Takeways

FERC to schedule Technical Conference (May 1-2, 2017) to address dividing line between state and federal jurisdiction
Conference expected to address ZEC programs in New York and Illinois, state RPS Standards, and Renewable Energy Credits.
Conference activity could have a major impact on future FERC action and the ability of states to pursue resource planning objectives.

On Friday, March 3, 2017, the Federal Energy Regulatory Commission (FERC) made the much-anticipated announcement of its upcoming staff-led technical conference on wholesale energy and capacity markets.

The conference comes as a number of states have implemented policy initiatives to support particular types of generation resources, such as New York’s zero-emission credit program to support continued operation of nuclear power plants. The New York program subsequently became a model for legislation in Illinois and similar initiatives are being considered in other states.

Earlier state energy policy initiatives have been challenged in the courts, and there is currently a struggle to find a clear dividing line between FERC jurisdiction and the states. Most recently, the Supreme Court case Hughes v. Talen Energy Marketing found that state energy policy initiatives encouraging new or clean energy measures must be “untethered” from wholesale capacity market participation. The application of this standard is likely to be the subject of continued debate and possible future litigation.

FERC has several post-Hughes cases pending on its docket that will require the Commission to address these issues further. However, since Commissioner Norman Bay abruptly resigned on February 3, 2017, the Commission has been left without a quorum, preventing it from issuing decisions with respect to these cases. It is likely to take the Trump Administration at least two to three months—or potentially much longer—to fill a third Commission seat and reestablish a quorum, even after the expected release of the names of Kevin McIntyre and Neil Chatterjee to fill two of the three empty Republican seats (McIntyre, a partner and energy practice leader at Jones Day, is expected to be designated chairman of the Commission). Given this potential for delay, FERC has decided to proceed with a staff-led Technical Conference relating to the issues raised by these cases, in order to start establishing a record and put itself in a positon to act quickly once at least one new Commissioner takes office.

The Conference is intended to focus specifically on efforts by “state policy makers to … prioritize certain resources or resource attributes,” including renewable portfolio standards (RPS), renewable energy credits (REC) and the use of zero-emissions credits (ZECs). FERC seeks to examine in depth “the question of how the competitive wholesale markets, particularly in states or regions that restructured their retail electricity service, can select resources of interest to state policy makers while preserving the benefits of regional markets and economic resource selection.”

This is likely to be one of the most important Conferences FERC has held in many years. It will take place on May 1 and 2, 2017 at the FERC offices in Washington, DC. Interested persons may register online. It will be important for affected companies to follow closely the issues raised at this Conference.