Week Ending March 20, 2020

Coronavirus Measures, Transmission NOPR Approved at FERC “Virtual” Meeting

This Article Appears as Published in Foster Report No 3291
Coronavirus Measures, Transmission NOPR Approved at FERC “Virtual” Meeting

FERC on March 19 took several steps to help the Commission and companies it regulates address the coronavirus known as COVID-19, with a point of contact at FERC, extensions of some deadlines on filing requirements, postponing audit site visits from the Office of Enforcement and moving technical conferences to conference calls or online meetings.

FERC also approved a notice of proposed rulemaking (NOPR) to spur transmission investment and update the Commission’s incentive policy for transmission facilities. The NOPR (RM20-10) increases return on equity incentives for grid projects that improve reliability or reduce transmission congestion through a benefit-to-cost ratio, FERC Chairman Neil Chatterjee explained. It would award basis point additions for grid projects that meet certain thresholds and increase the current incentive for facilities that are in regional transmission organizations (RTOs).

That last element is one of the points Commissioner Richard Glick raised in a partial dissent on the NOPR. Glick said he supports parts of the proposed rule, such as eliminating an incentive for transmission facilities built by independent transmission companies, but disagrees with other elements. An economic efficiency threshold might exclude grid enhancements designed to meet public policy measures, such as linking renewable power projects to aid carbon reduction goals, and increasing the current RTO membership incentive – which Glick has questioned repeatedly over the years – makes no sense, he said.

The NOPR would double the current incentive from 50 basis points to 100 basis points, “even though there is nothing in the record to suggest that any transmission owner would leave an RTO if not for that handout,” Glick said in a statement.

Chatterjee said the cost to consumers of the incentives are a fraction of the benefits provided and there are challenges for companies participating in RTOs. He said he wants to encourage transmission investment because “we need to have transmission in place to enable the grid of the future.”

The approach in the proposed rule more closely aligns with the statutory language in Section 219 of the Federal Power Act (FPA) and provides a clear framework for the Commission to grant incentives for transmission projects that are beneficial to consumers, Chatterjee said. The NOPR includes various basis point additions for projects that demonstrate certain benefits, including those outside of RTO regions, he said.

The extension of deadlines in response to COVID-19 applies to certain non-statutory items such as compliance filings, comments on rules, responses to deficiency letters and forms due on or before May 1. It does not apply to the annual Form 6 required filing by oil pipelines that is used to calculate rates for oil pipelines, FERC Chairman Neil Chatterjee explained during a March 19 conference call with reporters.

The press teleconference was held to address several items that were on the agenda for the planned open meeting, and many of those items were approved by notational voting since the meeting was canceled due to COVID-19 concerns.

Chatterjee emphasized that FERC will be receptive to requests from regulated companies throughout the crisis and its Office of Enforcement will work with companies to provide informal advice and guidance as remote working and other changes have affected the energy sector. “What was routine just a week ago is now anything but routine,” he said, noting that he wants FERC to explore ways to lift regulatory burdens on companies without sacrificing the Commission’s oversight responsibilities. Enforcement officials will take extenuating circumstances into account.

“This Commission will not be in the business of second guessing the good faith actions that companies take to keep the lights on. I’m committed to ensuring that industry can focus on continuity, safety and stability—not regulatory or enforcement matters that are not mission-critical during this crisis,” Chatterjee said.

Chatterjee is encouraging communication between FERC and regulated entities during the pandemic and named Caroline Wozniak as the point of contact for all industry inquires related to COVID-19 and their jurisdictional activities. Wozniak currently is a senior policy advisor in the Office of Energy Market Regulation and has been at FERC since 2008, including serving as an advisor to former Chairman Norman Bay, Chatterjee noted.

Chatterjee named Wozniak to the position because it is important for regulated companies to have their questions answered promptly and he thanked her for serving in the new role.

The Commission also announced that companies can email PandemicLiaison@ferc.gov to ask questions or seek guidance on issues related to COVID-19 and their requirements under FERC rules.

Chatterjee noted that one regulated entity sought a tariff waiver for a requirement on face-to-face meetings. FERC granted that request and similar requests will examined by the Commission, he said.

In his statement on FERC items to be addressed during the pandemic, Glick said he hopes FERC “proceeds judiciously” on orders that are not mandated by statute and those that require prompt action in response. For instance, the FPA and Natural Gas Act require parties to seek rehearing within 30 days of an order and FERC has no flexibility to waive that requirement. To the extent an item is not required by statute or imperative in the short term, the Commission should refrain from acting to enable parties to deal with the pandemic instead of putting resources toward seeking rehearing of an order, Glick said.

During the press conference, Chatterjee said the current situation is trying on everyone involved, but the energy bar community can work remotely and comply with regulator issues that keep power flowing and natural gas and oil delivered where needed. “We’re not imposing additional burdens,” and FERC will be flexible and evaluate items during the crisis on a case-by-case basis, he said. Pausing actions at this time would not be good for the economy, Chatterjee said.

FERC has not faced a situation where so many staff have been working from home or remote locations, but it took some early steps to prepare for such a scenario, explained Mark Radlinski, chief security officer at the Commission. There are federal requirements for agencies to enable flexibility in working locations for staff and FERC is ahead of the curve on that front, Radlinski said during the press conference. “We had been preparing for this for some time,” he said.

All agencies have continuity plans in place, but often those involve moving key staff to a different location, not all staff working from home or at different sites, Radlinksi explained. FERC staff tested web conferencing and networking capabilities and increased those capabilities as needed from their different locations and are well suited to carrying out their regulatory obligations. There are some staff still working at the FERC headquarters that are following safety issues or other matters.

Overall, “we’re in good shape,” Radlinski said.

By Tom Tiernan ttiernan@fosterreport.com

 

 

 

 

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