Speaking Energy

Akin senior counsel Scott Johnson will present part of a live webinar with Strafford entitled “PURPA Rules: FERC Revisions Regarding QF Power Sales, Requirements for Utilities, QF Certification, State Authority.” The panel will provide in-depth analysis of the Federal Energy Regulatory Commission’s (FERC) regulations under the Public Utility Regulatory Policies Act of 1978 (PURPA), recent revisions to those regulations and appeals of those revisions. It will discuss critical aspects of the rules to encourage the development of qualifying small power production facilities and cogeneration facilities (QFs), requirements for electric utilities, state authority to set rates in QF power sales contracts and modification of FERC’s “one-mile rule.” It will also address changes to a utility’s obligation to purchase QF output, QF certifications and other important aspects of FERC’s PURPA regulations. The webinar is approved for CLE credit and will take place on Thursday, April 18, from 1:00 p.m. – 2:30 p.m. ET. Please click here for more information and to register.

On February 9, 2024, it was reported that Commissioner Allison Clements will not seek a second term on the Federal Energy Regulatory Commission (FERC or Commission) following the expiration of her first term in June of this year.¹ The Commission is already down two out of five members. Commissioner Clements’ departure without replacement would leave FERC without a quorum and introduce additional uncertainty regarding the direction FERC may take on key energy issues in the coming years. FERC last went without a quorum in 2017, as explained in a prior Speaking Energy post.

2023 saw two megadeals in the oil & gas industry that have led to calls from environmental interest groups for the FTC to intervene despite a lack of obvious antitrust issues. Whether the FTC will sue to block the deals remains to be seen.

On October 27, 2023, the Federal Energy Regulatory Commission (FERC or the Commission) issued orders on two liquefied natural gas (LNG) export terminal projects sponsored by Rio Grande LNG, LLC (Rio Grande)¹ and Texas LNG Brownsville LLC (Texas LNG)² under development in Brownsville, Texas. The orders reaffirmed FERC’s April 2023 decisions³ finding that the terminals’ authorizations were not inconsistent with the public interest under section 3 of the Natural Gas Act (NGA) after challenges to those decisions were filed in May. The genesis of the April 2023 decisions was a remand ordered by the U.S. Court of Appeals for the District of Columbia (D.C. Circuit) finding that FERC’s initial authorization of the projects in 2019 was legally deficient.

On September 21, 2023, during the Federal Energy Regulatory Commission’s (FERC) September open meeting, Acting FERC Chairman Willie Phillips committed to scheduling a vote on pending rehearing petitions related to two liquefied natural gas (LNG) export terminal projects under development in Brownsville, Texas, by September 29. Chairman Phillips’ commitment followed a failed motion by Commissioner James Danly to hold another open meeting to vote on the rehearing orders before FERC loses its jurisdiction to do so under section 19 of the Natural Gas Act (NGA).

On July 3, 2023, the Federal Energy Regulatory Commission (FERC or the Commission) issued an order confirming a more aggressive posture towards scrutinizing the ability of investors to exercise control over public utilities through representation on the board of a public utility or a company holding an interest in a public utility. The order concerned a request for rehearing of an October 2022 order in Evergy Kan. Cent., Inc.¹ that held that an investor will be deemed to be affiliated with a public utility if an individual accountable to that investor is appointed to the board of the public utility or the public utility’s holding company, even if the investor holds less than 10% of the voting interests in the company at issue or the voting rights of the shares held by the investor have been restricted. That determination represented a marked departure from FERC’s historic approach to evaluating affiliation, in which FERC generally has accepted that investors holding an interest of less than 10% do not control a public utility and, as a result, should not be considered to be an affiliate of the utility.

Effective July 1, 2023, oil and liquids pipelines regulated by the Federal Energy Regulatory Commission (FERC) and charging so-called “index” rates will be able to increase their rates by over 13 percent. FERC announced this change on May 16, 2023 in its Notice of Annual Change in Producer Price Index for Finished Goods (PPI-FG). This year, FERC’s index rate formula of PPI-FG minus 0.21% results in a positive 0.133194, meaning that oil pipelines are required to multiple their July 1, 2022 through June 30, 2023 index ceiling levels by 1.133194 to compute their index ceiling levels for July 1, 2023 through June 30, 2024. This is the largest index rate increase since FERC initiated this methodology in the 1990s. The PPI-FG index is tied to inflation. Last year, the index ceiling increased by nearly 9%.

Energy industry watchers are waiting to see whether environmental or industry groups will appeal a pair of decisions issued by the Federal Energy Regulatory Commission (FERC) on April 21, 2023, that addressed the impacts of two proposed liquefied natural gas (LNG) export terminal authorizations on environmental justice communities within the projects’ vicinities.  In Texas LNG Brownsville LLC (“Texas LNG”) and Rio Grande LNG, LLC (“Rio Grande”), FERC for the first time conditioned a Natural Gas Act (NGA) section 3 authorization on the implementation of mechanisms specifically designed to protect nearby environmental justice communities. The conditions include ongoing air quality monitoring and mitigation during terminal construction and operation to be coordinated amongst and between the two project developers with LNG terminals to be situated around Brownsville, Texas. At FERC’s open meeting announcing the orders, Acting Chairman Willie Phillips proclaimed that the condition marked the first time that FERC was “requiring that the project sponsors ensure that the overlapping construction and operation of [their] project[s] do not cause any significant air quality impacts on environmental justice communities.” Another nod to environmental justice communities was a new requirement that the projects update their Emergency Response Plans to protect nearby communities, to include, among other things, training materials in English and Spanish. The decisions came just under a month after FERC held its first Technical Conference on Environmental Justice and Equity in Infrastructure Permitting. FERC is taking comments on that technical conference through May 15, 2023, in Docket No. AD23-5-000.