March 25th, 2016 by Miles Farmer, Legal Fellow, Energy & Transportation Program
FERC Will Address Issues Related to Competitive Transmission Development (AD16-18). On June 27 and 28 of 2016, FERC will hold a public technical conference to discuss the competitive transmission development process. Among other issues, the conference will address cost containment provisions, as well as a transmission developer’s request that proposals selected through Order 1000-compliant competitive processes should be deemed “just and reasonable” under the Mobile-Sierra doctrine (which holds that electricity rates arrived at through the competitive marketplace will be approved unless a different result is required by the public interest). Such a rule would provide transmission developers with greater certainty, but it could pose problems if Order 1000 processes are not truly competitive.
FERC Will Discuss Compensation Mechanisms for Reactive Power Supply and Voltage Control (AD16-17). FERC will convene a public workshop on June 30, 2016 to discuss compensation for reactive supply and voltage control within regions covered by Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs). The workshop will address all of the different sources of compensation by which generators recover costs incurred in order to provide reactive power supply and voltage control services, and examine ways in which these mechanisms could be adjusted to more efficiently address the system’s needs.
FERC 2015 State of the Market Report Highlights Increased Renewables Penetration. FERC released its 2015 State of the Markets Report at its March open meeting. The report highlights the dramatic growth of distributed energy resources, noting that the amount of generation produced by net metering customers increased by an average of nearly 500 percent from 2011 through 2015, while generation from power plants stood nearly flat. The report also notes that demand response resources are receiving higher revenues from capacity markets, a trend which is likely to accelerate after the Supreme Court’s decision approving FERC’s Order No. 745, which provides for compensation of those resources in wholesale markets. In addition, the report highlights that natural gas overtook coal as the leading source of electricity generation for 7 months in 2015.
FERC Proposes to Revise Interconnection for Small Generators to Require Them to Stay Connected During Abnormal Frequency and Voltage Events (RM16-8). FERC issued a notice of proposed rulemaking (NOPR) to revise its pro forma Small Generator Interconnection Agreement (SGIA). Under FERC’s proposal, the SGIA would impose “ride through” requirements that mandate newly interconnected generators under 20 MW to stay connected to the grid during abnormal frequency and voltage events, such as a sudden outage caused by a downed power line. FERC reversed its prior judgment exempting small generators from ride through requirements based on the increasing grid penetration of distributed energy resources, and the wider availability of technology to enable ride through. The North American Electric Reliability Corporation (NERC) found that the lack of a ride through requirement for small generators could contribute to load imbalance and cause disturbances on the bulk power system. FERC’s new rule, if enacted, will increase the burdens placed on small generators. At the same time, it will help to ensure that they are deployed in a manner that enhances the reliability of the system.