Resuming progress after 2011’s uncertainty.
From the Fukushima disaster and its repercussions, to the raging battle over new EPA regulations, 2011 was one of the most volatile years on record for the electric power business. Will 2012 be better or worse than 2011? Cost factors make this a great time to invest, but overhanging uncertainties might bring another year of fear.
2010 Law & Lawyers Report
2010 Law & Lawyers Report
The U.S. utility industry has never faced a more uncertain legal and regulatory landscape. From FERC demand-response pricing to state ratemaking disputes, legal trends and decisions are reshaping the power and gas market. The industry’s top legal minds provide strategic counsel. By definition, a battlefield is an ugly place. Conflict creates chaos, uncertainty and danger.
Ring-fencing after the subprime meltdown.
When Électricité de France stepped in to buy Constellation Energy’s nuclear assets and help the company avoid bankruptcy, the Maryland Public Service Commission conditioned the sale on a set of ring-fencing provisions. The industry has been using such structures to protect ratepayers in complex and high-risk M&A transactions since the 1990s. The protection isn’t foolproof, however—and it can bring problematic regulatory trade-offs.
Transmission cost allocation, the worth of the grid, and the limits of ratemaking.
A look at the issues that the Federal Energy Regulatory Commission must address concerning allocation of costs for certain high-voltage transmission lines 500kV or greater, planned for the PJM region, in the “paper hearing” on remand from the 7th Circuit federal court decision that rejected a socialized, region-wide sharing of costs among all utilities and customers across the RTO footprint.
Smart-grid planners feel the heat.
State utility regulators begin to question the benefits of smart grid technology, and customers take to the streets in public protests and demonstrations to oppose installation of smart meters.
Constitutional questions about state-mandated renewable tariffs.
Despite state efforts to follow the European model of state-mandated feed-in tariffs to promote renewable power, these actions won’t pass Constitutional muster. The Supremacy Clause makes a formidable legal barrier.
Mitigating enforcement penalties in NERC hearings and appeals.
The North American Electric Reliability Corp. (NERC) holds substantial enforcement powers as the nation’s electric reliability organization for bulk power transactions. Taking affirmative steps will help utilities and system operators to avoid or minimize NERC penalties.
Why did Michigan cap competition?
The sweeping regulatory reform implemented in Michigan over the past year is often couched as a response to the economic crisis. Decoupling rates from utility profits, the reasoning goes, will remove disincentives to efficiency. Reducing the subsidies that commercial customers have long shouldered will ease their financial burdens. New renewable portfolio standards and wind generation initiatives will create green jobs and much-needed infrastructure.
Predicting discord in power plant property tax assessments.
At a time when many states and municipalities are facing budget deficits of historic proportions, many power generators are struggling against declining demand, the lowest electricity prices in many years, and looming carbon legislation. As a result, tax authorities might be seeking to raise property tax receipts at the exact same time that many generators are looking to lower their assessments. Conflict appears to be on the horizon, but where will it emerge? An examination of state budgets, as well as the expected changes in generator gross margins, reveals how tax collectors and taxpayers are most likely to respond.