Alerts and Updates
Energy, Environment and Resources Update
Issue 16 | September 2016
FERC Revises Proposed Data Reporting Requirements
Heeding calls from wholesale energy market participants, the Federal Energy Regulatory Commission ("FERC") has issued a new notice of proposed rulemaking ("NOPR") concerning the collection of data from market participants with market-based rate ("MBR") authority and other entities that trade virtual products or hold financial transmission rights in organized wholesale electric markets. Virtual products are those that do not end in a physical delivery, while financial transmission rights are financial contracts that can help offset transmission-related costs. The purpose of the NOPR is to improve FERC’s ability to observe the financial and legal connections among market participants and other entities in FERC-jurisdictional markets, as well as to enhance its market analytics and surveillance capabilities. In order to ease the information collection burden on such entities, FERC is requiring the use of a relational database, which will help eliminate duplication of inputs and facilitate access to the data.
While the NOPR proposes a number of new or revised information reporting requirements, a few are summarized here. Under current regulations, market participants with MBR authority are required to provide information on their affiliates and upstream ownership structure. FERC proposes to revise and narrow that requirement to affiliate owners that satisfy certain criteria. Market participants would also be required to provide ownership information concerning ownership or control by a foreign government or an entity controlled by a foreign government. In addition, market participants would be required to affirm the qualifications of passive ownership entities. The NOPR also proposes to require entities with MBR authority, as well as entities that trade virtual products or hold financial transmission rights, to provide connected entity information. That information would be provided directly by the entity to FERC. A connected entity is defined to including the following: (1) an entity that is an affiliate of the market participant that meets certain criteria, (2) the market participant’s traders (as defined in the NOPR) or (3) contracts pertaining to control over a generation asset. The full list of proposed reporting requirements can be found in the NOPR, titled "Data Collection for Analytics and Surveillance and Market-Based Rate Purposes," 156 FERC ¶ 61,045 (2016). Comments on the NOPR are due on September 19, 2016.
New York Public Service Commission Orders Implementation of Clean Energy Standard
On August 1, 2016, the New York Public Service Commission issued another groundbreaking order, establishing a new Clean Energy Standard ("CES"). Much of the responsibility for implementation of the CES will rest with the New York State Energy Research and Development Authority ("NYSERDA").
Key aspects include a requirement that, by 2030, 50 percent of New York’s electricity will come from renewable energy sources, such as wind and solar. Energy suppliers, including utilities and other load serving entities ("LSEs"), will be required to phase in renewable power resources starting with 26.31 percent of the state's load in 2017, increasing to 30.54 percent in 2021, and reaching 50 percent by 2030.
All LSEs, including utilities and unregulated suppliers of energy, will be required to procure renewable energy certificates ("RECs") to satisfy this requirement or make alternative compliance payments to NYSERDA. NYSERDA will also purchase zero emission credits ("ZECs") to offer support to nuclear zero-carbon electric facilities, which have been struggling as a result of low oil prices, and LSEs will be required to purchase ZECs from NYSERDA. Finally, NYSERDA has been requested to devise a mechanism to maximize the potential for offshore wind in New York.
Con Edison DSIP Plan Filed at NYPSC
On June 30, 2016, the New York electric utilities filed Distribution System Implementation Plans (“DSIP”) as required by the New York Public Service Commission’s ("PSC" or "Commission") April 20, 2016 Order in its Reforming the Energy Vision (“REV”) proceeding. Among the filings was Consolidated Edison of New York, Inc.’s ("Con Edison") DSIP. The purpose of the plans is to establish how each utility will incorporate increasing amounts of distributed energy resources (“DER”) in its system. A primary goal of REV is to increase the amount of distributed, clean energy resources in New York state.
Key aspects of the Con Edison plan, which runs approximately 350 pages, include how the utility will forecast the amount of DER and how it will incorporate DER into its distribution planning process. The utility will publish initial hosting capacity maps for its underground network, which comprises most of New York City, and will identify where the greatest value of DER is for staving off Con Edison's investing in its distribution system. Con Edison will also establish requirements for DER providers to follow, including physical, cybersecurity and interconnection requirements. How the utility will share customer data is an important aspect of the plan, as it will allow customers to make informed decisions about adding DER. The utility is also planning to enhance its digital services, in order to give customers insight into their energy usage and allow for sharing of data with third parties.
EPA Issues Guidance on Greener Cleanups
On August 2, 2016, EPA issued the memorandum, "Consideration of Greener Cleanup Activities in the Superfund Cleanup Process," that recommends approaches for regional EPA Superfund staff to consider when evaluating, during the remedy selection process, how "greener cleanup activities" might be employed. While the concept of incorporating "green" considerations into remedy selection is not new (see EPA's 2009 "Principles for Greener Cleanups"), this memorandum is the first formal guidance document from EPA on the subject.
At the heart of the memorandum are two recommendations. First, EPA regional offices should consider conducting a Best Practices (BP) analysis to identify greener cleanup activities that may help minimize the environmental footprint of the cleanup. Second, at more complex cleanup sites, EPA regional offices should consider conducting a "footprint analysis" to help quantify site-specific metrics (such as material, water and energy usage, and emissions and waste generation) and to better identify greener cleanup activities that may reduce a cleanup’s environmental footprint.
While the memorandum goes to great length, including through the use of bold lettering, to emphasize that (a) green cleanup goals cannot supplant the National Contingency Plan (40 CFR Part 300) threshold cleanup criteria (protect human health and the environment, as well as comply with "applicable or relevant and appropriate requirements"); and (b) consideration of greener cleanup activities "is not a new criterion for evaluating alternatives for remedial actions," time will tell how much impact green cleanup considerations will have. For example, many state groundwater cleanup programs are fully risk-based and require no cleanup of groundwater if its use is prohibited by a legally binding restriction such as a municipal ordinance. EPA, in stark contrast, continues to mandate the use of energy-consuming, greenhouse gas-emitting pump and treat systems even when groundwater use is prohibited by such a restriction and no exposure to contaminated groundwater is occurring. It would seem that EPA may face some challenges, as climate change pressures grow, in continuing to mandate remedies that are in conflict with sustainability goals.
Water Shortages Loom Large for California Farmers
From a climate perspective, 2016 in California was a fairly wet year. Northern California reservoirs filled and went in the flood control releases. That should be good news for California's cities and farms in terms of starting to dig out of the deep drought hole that has hit the state in the past several years. Overall, the past 10 years have been the driest on record. Despite full reservoirs in Northern California, to the south of Sacramento, where the San Joaquin Valley is located, large areas are still severely shorted in their water supplies. While many cities have been able to eliminate their water rationing programs, hundreds of thousands of acres of farmland have been allocated a 5-percent water supply by the federal government. To make matters worse, for several farming areas that are customers of the federal Central Valley Project, the Bureau of Reclamation has "borrowed" hundreds of millions of dollars' worth of water with no apparent ability to repay it.
Tensions are running high within the farmer and water manager communities. The reservoir that supplies water to the farmers, as well as provides water to the Silicon Valley, is essentially empty. How does this happen in a year where the reservoirs that typically provide the water are brimful? Enter the Endangered Species Act and politics.
In 2014 and 2015, water managers for the state and federal governments that operate the biggest reservoirs in California were flying by the seat of their pants. The state had not experienced this type of a water shortage before. Rules were being made up as the drought progressed. According to federal biologists, winter run salmon populations were decimated due to warm temperatures. Also, other Endangered Species Act-protected species, such as the spring run Chinook salmon and the tiny Delta smelt, also allegedly saw their population numbers severely dwindled. There is much speculation that the Delta smelt may be extinct. So, in order to avoid fish dying due to warm river temperatures, the state and federal fishery managers ordered that water be held in the upstream reservoirs to provide “cold water” to be released later in the year to lower river temperatures and help save fish. At the same time, other fishery managers were demanding water to be released to protect the Delta smelt, which lives far downstream from these reservoirs in the Sacramento-San Joaquin River Delta. Meanwhile, water normally available for human uses was allowed to flow out to the ocean during times when it could not otherwise serve double duty of meeting fishery needs and human uses. As a result, the problems with California’s water management continues to unfold. At this point, what it means for fisheries and farmers is that the system, as currently managed, is unsustainable.
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