Six years after Congress granted FERC “backstop” siting authority for electric transmission projects in the Energy Policy Act of 2005, the regulatory landscape is still evolving as a result of...
Bench Report: Top 10 Groundbreaking Legal Decisions in 2009
(Civ. 1:06CV20, 2009 WL 77998 (W.D. N.C., Jan. 13, 2009).
6. Piedmont Environmental Council v. FERC: Not Quite a Leak-proof Backstop
In February, a federal appeals court ruled that FERC’s right under the 2005 EPAct law to step in as a “backstop” and grant a federal permit for a new transmission line when the applicable state permitting agency has failed for 12 months to act on a permit application does not apply if the state agency has taken action within 12 months to expressly deny the permit application.
FERC had argued that a “denial” should be equated with a failure to act because otherwise, Congress would never have included another clause in the EPAct law that had granted backstop authority to FERC when the state agency nominally OKs a permit but also imposes impossible conditions that effectively kill the project anyway. Piedmont Environmental Council v. FERC, Feb. 18, 2009, 558 F.3d 304 (4th Cir.).
7. NStar/Northeast: FERC Bends Rules to Boost Renewables
In May, the FERC showed itself willing to violate its own open-access policy—if only to ensure that enough transmission gets built to boost imports of renewable energy from Canada into the United States.
The case involved NStar and Northeast Utilities, which had joined with Hydro-Quebec to propose a new 1,200-MW, high-voltage DC line from Quebec to New England. With a clever multi-contract deal structure that traded grid rights for construction funding, NStar and NU won rate-base treatment for their U.S. line segment, but HQ also won the right to export renewable hydropower at market rates, without having to bid the exports into New England’s regional wholesale market, in competition against private power producers. NE Utils. Srv. Co., NStar Elec. Co., Docket No. EL09-20, May 22, 2009, 127 FERC ¶61,179.
8. Chinook/Zephyr: An ‘Anchor’ for Merchant Transmission
In February, the FERC relaxed its rules for financing “merchant” electric transmission lines when it allowed power line developers to set aside a 50-percent share of future line capacity for the exclusive use of an unnamed wind farm project developer who would serve as an “anchor tenant” and help with upfront funding of line construction—thus allocating only half the line’s capacity through an “open-season” solicitation process.
FERC agreed that market realities warranted a new approach to reduce risk and boost the credit-standing of merchant lines, and to break the stalemate when downstream utilities and upstream wind farm developers each hesitate to commit funds without assurances from the other.
The case involved Chinook and Zephyr Transmission LLC, two second-tier subsidiaries of the Canadian pipeline giant TransCanada, and twin proposed high-voltage (500 kV), 3,000-MW DC power lines, running from Montana and Wyoming to just south of Las Vegas. See, Chinook Pwr. Trans. LLC, Zephyr Pwr. Trans. LLC, Docket Nos. ER09-432, ER09-433, Feb. 19, 2009, 126 FERC ¶61,134.
9. John Deere v. SW Public Service: Texas Throws a Curve at Small Wind Developers
The Texas PUC held in May that because wind energy is intermittent, and thus non-firm, state rules implementing the 1978 federal PURPA law do not allow wind-powered QFs (qualifying facilities) to bind retail electric