observed, “if a threat to grid resilience exists, the threat lies mostly with the transmission and distribution systems, where virtually all significant disruptions occur.” Expressing support for the Commission’s decision, Commissioner Neil Chatterjee, in a concurring opinion, described the order as “the first step in a more systematic effort by the Commission, over both the near and long term, to ensure the resilience of the nation’s bulk power system.”

Reiterating its support for competitive wholesale electricity markets and market-based solutions, the Commission focused its new grid resiliency review on RTOs and ISOs. The Commission directed RTOs and ISOs to submit detailed information explaining (1) how they assess threats to grid resilience in their respective regions and (2) how they mitigate those threats. The order provides a series of detailed questions that require RTOs and ISOs to further elaborate on these two core questions. RTOs and ISOs must submit their responses within 60 days of the issuance of the order. Additionally, the Commission invited other interested entities to submit reply comments within 30 days of the due date of the RTO and ISO submissions. This suggests that the Commission intends to take a deliberate and inclusive approach to further exploring the concept of grid resiliency that elicits broad stakeholder input and evaluates the effectiveness of various approaches to risk assessment and contingency planning.

Read More:

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Reed Smith | Attorney Advertising

Written by:

Reed Smith
Contact
more
less

Reed Smith on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.