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DWGP Client Granted License for Advanced Pumped Storage Hydro Project
DWGP client Eagle Crest Energy (ECE) received a new 50-year license from the Federal Energy Regulatory Commission (FERC) for the ECE’s Eagle Mountain Pumped Storage Hydroelectric Project (Project), FERC Project No. 12569, on June 19, 2014. The 1,300 MW Project is a prime example of pumped storage projects that both Congress and FERC have recognized hold great promise. In addition to serving as a source of clean, renewable energy themselves, pumped storage projects provide energy storage solutions that make intermittent resources like solar and wind more reliable generation sources. DWGP attorneys Don Clarke and Josh Adrian provided assistance and guidance in agency and stakeholder consultations, NEPA compliance, and FERC liaison throughout the various licensing stages.
The Project will be located at the site of an inactive mine in Riverside County, California near the town of Desert Center. Two mining pits will serve as the upper and lower reservoirs for the innovative pumped hydro project. Because the Project will be located at a high elevation in an arid desert region, the disturbance to the environment, recreation opportunities, and aesthetics will be minimal. Nevertheless, the license contains conditions to ensure groundwater quality and protect geological resources as well as desert wildlife within the vicinity of the Project. Although the license contains recommended water quality conditions, FERC rejected the state water quality certification on jurisdictional grounds. DWGP attorneys are actively involved in strategic planning for license compliance, project construction, and related regulatory approvals.
Energy News - D.C. Circuit Vacates FERC Order No. 745 – Demand Response Compensation in Organized Wholesale Energy Markets Rule
On May 23, 2014, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”), in a 2-1 decision, vacated in its entirety and remanded the Federal Energy Regulatory Commission’s (“FERC”) Order No. 745, “Demand Response Compensation in Organized Wholesale Energy Markets.” Order No. 745 sought to incentivize retail customers to reduce electricity consumption, when economically efficient, by requiring independent system operators and regional transmission organizations to compensate, in certain circumstances, demand response providers at market prices, i.e., the locational marginal price.
The D.C. Circuit found that FERC acted: (1) beyond its jurisdictional authority and infringed on the exclusive jurisdiction of the states to regulate the retail electricity market unambiguously set forth in Section 201 of the Federal Power Act; and, (2) arbitrarily and capriciously by implementing Order No. 745 without fully addressing arguments that such compensation would result in unjust and unreasonable rates.
The DC Circuit stated that FERC jurisdiction is limited to regulating the wholesale energy market, while the retail energy market is within the exclusive jurisdiction of the states, under Section 201(b)(1) of the Federal Power Act. However, FERC relied on Sections 205 and 206 of the Federal Power Act, which give FERC broad authority to certify that “all rules and regulations affecting . . . rates in connection with the wholesale sale of electric energy are “just and reasonable.” FERC stated in Order 745 that by reducing retail consumption incentivized by locational marginal price payments, demand response “directly affects wholesale rates.” The majority rejected FERC’s position and found: “Demand response – simply put – is part of the retail market. It involves retail customers, their decision whether to purchase at retail, and the levels of retail electricity consumption.” FERC cannot regulate areas left to the states, and although demand response is “not necessarily a retail sale, [it] is indeed part of the retail market, which . . . is exclusively within the state’s jurisdiction.”
The dissent argued that the Federal Power Act is ambiguous regarding whether demand response is a retail sale; and that a narrow application of Order No. 745 allows it to fall squarely within the Commission’s jurisdiction “affecting wholesale rates.”
To view this decision in its entirety, please click here.
For additional information, please contact Matthew Rudolphi.
Environmental News - EPA Issues Proposed Rule on Carbon Emissions from Existing Power Plants
On June 2, 2014, the United States Environmental Protection Agency (EPA) issued a proposed rule pursuant to Section 111(d) of the Clean Air Act regarding emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel-fired electric generating units. EPA estimates that nationwide, by 2030, this rule would achieve carbon emission reductions of approximately 30 percent, as measured from 2005 levels. The crux of EPA’s proposal is state-specific targets for carbon reduction. EPA has structured each state’s goal in two parts: a state must meet an interim goal on average over the ten-year period from 2020-2029 and a final goal by 2030 and thereafter.
The emission guidelines for states are based on EPA’s determinations of the “best system of emission reduction.” EPA proposes that a mix of four “building blocks” comprise the best system of emission reduction: making fossil fuel power plants more efficient (e.g., by increasing heat rates); making more use of lower-emitting carbon sources (e.g., natural gas combined cycle units); using more zero and low-emitting carbon sources (e.g., nuclear and renewables); and using electricity more efficiently (e.g., demand-side energy efficiency).
Each state would be required to determine, and include in its state plan, emission performance levels for its affected plants. States are also offered the option to choose between a regional (i.e., multiple states) or a single state compliance approach. All states must submit initial or complete plans by June 30, 2016, with the potential for a one-year extension for individual state plans and a two-year extension for multi-state plans. Comments on the Proposed Rule are due 120 days from the date of publication in the Federal Register. The Proposed Rule can be accessed here.
Legislative News - Congress Acts to Spur Hydropower Development at Federal Facilities
On Tuesday, June 10, 2014, the President signed into law H.R. 3080, known as the Water Resources Reform and Development Act (“WRRDA”). WRRDA includes several provisions intended to expedite the development of non-federal hydropower projects at facilities operated by the Army Corps of Engineers. It specifically declares that the permitting of such projects by the Corps be completed in a timely manner. It also requires the Corps to submit a report to Congress detailing its efforts to encourage the development of non-federal hydropower projects at Corps facilities and its progress in reviewing and approving applications to develop such projects. The passage of WRRDA may accelerate a Corps approval process that many within the hydropower community have found to be protracted and problematic.