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Fortnightly's Top 10

ago FERC ruled that Dominion and FirstEnergy had the right to build an integrated system of static var compensators that the private merchant grid developer Primary Power had planned and worked on for years, even though, as Primary Power was later to complain, “they [the two utilities] had not spent a dime” on developing the idea.

Applying rules in its FERC-approved tariffs, PJM had awarded construction rights to Dominion and FirstEnergy on finding that they could do the work at less cost because they already owned two substations that would be involved in the project.

FERC agreed, albeit reluctantly, as the order could find no loophole in PJM’s rules allowing for any other conclusion. FERC said, however, that PJM should resolve the problem in tariffs filed to comply with FERC Order 1000.

#10 Thou Shalt Not Shed Load: No Way, No How
Earlier this spring FERC rejected and remanded a NERC-proposed electric reliability standard, the details of which would be left to be fleshed out through a regional transmission planning process, in which groups of stakeholders would freely debate, review, and then sign off on a standard that would allow grid system operators to rely on load-shedding as a possible option to maintain reliability during a single-contingency failure.

As the commission explained in its decision (Order 762) , such a standard would be impermissibly vague, and thus unenforceable, unless NERC could provide some kind of assurance that the stakeholder process would apply strict or technical engineering standards as part of its review, or even that the stakeholders would act affirmatively in some manner, and fine-tune the standard, rather than simply sit by and allow it to take effect without any countervailing action at all—a possibility that seemed to be permitted under the NERC proposal.

Yet the decision was seen by some (such as NARUC, representing state regulators) as overstepping FERC’s authority over the interstate bulk power system, and invading the state-controlled arena of retail service.

The case highlights a key weakness in the regulation of electric reliability—the lack of any cost-based guideline to help experts decide exactly how much reliability the nation can really afford. That and the fact that no regulator ever wants to see his name appear on in the same sentence with the word “outage.”

Deck: 
The year’s most important legal and regulatory rulings.
Image: 
Fortnightly's Top 10 Legal Decisions of 2012
Subtitle: 
The year’s most important legal and regulatory rulings.
Intro Text: 
It’s a war out there — or rather, several of them. Fortnightly reports from the front lines of the conflict over U.S. energy and environmental policy.

Pages

Publishing Date: 
Wednesday, October 31, 2012 (All day)