FERC Issues Energy Infrastructure Update for November 2019

FERC Issues Energy Infrastructure Update for November 2019

The Federal Energy Regulatory Commission (FERC) issued its regular Energy Infrastructure Update for November 2019. This update covers the news and highlights for energy around the country, in gas, hydropower, and electric generation.

In November, one new natural gas pipeline was placed into service, bringing the year’s total up to 10, compared to 21 in 2018. Two pipelines were certified in November, bringing the year’s total up to 30, compared to 46 in 2018. There was nothing new for storage facilities in November. Two new LNG export facilities were placed into service, and another four import/exports were certified, bringing the year’s totals up to seven and 11, respectively; in 2018, there was only one of each.

There were no hydropower project activities in the month of November.

The electric generation highlights detailed the new and expanded units in November, along with year-to-date totals, and a comparison of this period in 2018. There was relatively little in this area in November. Only one new wind power unit was placed in service, which brings the total for the year up to 35, compared to 47 in 2018. Solar power had 13 units added, bringing the year’s total up to 364, compared to 514 in 2018.

There were a number of proposed additions and retirements of generation units in November, all planned to occur by November 2022. Coal had one proposed addition and 50 retirements. Natural gas had 213 additions, 98 of which are currently under construction, and 76 retirements. Nuclear power had seven additions, two are under construction, and six retirements. Oil had 11 additions, one is under construction, and 15 retirements. Hydropower had 241 additions, 95 are under construction, and 12 retirements. Wind power had 512 additions, 184 are under construction, and three retirements. Biomass had 51 additions, 21 are under construction, and 28 retirements. Geothermal steam had 12 proposed additions, four are in construction now, and no retirements. Solar power had the most proposed additions at 2,732, with 673 under construction; there were no proposed retirements for solar power.

For electric transmissions, in the ≤230 voltage range, six miles of line completed in November, compared to 49.7 the previous year. This brings the total for the year up to 190.6 miles, compared to 521.5 in 2018. There are another 533.8 miles planned to be added by December 2021. There was nothing new in the 345-voltage range or the 500-voltage range in November. There are a planned 637.5 miles for the 345-voltage, and 670 for the 500-voltage range.

FERC Approves Eastern Shore Natural Gas Company Expansion

FERC Approves Eastern Shore Natural Gas Company Expansion

On January 7, 2020, the Federal Energy Regulatory Commission (FERC) approved the Del-Mar Energy Pathway Project. In both, Kent and Sussex counties in Delaware, and Wicomico and Somerset counties in Maryland, it “approves the construction and operation of new infrastructure facilities.”

Chesapeake Utilities Corporation’s Senior Vice President, Jeff Sylvester, assures, “bringing natural gas to a new area results in many positive enhancements for the community, both environmental and economic.” The project could lead to an increase in job growth and overall service expansion.

The Regional Economic Studies Institute of Towson University concluded the project would economically benefit the region through direct, in-direct, and induced employment. The FERC’s approval meets a growing demand for natural gas services for the consumer, and furthermore “expands our partnership in the local communities in which we live and work, bringing natural gas service to Somerset County for the first time and providing a cleaner, reliable and more cost-effective energy choice for customers on the Delmarva Peninsula,” according to Jeff Tietbohl, the Vice President of Eastern Shore Natural Gas Company.

The construction of the Del-Mar Energy Pathway Project is set to begin within the first quarter of 2020. It will construct approximately 12 miles of natural gas infrastructure through Kent and Sussex counties and 7 miles through Wicomico and Somerset counties. Once running, it will provide roughly “11.8 million cubic feet per day of additional natural gas firm transportation service and 2.5 million cubic feet of off-peak transportation service to Chesapeake Utilities’ natural gas distribution subsidiaries on the Delmarva Peninsula and one industrial customer.”

The project is projected to cost approximately $37 million and reach completion within the fourth quarter of 2021. The foreseen annual gross margin for the Del-Mar Energy Pathway Project is $5.1 million.

For more information on the project, visit http://info.esng.com/delmar

FERC Issues Energy Infrastructure Update for October 2019

FERC Issues Energy Infrastructure Update for October 2019

The Federal Energy Regulatory Commission (FERC) issued its regular Energy Infrastructure Update for October 2019. This update covers the news and highlights for energy around the country, in gas, hydropower, and electric generation.

In October three new natural gas pipelines were certified, and there were proposals for two more; bringing the total new pipelines in the year up to nine, and 28 total were certified. This is compared to 17 and 44 from 2018, respectively. There were no new LNG storage or import/export facilities in October.

For hydropower in October, one capacity amendment was filed, bringing the total capacity amendments filed in the year up to five total. There was no other activity reported.

The electric generation highlights detailed the new and expanded units in October, plus the year to date, and a comparison of this period in 2018. There was one new LNG unit placed in service, bringing the year’s total to 77, compared to 101 in 2018. Two new wind generation facilities were placed into service, bringing the total up to 31 for the year, compared to 43 last year. There was one new biomass facility, bringing the year’s total to eight, compared to 13 the year before. October saw the first geothermal steam until of the year, compared to seven in 2018. Eight new solar powered units were placed in service, bringing the total for the year up to 334, compared to 486 the previous year. There were no new coal, nuclear, oil, or hydropower units placed in service in October.

There were a number of proposed additions and retirements of generation units in October, all planned to occur by October 2022. There was one proposed addition for coal, and 50 retirements. Natural gas had 220 proposed additions, 101 are under construction, and 102 proposed retirements. Nuclear power had six proposed additions, one of which is under construction, and six proposed retirements. There were 11 additions for oil, one of which is under construction, and 16 retirements. Hydropower had 226 additions, 90 of which are under construction, and 12 retirements. Wind power had 527 additions proposed, 187 under construction, and three retirements. There were 48 additions proposed for biomass, 21 are under construction, and 28 retirements. Geothermal steam had 14 additions, four are under construction, and no retirements proposed. Solar power had the most proposed additions at 2,669, with 655 under construction, and only one retirement.

For electric transmissions, in the ≤230 voltage range, there were 61.7 miles completed in October, compared to 69 the year before. This brings the total for that voltage up to 184.6 for the year, compared to 521.5 for 2018; there are 533.8 miles planned by November 2021. In the 345-voltage range, 26 miles were completed, compared to 114 the previous year; the total for the year reached 397.5 miles, compared to 847.2 in 2018, with another 701.4 planned. There is nothing new in the 500-voltage range.

FERC Accepts Pipeline Tariff Changes to Address Midwest Propane Situation

FERC Accepts Pipeline Tariff Changes to Address Midwest Propane Situation

The Federal Energy Regulatory Commission (FERC) accepted amendments to two oil pipeline tariffs that are intended to help move propane to the Midwest. The ONEOK North System (ONEOK) and Enterprise TE Products Pipeline Company (Enterprise TE) both said they have “received requests from shippers for the changes after the start of the alternative dispute resolution (ADR) process initiated by FERC last month to alleviate propane pipeline constraints in Midwestern states.”

In the case of ONEOK, “FERC approved a revised pipeline transportation capacity allocation policy allowing shippers to transfer allocated capacity to other shippers through the end of this month, and to receive credit to their allocation history for barrels moved by replacement shippers.”

Enterprise TE “is extending emergency transportation service of propane to the Midwest region.” Enterprise TE has been receiving “requests from third-party shippers to continue propane service to Monee, Illinois, for a period of time beyond the original date on which it intended to terminate the service.” It will continue doing so until Enterprise TE cancels or modifies the service.

With the Midwest badly needing propane, FERC worked quickly to approve the requests. On November 19, FERC Chairman Neil Chatterjee announced the ADR process; ONEOK and Enterprise TE filed their requests on November 26, and FERC issued notices to both of them on November 27. FERC is monitoring the Midwest’s propane situation and they are continuing the ADR process.

FERC Adopts New Base ROE Methodology, Addresses Complaints Against MISO

FERC Adopts New Base ROE Methodology, Addresses Complaints Against MISO

The Federal Energy Regulatory Commission (FERC) “adopted a new methodology for determining whether a jurisdictional public utility’s rate of return on equity (ROE) is just and reasonable under section 206 of the Federal Power Act.” FERC applied it to “complaints against the Midcontinent Independent System Operator (MISO) transmission owners” and determined their “current base ROE should be 9.88 percent.”

In 2017, “the U.S. Court of Appeals for the District of Columbia vacated and remanded FERC Opinion No. 531, which had adopted certain changes to the Commission’s use of the discounted cash flow (DCF) methodology for evaluating and setting the ROE for the New England transmission owners.” They concluded that FERC did not sufficiently demonstrate that the “existing ROE was unjust and unreasonable and that setting the replacement ROE at the midpoint of the upper half of the zone of reasonableness produced by a two-step DCF analysis, rather than the midpoint of the overall zone of reasonableness, was just and reasonable.”

FERC responded to the 2017 ruling, along with “complaint proceedings against the MISO transmission owners,” that it will be using the “DCF model and capital asset pricing model to determine if an existing base ROE is unjust and unreasonable, and, if so, what replacement ROE is appropriate.” FERC said they found that those models were the “two methods investors most commonly use to estimate the cost of equity.” FERC said it plans to “use ranges of presumptively just and reasonable ROEs in its analysis of whether existing ROEs have become unjust and unreasonable.”

As part of this, FERC implemented the “revised methodology in two complaints against the MISO transmission owners’ base ROE,” granting a “rehearing on the first complaint (EL14-12), finds the existing 12.38 percent ROE unjust and unreasonable, and directs the MISO transmission owners to adopt a 9.88 percent ROE, effective September 28, 2016, and to provide refunds.” FERC also dismissed the second complaint, saying it found the record for that proceeding did “not support a finding that the 9.88 percent ROE established in the first complaint proceeding has become unjust and unreasonable.”

FERC Commissioner Richard Glick issued a statement dissenting in part the new methodology and the complaints against MISO.

FERC Identifies Key Cybersecurity Program Priorities

FERC Identifies Key Cybersecurity Program Priorities

The Federal Energy Regulatory Commission (FERC) detailed its “efforts to address cybersecurity challenges facing the nation’s energy infrastructure.” This has been one of FERC’s ongoing priorities. Several organizational changes were detailed that are intended to help FERC better focus its resources on the “quickly evolving cyber challenges including creation of a new security-focused group within the Office of Energy Projects’ Division of Dam Safety and Inspections. The group will address cyber, as well as physical, security concerns at jurisdictional hydropower facilities.”

FERC Chairman Neil Chatterjee announced that FERC’s Office of Electric Reliability would realign “its functions to establish one division focused exclusively on cybersecurity.”

The new security group will be responsible for:

·         “Maintaining technical expertise, mentoring, and performing as team leaders for analyses and resolution of cyber and physical security issues for the Commission’s Dam Safety Program.

·         “Performing special security inspections, both physical and cyber, and participating as an evaluator during security exercises.

·         “Conducting surveys and risk analyses to assess security needs, identifying and assessing the degree of vulnerability, and ensuring that selected protection measures are implemented effectively.”

“At FERC, we are charged with overseeing the development and enforcement of cybersecurity standards for the nation’s high-voltage transmission system and jurisdictional hydroelectric facilities,” Chatterjee said. “These two developments will help FERC staff more efficiently focus its efforts on cybersecurity. This new security group in OEP and the realignment in OER will consolidate the cybersecurity staff into a division that focuses solely on cyber.”

The FERC staff “identified five areas where Commission staff will strategically and collectively focus efforts to address critical cybersecurity challenges. The five focus areas are:

  • “Supply Chain/Insider Threat/Third-Party Authorized Access;
  • “Industry access to timely information on threats and vulnerabilities;
  • “Cloud/Managed Security Service Providers;
  • “Adequacy of security controls; and
  • “Internal network monitoring and detection.”

FERC also detailed outreach activities and initiatives they intend to prioritize next year. “In particular, staff will closely monitor supply chain security implementation and the industry’s adoption of new technologies and services to address cyber infrastructure implementation, maintenance and/or management. In addition, the Office of Energy Infrastructure Security continues to build on its existing outreach initiatives, including offering voluntary network architecture assessments and the Office of Electric Reliability will continue to conduct and participate in audits.”

FERC Issues 13th Annual Report on Enforcement

FERC Issues 13th Annual Report on Enforcement

The Federal Energy Regulatory Commission’s (FERC) Office of Enforcement (OE) issued its 13th annual Report on Enforcement. The intent of the report is to discuss the OE’s activities over the last fiscal year. “The report discusses the activities performed by OE’s Divisions of Investigations, Audits and Accounting, Analytics and Surveillance, and Market Oversight during the last fiscal year.”

The report goes over the ” audits, market reports, litigation filings, and settlements” from the year, which were approved by FERC. It also covers “non-public activities, including summaries of closed investigations and self-reports that were closed without further action by the Division of Investigations.” This is the first time the report has included “illustrative examples of the market monitor referrals received by OE that staff reviewed and closed without opening an investigation.”

They did not include the names of “the companies and individuals whose conduct was under review in these matters” to keep everything confidential.

The Division of Audits and Accounting

“Illustrative compliance alerts that cover nearly a dozen distinct areas where there have been consistent concerns or noncompliance of significant impact” were included by the Division of Audits and Accounting. That section of the report also “includes citations to docket numbers relevant to the recurring, problematic compliance issues discussed in the alerts,” this was a new inclusion to the report. “Additionally, a representative sample of audits completed in FY2019 summarizes staff’s recommendations for corrective action and provides context for audits that resulted in refunds and recoveries.”

“The Division of Audits and Accounting completed 11 audits of public utility and natural gas companies covering a wide array of topics.” They resulted in 286 recommendations for corrective action and 76 findings of noncompliance; $161.2 million was given in refunds and recoveries. They also ” acted through the Chief Accountant’s delegated authority on 120 accounting filings requesting approval of a proposed accounting treatment or financial reporting matter.” They also “advised and acted on 433 proceedings” at FERC, which covered various accounting matters. In many of the cases they worked on, they “served in an advisory role, identifying and analyzing the accounting implications of those requests.”

The Division of Analytics and Surveillance

“The Division of Analytics and Surveillance provides a comprehensive review of its surveillance program and describes how it analyzed transactional and market data in FY2019 to detect potential manipulation, anticompetitive behavior, and other anomalous activities in the energy markets.” There are also ” greater and new details about DAS’s processes and practices related to reviewing market monitor referrals and data management.”

The DAS “continued monitoring for market manipulation and other anomalous activities in the markets… Natural gas surveillance screens produced approximately 7,629 screen trips which were reviewed by DAS staff, resulting in 20 additional in-depth inquiries into specific trading behavior.” There were 83 electric surveillance screens run and reviewed by the DAS, in addition to “monthly, hourly and intra-hour sub-screens, and reports for over 37,000 hub and pricing nodes within the six ISO/RTOs.” The surveillance identified 23 instances that needed further analysis. They “made a total of six surveillance-related referrals to the Division of Investigations” over the last fiscal year. They also worked with the DOI on about 45 investigations “involving allegations of manipulation in the Commission-jurisdictional natural gas and electricity markets, or violations of tariff provisions.” As part of these efforts, the DAS “(1) provided analytical and data-based assessments of market activity related to ongoing investigations; (2) supported DOI in its fact-finding; and (3) calculated the amount of unjust profits and market harm resulting from alleged violations to assist with determining a civil penalty recommendation under the Commission’s Penalty Guidelines.”

The Division of Energy Market Oversight

There is a summary of the Division of Energy Market Oversight’s “recent Market Reports and Assessments and describes other measures to monitor and analyze the nation’s wholesale natural gas and electric power markets.” It also describes their ” role in the administration of certain Commission filing requirements and certain public outreach conducted by the division last fiscal year.” This section also ” identifies which Commission Program Office is now responsible for each of the functions previously performed by Market Oversight following the September 2019 realignment, which moved Market Oversight’s functions to other Commission offices and OE divisions to improve organizational efficiency and centralize management expertise.”

The four areas OE has made their priority for enforcement are: “(1) fraud and market manipulation; (2) serious violations of the Reliability Standards; (3) anticompetitive conduct; and (4) conduct that threatens transparency in regulated markets.” They note that this is the same as the previous year.

The Division of Energy Market Oversight also continued monitoring “the jurisdictional markets to identify market trends, and also continued its efforts to enhance its analytical capabilities related to the ongoing eForms refresh project.” They issued their annual  “State of the Markets Report and seasonal Market and Reliability Assessments, which reviewed trends and events in natural gas and power markets, including trends in prices, supply, and demand.” It also reviewed the development of ” pipeline infrastructure and the rapid increase in the LNG export industry.”

The Division of Investigations

FERC approved two settlements with Enforcement, totaling over $14 million, “$7.4 million in civil penalties and disgorgement of another $7 million.” The DOI “opened 12 new investigations and brought 14 pending investigations to closure with no action.” These ” included matters in which staff found no violation, or staff found that there was not enough evidence to conclude that a violation had occurred.” There were some matters where they “found a violation but exercised its discretion to not pursue a sanction and closed the investigation.” They also “closed 130 self-reports without further action, closed 10 MMU referrals without opening full investigations, and resolved 148 calls made to the Commission’s Enforcement Hotline.” They are also still litigating three cases in federal court on behalf of FERC.