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.”