FERC Technical Conferences Examining EPA Clean Power Plan Are Underway

At the close of 2014, the Federal Energy Regulatory Commission (“FERC”) announced that it would hold a series of technical conferences to examine issues surrounding compliance with the Clean Power Plan proposed by the U.S. Environmental Protection Agency (“EPA”) last June.  FERC was urged by members of Congress to hold the conferences in order to do a deeper dive into areas of concern raised by energy industry stakeholders, given the EPA’s apparent failure to engage FERC in adequate discussion prior to issuing the proposed Plan.  The series kicked off with a National Overview Conference at FERC on February 19, 2015, focusing on electric grid reliability, infrastructure needs, and potential impacts of the Clean Power Plan on gas and electric markets within FERC’s jurisdiction.  Following the National Overview Conference, FERC scheduled three regional conferences in rapid succession, the first of which was held yesterday in Denver, CO. We highlight the first two conferences below. Additional detailed conference materials are available through the links provided, and more information on the Clean Power Plan is available in our previous posts.

National Overview Technical Conference

For the National Overview Conference, FERC pulled together a broad spectrum of interested stakeholders to spark meaningful dialogue and analysis of the major issues of concern, including speakers and panelists representing the EPA, U.S. Department of Energy, North American Electric Reliability Corporation, National Association of Regulatory Utility Commissioners, several state utility commissions, Environmental Defense Fund, various ISOs/RTOs, Interstate Natural Gas Association, American Wind Energy Association, Electric Power Supply Associations, and additional interested parties.  Discussion at the National Overview Conference was guided by the following targeted questions outlined by FERC:

Electric Reliability

1. What operational issues could arise under different compliance approaches? Are there operational issues that could arise if neighboring states adopt different methods of compliance?
2. What tools are available to address these potential issues and ensure that electric reliability is maintained as states and regions comply with the proposed rule?
3. How will entities responsible for electric system planning (e.g., reliability entities, state public utility commissions, grid operators) coordinate with entities responsible for developing state and regional plans to comply with the proposed Clean Power Plan?
4. Are additional tools or processes needed to address any potential operational issues or ensure coordination between relevant entities?

Infrastructure Needs

1. What mechanisms can be used to identify potential infrastructure needs and ensure that adequate infrastructure will be built in sufficient time to comply with the proposed Clean Power Plan? Are additional mechanisms needed?
2. What are the primary challenges, if any, in coordinating planning processes to evaluate energy infrastructure needs?
3. How could various compliance approaches impact the need for additional infrastructure?
4. Are adaptations to current Commission policies needed to facilitate the infrastructure needed for compliance with the proposed Clean Power Plan?

FERC-Jurisdictional Gas and Electricity Markets

1. Are there specific features of Commission-jurisdictional markets that can be utilized to facilitate the implementation of state or regional compliance plans?
2. What unique market issues could arise under specific compliance approaches (e.g., individual state compliance plans, regional compliance approaches, etc.)?
3. What adaptations in the current markets could be necessary as state or regional compliance plans are developed?

A webcast of the February 19 National Overview Conference, participant statements, and other conference materials are available on FERC’s website.

Regional Technical Conferences

The EPA originally anticipated issuing a final Clean Power Plan rule in June 2015, but recently extended the anticipated issuance date to mid-Summer 2015, given the flood of comments the agency received during the extended public comment period.  FERC will complete its series of technical conferences well in advance of the EPA’s anticipated deadline for issuing a final rule.  Following the National Overview Conference, FERC scheduled the following three regional conferences:

• Western Region Conference – February 25, Denver, CO
• Eastern Region Conference – March 11, Washington, DC
• Central Region Conference – March 31, St. Louis, MO

At the Western Regional Conference held on February 25, the FERC Staff provided a region-specific energy infrastructure presentation, which included detailed data regarding electric generation, natural gas infrastructure & production, energy pricing, and energy imports/exports with Canada and Mexico. In addition to an overview of the Clean Power Plan, conference participants also addressed electric reliability considerations, identifying and addressing infrastructure needs, and potential implications for wholesale markets and bilateral trading. Some of the specific questions posed by FERC to panelists include:

1. Does the wide variety of governance structures applied to electric industry entities in the West present challenges for regional coordination?
2. Each of the Western states faces a different set of circumstances, including the range of electric industry entities, resource mix, and state-specific carbon reduction goal. Considering this diversity, what would be the primary considerations in developing a regional compliance plan?
3. What are the preliminary indications from the studies that have been conducted regarding the impacts of the Proposed Rule on reliability in the Western region?
4. Given certain features of the Western region, such as the significant hydroelectric generation, the high penetration of renewables, the lack of natural gas storage in some areas, and the prevalence of federal lands, are there unique infrastructure needs in order to comply with the Proposed Rule?
5. How will compliance with the rule affect existing trading patterns in the West, and will changes to those trading patterns cause the need for new infrastructure to be built (e.g., electric transmission, gas pipelines, gas storage facilities)?
6. What wholesale market design and bilateral trading issues, including revisions to the terms of standard contracting agreements (e.g., the Western Systems Power Pool Agreement), could arise in the Western region under various compliance approaches?
7. What are the implications, if any, of various compliance approaches on the emerging energy imbalance market in the West?

The February 25 Western Regional Conference materials and participant statements are available here. The Eastern Regional Conference is scheduled for March 11 in Washington, DC – event details can be found here.