PowerPoint Slideshow about 'Federal State Regulatory Issues' - loki
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As a wholesale supplier of power, a wind developer will be subject to regulation under the Federal Power Act (FPA). The Federal Energy Regulatory Commission (FERC) administers the FPA. FERC has jurisdiction over both the transmission and the sale of this power.
Siting and related matters are subject to the jurisdiction of the states.
The interconnection process has been standardized. Each Transmission Owner or RTO/ISO has tariff provisions governing the process from the filing of an interconnection request to the execution of the Interconnection Agreement.
While the process is standardized, there are limited regional differences that are permitted by FERC. Milstones must be met to remain in the interconnection queue.
The process includes a number of steps, many of which must be followed by deposits. Developer must pay for the costs of all studies.
Interconnection Request - $10,000
System Reliability Study - $50,000
Facility Study - $100,000
Interconnection Agreement - $250,000 if can’t show evidence of site control
Category 1 Sellers (those marketers which own or control 500MW or less and not affiliated with a public utility with a franchised service territory) do not have to file market power updates periodically.
Category 2 Sellers (those who are not Category 1) must file updates to show that they continue to qualify. FERC establishes a filing schedule for the periodic updates.
All sellers must file changes in circumstances with the FERC.
Wind projects are qualifying small power production facilities.
The Public Utility Regulatory Policies Act of 1978 (PURPA) required among other things the utility, if requested, to purchase all of the output (net) of QFs at the utility’s avoided cost.
Also, under PURPA, the FERC was given the authority to exempt QFs from provisions of the FPA, including rate regulation under Section 205.
On August 8, 2005, Congress enacted the Energy Policy Act of 2005 (EPAct) which among other things gave FERC the authority to allow the utility to escape from the mandatory purchase obligation if QF has non-discriminatory access to three markets defined in the legislation.
FERC implemented EPAct and issued Order No 688, (71 FR64342 (2006), Order on reh’g, 119 FERC ¶ 61,305 (2007), which established guidelines for utilities to escape from the mandatory purchase obligation. FERC created three rebuttable presumptions.
For projects with a capacity over 20MW, in “Day 2” RTO/ISO markets, there is a rebuttable presumption that those markets are workably competitive. The 4 Day 2 markets are Midwest ISO, New York ISO, PJM and ISO-New England.
For projects with a capacity over 20MW, QFs located in markets where service is provided under an open access transmission tariff are presumed to have non-discriminatory access to markets in that transmission provider’s territory.
QFs with a net capacity 20MW or less are presumed to not have non-discriminatory access to any markets.
As a result of these presumptions, many QFs with a net capacity of greater than 20MW will no longer have local utility as an involuntary purchaser of power. That doesn’t mean that the utility won’t voluntarily purchase the power at an agreed upon or auction-based price.
If a project does not avail itself of the benefits of QF status, developers obtain Exempt Wholesale Generator (EWG) Status. EWGs are exempt from certain regulations under the Public Utility Holding Company Act of 2005.
In EPAct, the Congress repealed the Public Utility Holding Company Act of 1935, eliminating the onerous SEC-related reporting requirements that fell on public utility holding companies.
While the exemption from regulations as an EWG may not seem as valuable, it is important to maintain EWG status in order to claim certain exemptions from filing, e.g., to dispose of a facility under FPA Section 203. (See FERC Order No. 669).
Once EWG status is obtained, material changes in circumstances -- changes in upstream ownership, etc. must be reported to FERC.