The Federal Energy Regulatory Commission today formally began a process announced at the end of December during the first meeting chaired by Kevin McIntyre, issuing a notice of inquiry to review the agency’s 1999 policy statement (“Certification of New Interstate Natural Gas Pipeline Facilities – Statement on Policy”) on how it will certify new natural gas pipelines. During 2016 and 2017, pipeline siting generated the most public controversy FERC has ever faced, including inside and outside of the commission’s monthly open meetings and critical court reviews.
Commissioner Cheryl LaFleur had been pushing FERC to take a deep look at its procedures for approving use of eminent domain to site pipelines and the environmental review that the FERC process employs. McIntyre’s first initiative committed FERC to a full review of the 1999 pipeline policy.
At today’s meeting, LaFleur praised the beginning of the review. She added a dollop of reality, as well. “It is easier to criticizing the existing process than creating a new one,” she said.
A FERC press release notes that the notice “poses a range of questions that reflect concerns raised in public comments, court proceedings and other forums. Through the [notice] FERC is seeking input on potential changes to both the existing policy statement
As it began a new initiative, FERC also wrapped up a four-year regulatory policy effort on price formation. FERC announced its intent in 2014 to take a penetrating look at how the wholesale markets the commission regulates formulate their prices for various services. Since then, McIntyre noted that FERC has issued 30 orders on the topic and today’s is “the last” of the generic price formation endeavor.
The final price formation order (RM17-2-000) looks at the transparency of how the markets calculate “uplift payments,” which a FERC press release defines as the “payment that a regional grid operator makes to a resource when market revenues are insufficient to cover the resource’s operating costs” when the resource is needed for system reliability.
Following up on a proposed rule from January 2017, the final rule finds that “market uplift pricing policies, including penalty factors around payments for re-dispatch of resources, are not transparent and can result in prices that are not just and reasonable.”
Regional market operators under the final rule will have to make three new monthly reports that detail their uplift activities to a much greater detail than in current practices.
FERC dropped a portion of the 2017 proposal that would have specified procedures on how the markets allocate uplift costs. Comments indicated that the FERC proposal would be difficult or even possible to implement, so the commission dropped that portion of the proposed rulemaking in the final rule.
FERC also yesterday adopted a final rule on generator interconnection procedures for generation above 20 MW, with reforms designed to increase certainty for resources seeking to interconnect to the regional regulated grid. The FERC press release says, “This final rule culminates an extensive process involving a large number of stakeholders and and addresses systemic inefficiencies, including those caused or exacerbated by changing market forces and by the emergence of new technologies.”
— Kennedy Maize