Month: March 2019

FERC Initiates Pipeline Rate Investigation Terminates 38 Proceedings

The Federal Energy Regulatory Commission (FERC) opened an investigation and ordered a hearing on March 20, to determine whether or not the Stagecoach Pipeline & Storage Company has been “substantially over-recovering its cost of service, resulting in unjust and unreasonable rates.” FERC also discovered that “38 gas companies have complied with the filing requirements of Order 849 and terminated their FERC Form 501-G proceedings without any further action.”

In July 2018, FERC directed every interstate natural gas pipeline company to file Form 501-G, which is “a one-time report that provides a rough estimate of the pipeline’s return on equity before and after passage of the Tax Cuts & Jobs Act and changes to the Commission’s income tax allowance policies in response to rulings by the D.C. Circuit.”

The March 20 order for the investigation follows FERC’s review of the 501-G, as well as other filings by Stagecoach. FERC is concerned that the earnings Stagecoach receives “may exceed its actual cost of service, including a reasonable rate of return on equity.” The hearing and investigation will determine if the existing rates are indeed “just and reasonable in accordance with section 5 of the Natural Gas Act.”

FERC has not determined “a just and reasonable return on equity for Stagecoach, and therefore set this issue, among others, for hearing before FERC’s administrative law judges.” Stagecoach was directed by FERC to “file a cost and revenue study for the latest available 12-month period within 75 days of the issuance of its order.”

FERC listed “the 38 companies whose FERC Form 501-G proceedings were terminated without further action:”

Cheniere Creole Trail Pipeline
Cheyenne Plains Gas Pipeline Company
Cimarron River Pipeline
Colorado Interstate Gas Company, L.L.C.
Crossroads Pipeline Company
Dauphin Island Gathering Partners
DBM Pipeline, LLC
Destin Pipeline Company, L.L.C.
Florida Gas Transmission Company, LLC
Florida Southeast Connection, LLC
Golden Pass Pipeline LLC
Gulf Crossing Pipeline Company LLC
Kinder Morgan Illinois Pipeline LLC
Kinder Morgan Louisiana Pipeline LLC
KO Transmission Company
MarkWest Pioneer, L.L.C.
Midcontinent Express Pipeline LLC
Mojave Pipeline Company, L.L.C.
National Grid LNG, LLC
NGO Transmission, Inc.
Pine Needle LNG Company, LLC
Rockies Express Pipeline LLC
Rover Pipeline LLC
Ruby Pipeline, L.L.C.
Sabal Trail Transmission, LLC
Sabine Pipe Line LLC
Sea Robin Pipeline Company, LLC
Sierrita Gas Pipeline LLC
Stingray Pipeline Company, L.L.C.
TransColorado Gas Transmission Company LLC
Trans-Union Interstate Pipeline, L.P.
Transwestern Pipeline Company, LLC
UGI Mt. Bethel Pipeline, LLC
UGI Sunbury, LLC
USG Pipeline Company, LLC
Venice Gathering System, L.L.C.
West Texas Gas, Inc.
WTG Hugoton, LP

FERC Staff Issues Energy Infrastructure Update for January 2019

On March 12, the Federal Energy Regulatory Commission (FERC) released their Energy Infrastructure Update for January, related to natural gas and hydropower, and covering the highlights for electric generation and transmissions.

In January, two liquefied natural gas (LNG) pipeline projects were certified, and another four were proposed. There were no updates to any storage or import/export LNG projects. In January 2018, seven LNG pipelines were certified, and there are no other differences in totals for that month last year.

For nonfederal hydropower, one capacity amendment was filed, and nothing new was issued or placed in service.

For new generation in-service electric generation, there was one new natural gas unit, compared to three in 2018. There were no nuclear power or oil units, compared to three in January 2018. There were no hydropower or biomass units, the same as in 2018. Wind power had four new units, compared to 12 last year. There were no updates to geothermal steam power, compared to one in January 2018. There were 18 new solar power units added, compared to 44 in 2018. In total, 23 new units were added, one-third of the 69 units added in January 2018.

There were a number of proposed additions and retirements of units by February 2022. For coal there was one proposed addition and 54 retirements; for natural gas there were 265 proposed additions and 94 retirements; there were 12 proposed additions for nuclear power and nine retirements; for oil, there were 18 proposed additions and 25 retirements; hydropower had 238 proposed additions and 18 retirements; wind power had 538 proposed additions and no retirements; biomass had 53 proposed additions and 27 retirements; geothermal steam had 18 proposed additions; and solar power had 2,394 proposed additions and five retirements.

For electric transmission highlights, “American Electric Power announced plans to increase their four year forward transmission capital expenditure plans by $1.7 billion.” FERC also noted there were no transmission projects completed in January, compared to 30 in January 2018.

FERC Issues Final Rules to Revise Regulations to Confirm with the FPA’s Recent Changes

On February 21, the Federal Energy Regulatory Commission (FERC) issued two final rules revising regulations in order to conform to recent changes made by Congress to the Federal Power Act (FPA), in relation to FERC’s review of hydropower permits and public utility mergers.

The rule related to mergers “implements statutory changes to FPA section 203 by amending FERC regulations requiring a public utility to seek authorization to merge or consolidate jurisdictional facilities so that such authorization is required only when those facilities are valued at more than $10 million.”

These revisions will also require public utility companies to tell FERC about “mergers or consolidations if the facilities are valued at more than $1 million but less than $10 million.” It will also “reduce the regulatory burden on utilities for lower-value transactions, and the final action comes within the 180-day period set by Congress.”

The rule about hydropower “conforms the Commission’s regulations to the America’s Water Infrastructure Act of 2018, which amended sections of the FPA related to preliminary permits, qualifying conduit hydropower facilities, and start for payment of annual charges. Under the Act and the Commission’s amended rules, FERC can issue preliminary permits for four years and extend a permit once for an additional four years, instead of three-year terms for preliminary permits with a possible two-year extension.”

This rule also now allows FERC to “issue a second four-year extension if warranted by extraordinary circumstances.” FERC also increased the “maximum installed capacity for qualifying conduit exemptions is increased from five megawatts (MW) to 40 MW.”

FERC was authorized by the Act to “to issue extensions of the start of construction deadline for licenses for up to eight years, which affects the start of the payment of annual charges … Annual charges will begin two years after a license is issued or any extension deadline expires.”

The third rule FERC issued was to clarify and update the “requirements related to interlocking officers and directors.” FERC’s position on “late-filed applications and informational reports” was also clarified.

FERC Clarifies Reforms of Generator Interconnection Procedures and Agreements

The Federal Energy Regulatory Commission (FERC) clarified its position on Order 845 on February 21. “Order No. 845 adopted ten reforms to improve certainty for interconnection customers, promote more informed interconnection decisions, and enhance the interconnection process.”

FERC received 12 requests for a rehearing or clarification on Order 845. “The draft order grants in part and denies in part the requests for rehearing and clarification.” While most of the reforms in 845 will remain unchanged, FERC granted the rehearing for some of the reforms. The rehearing was granted to clarify “two aspects of the reform to remove a limitation on the interconnection customer’s option to build.”

The Order requires “transmission providers [to] explain why they do not consider a specific network upgrade to be a standalone network upgrade, and second, allows transmission providers to recover option to build oversight costs.” It also clarifies two different parts of the “option to build reform by finding, first, that the Order No. 845 option to build provisions apply to all public utility transmission providers, including those that reimburse interconnection customers for network upgrades, and second, that the option to build does not apply to stand alone network upgrades on affected systems.”

The rehearing also covered reforms to “create a surplus interconnection service process,” explaining that FERC has no intentions to “limit the ability of RTOs and ISOs to argue that an independent entity variation is appropriate.”

There were clarifications regarding the “study model and assumption transparency.” It found that:

“Transmission providers may use the Commission’s critical energy/electric infrastructure information regulations as a model for evaluating entities that request network model information and assumptions.”
“The phrase ‘current system conditions’ does not require transmission providers to maintain network models that reflect current real-time operating conditions of the transmission provider’s system but should reflect the system conditions currently used in interconnection studies.”

They also clarified the reforms to “institute interconnection study deadline reporting requirements.” Another clarification was on “the date for measuring study performance metrics and clarifies that the reporting requirements do not require transmission providers to post 2017 interconnection study metrics. Instead, the first required report will be for the first quarter of 2020.”

As for the reforms on “requesting interconnection service below generating facility capacity,” a partial rehearing was granted “to find that an interconnection customer may propose control technologies at any time at which it is permitted to request interconnection service below generating facility capacity.”

They also addressed “the reform that allows interconnection customers to request interconnection service below generating facility capacity,” clarifying that transmission providers “must provide a detailed explanation if it determines additional studies at the full generating facility capacity are necessary when the interconnection customer has requested service below full generating facility capacity.”

The draft order denied other requests for rehearings or clarification.

The draft order will go into effect 75 days after it is published in the Federal Register. Public utility transmission providers have to “submit a single compliance filing, within 90 days of the issuance of this order, to comply with Order No. 845 and this draft order on rehearing and clarification.”