Compliance with Dodd-Frank might not be as complicated as feared; however, companies must be vigilant in order to maintain the relevant exemptions.
Federal policy trumps state siting authority.
authorize FERC or NERC to “set and enforce compliance with standards for adequacy or safety of electric facilities or services.” Notably, however, this language excludes reliability, indicating, consistent with the remainder of Section 215, that the statute does authorize FERC and its designees to set and enforce compliance with reliability standards. Hence, while the state can adopt different approaches to meet need, it can’t revisit the calculation of need resulting from the application of a reliability standard within the RTO planning process.
Section 215 clarifies FERC’s enforcement powers with regard to a transmission provider’s compliance with reliability standards:
On its own motion or upon complaint, the Commission [FERC] may order compliance with a reliability standard and may impose a penalty against a user or owner or operator of the bulk-power system if the Commission finds, after notice and opportunity for a hearing, that the user or owner or operator of the bulk-power system has engaged or is about to engage in any acts or practices that constitute or will constitute a violation of a reliability standard.
If the entity engaged in violative activity isn’t a transmission user, owner or operator, but rather a state authority, Section 215 provides that NERC and affected parties may file a petition with FERC to obtain an order determining whether the state’s action is inconsistent with a reliability standard. NERC Rules of Procedure, § 314, provides that a system owner must promptly tell the state commission, NERC and the RTO of such a potential conflict:
If a bulk power system owner … determines that a NERC … Reliability Standard may conflict with a[n] …order … that has been accepted, approved, or ordered by a governmental authority affecting that entity, the entity shall expeditiously notify the governmental authority, NERC and the relevant regional entity of the conflict.
FERC may stay state action pending issuance of its inconsistency order. Section 215 is silent, however, as to what happens after the issuance of a FERC inconsistency order. This may mean that a FERC inconsistency determination isn’t self-executing, but rather is entitled to Chevron deference in a Supremacy Clause claim that the affected party may assert as a declaratory judgment, 11 or may be cited in another appropriate adjudicatory forum, such as a Section 206 complaint proceeding.
With this context in mind, the regulatory framework established under Section 215 delegates decisions over the assumptions to determine need for reliability purposes to the transmission provider ( e.g., the RTO). Compliance with these standards is carried out pursuant to the collaborative process required by Order 890 and embodied in the transmission provider’s OATT. Under the relevant NERC transmission planning reliability standards (TPL-001 to TPL-003), if a state commission uses different modeling assumptions to suggest that the reliability need isn’t as great as the regional planning process indicates, there’s a direct conflict between a NERC reliability standard and the state’s different assumptions. The transmission-planning standards specifically delegate identification of the assumptions to be used in a needs assessment to the RTO, which in turn establishes the assumptions applied pursuant to a process described