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IMA Energy & Environment Blog

FERC Review Finds Few Regulations That Burden Energy Production

by Sylvia Bartell

Husch Blackwell LLP is an IMA member law firm…

FERC recently reviewed its regulations to determine if they “potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources,” as required Executive Order 13783.

In conducting this review, FERC focused on the following four jurisdictional areas:

  1. Hydropower Licensing
  2. Liquid Natural Gas (“LNG”) Facility and Natural Gas Pipeline and Storage Facility Siting
  3. Centralized Electric Capacity Market Policies in PJM, ISO-NE, and NYISO
  4. Generator Interconnection Policies

FERC did not review rates for natural gas, oil, electric energy, electric transmission (including return on equity), or ancillary services. Additionally, it did not review electric power market policies, demand response resources, enforcement, backstop transmission siting authority, or the Public Utilities Regulatory Policies Act (PURPA).

FERC found that the vast majority of agency actions related to hydropower do not present a material burden to hydropower resources.  However, it identified three areas where potential material burdens may exist: (1) licensing processes, (2) exemption processes, and (3) determinations on deficient applications.  FERC found that it could consider making optional the pre-filing requirement that developers file both a draft application and a preliminary licensing proposal.

Similarly, FERC determined that the majority of its LNG and natural gas pipeline and storage siting regulations do not present material burdens to the transportation of natural gas.  FERC implied that although its pre-filing process for LNG terminals and associated natural gas facilities has been characterized as burdensome, the process is not burdensome overall because it allows for early identification and resolution of issues, which saves time during formal review of the application.  Accordingly, FERC found no need to consider revising pre-filing regulations.

As to centralized capacity markets, FERC examined the controversial minimum offer price rule (“MOPR”).  It found that “Commission actions on the MOPR arguably impose a burden on certain new resources,” but concluded that the burden is not material because, among other things, the MOPR helps to “preserve the integrity of the market price signals and revenue streams[.]” In turn, FERC found that this encouraged the use of domestic energy resources through the retention and development of resources that use domestic sources.

In regards to generator interconnection procedures, FERC itemized its interconnection orders and found that none present a material burden to the development or use of domestic energy; rather, they establish a uniform and orderly process for the interconnection of all types of generators.  Notably, FERC did not reference the pending rulemaking proceeding in Docket No. RM17-18 that may overhaul generator interconnection procedures to benefit interconnecting generators and arguably burden transmission providers and owners.

FERC’s review is part of what it describes as an ongoing process wherein it will evaluate its regulations pursuant to the separate Executive Order 13777 directing agencies to make recommendations for repeal, replacement, and modification of existing regulations.  As an independent regulatory agency, FERC is not required to comply with either Executive Order 13783 or 13777, but may do so on a voluntary basis.  That said, if its initial review is any indication of how it will approach future such evaluations, it seems unlikely that FERC will flag any significant programs for revision.


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