Like most state public utility commissions, the Federal Energy Regulatory Commission has recently taken a series of actions in response to the coronavirus pandemic and its impact on the electric power and natural gas sectors. While PUCs to date have focused largely on measures to protect retail consumers, FERC's initial actions are largely aimed at providing regulatory relief to the electric and gas utility companies and other entities the commission regulates.
FERC's actions also apply to many fundamental industry functions and regulatory activities that most residential and commercial consumers are not aware of and do not see. Among other things, these functions and activities include wholesale power sales, setting rates for electric and gas transmission and the operations of regional transmission organizations and independent system operators, or RTOs and ISOs.
At the state level in most jurisdictions, there is now some type of moratorium in place on utilities terminating service for nonpayment of bills, which directly impacts retail customers of electric and gas distribution companies regulated by the states. At the same time, PUCs and utilities are beginning to recognize and respond to the impact of the uncertainties associated with the coronavirus on companies' businesses, even as the filing and processing of distribution rate cases is disrupted.
According to Regulatory Research Associates, a group within S&P Global Market Intelligence, as of March 18, the pace of state-level regulatory activity remained vigorous nationwide, with 44 electric and 36 gas rate cases pending in 31 jurisdictions, including the District of Columbia. See Pace of rate case activity remains brisk; uncertainty expected due to pandemic. More recently, RRA found that the expected uncertainty is beginning to have an impact on state-level rate cases. See Precipitous decline in case filings suggests some requests have been withheld.
With realities of coronavirus taking shape, impact felt on meetings, rate cases, COVID-19 proving to be a strain on utility rate case schedules and State regulators take 1st steps to address COVID-19 costs to utilities.
While traditional rate cases for electric and gas utilities are commonplace in the states, they are far less frequent at FERC. In the electric power sector, where FERC regulates the rates and terms of transmission service in interstate commerce, more than 100 utilities now employ formula rates for transmission, greatly reducing the number of companies that are subject to traditional rate cases.
Formula-based frameworks update rates annually based on updated cost of service data, generally drawn from the data filed by a company in its annual FERC Form 1. A "stated" transmission rate is also based on the traditional cost of service data, but the rate can only be changed through a formal rate case process.
In 2018, FERC identified only 33 companies with stated transmission rates in connection with tax reform proceedings, and only 21 of those were investor-owned utilities. Of those 21 utilities, at least four have subsequently applied for or received authority for formula transmission rates: NextEra Energy Inc. subsidiary Florida Power & Light Co., PG&E Corp. subsidiary Pacific Gas and Electric Co., Fortis Inc. subsidiary Tucson Electric Power Co. and AES Corp. subsidiary Dayton Power and Light Co.
In the natural gas sector, where FERC has authority over the transportation and sale of natural gas in interstate commerce, traditional rate cases for gas pipelines are also relatively uncommon and often occur only as a result of a commitment in a settlement of a pipeline's prior rate case.
FERC's initial actions in response to the coronavirus pandemic on March 19 provided an extension of time for certain required "non-statutory" filings that are due on or before May 1. Examples of non-statutory filings cited by FERC include compliance filings and responses to deficiency letters, rulemaking comments and most forms required by the commission. FERC noted that the extension of time also applies to filings required by company tariffs or rate schedules.
FERC also noted that settlement conferences in cases pending before the commission's administrative law judges will continue via conference call, and FERC's chief administrative law judge will make case-specific determinations on cases that have been set for more formal hearings as their start dates approach. FERC's calendar lists 15 settlement conferences and three prehearing conferences scheduled through the end of April.
On April 2, FERC took a series of additional actions to address the impacts of the coronavirus pandemic. One order temporarily delegated authority until June 1, to FERC staff "to take action on uncontested requests for waiver of certain regulatory obligations to address needs resulting from steps entities have taken to meet the emergency conditions caused by the novel coronavirus disease."
In a policy statement issued the same day, FERC noted that it will "expeditiously review and act on requests for relief including, but not limited to, coronavirus-related cost recovery requests…" FERC added it would "give our highest priority to processing filings made for the purpose of assuring the business continuity of regulated entities' energy infrastructure during this extraordinary time."
Noting that the New York ISO on March 27 requested a waiver of notarization requirements for certain forms, FERC also granted a blanket waiver through Sept. 1 of not only document notarization requirements but also in-person meeting requirements contained in electric utilities' open access transmission tariffs, or OATTs, and "any other tariff, rate schedule, service agreement, or contract subject to the commission's jurisdiction."
For RTOs and ISOs, the coronavirus pandemic is having pronounced impacts on stakeholder processes and managing system operations. The responsibilities and functions of FERC-approved RTOs and ISOs are manifold and include transmission planning, interregional coordination and maintaining grid reliability.
In order to help fulfill their core responsibilities and functions, RTOs and ISOs have established multiple committees and working groups of transmission owners, market participants and other stakeholders. For example, the PJM Interconnection has 17 committees, 19 subcommittees and numerous other stakeholder groups that meet regularly "to provide a forum for members to share their positions and resolve difficult issues." PJM's calendar reflects approximately 24 stakeholder meetings scheduled through the end of April, excluding a weekly coronavirus update conference call.
For an overview of actions RTOs and ISOs are taking to manage critical system operations and maintain business continuity, see As coronavirus spreads, NY grid operators agree to live at work.
In addition, the Midcontinent ISO notes that the organization's Incident Management Team meets daily "to review situational awareness reports, coordinate action plans and develop communications." MISO also notes that stakeholder meetings will continue to be conducted via teleconference and/or phone until May 1 and MISO will reassess the situation at that time.
PJM is extending Webex-only stakeholder meetings until at least May 6. PJM notes that it will brief states each Friday on the latest coronavirus-related information during a closed teleconference and post public materials associated with the updates on its website. PJM also notes it will provide members and stakeholders with a weekly update at 11 a.m. each Friday for the duration of the coronavirus pandemic.
Regulated company actions
Prior and subsequent to FERC's actions of March 19 and April 2, which likely forestalled a flurry of requests from the regulated community for waivers and extensions of time, some companies submitted requests for relief from various regulatory requirements to the commission.
In the electric power sector, on March 9, Sierra Pacific Power Co. and Nevada Power Co. requested a waiver of the in-person meeting requirements in the companies' OATT for the remainder of 2020 "so that [the companies] can convene meetings via teleconferences during the COVID-19 outbreak, instead of in person, as required by the OATT." FERC issued an order granting the companies' requested waiver on March 19.
On April 2, ISO New England asked FERC to waive requirements contained in ISO-NE's Financial Assurance Policy and any similar requirement contained in ISO-NE's tariff or commission regulations that certain documents be notarized. ISO-NE asserted the waiver is necessary due to the effects of the coronavirus "and the resulting governmental restrictions and orders that make notarization difficult or practically impossible in many cases."
On April 3, Puget Sound Energy Inc., or PSE, requested a temporary waiver of requirements in its OATT "to help PSE employees work remotely in light of restrictions enacted in response to the [coronavirus] emergency." Specifically, PSE cited tariff provisions that require or allow certain documents to be provided to PSE in hard-copy, and to permit PSE to require that all such documents be submitted by email. PSE also requested a waiver "to disallow forms of payment that require in-person handling, and that all customer payments to PSE be made by wire or automated clearing house transfer."
In the natural gas sector, on March 18 Alliance Pipeline L.P. requested an extension of time to file a general rate case to "allow it to continue to prepare the filing while navigating the uncertainty and challenges associated with addressing the COVID-19 pandemic." In 2016, FERC approved a settlement in Alliance's previous rate case that required the company to file a new rate case by April 1, 2020. Alliance asserted "due to the unprecedented circumstances presented by the COVID-19 pandemic," the company has implemented policies requiring employees to work remotely and "hampered Alliance's ability to complete the filing by the April 1, 2020 deadline." FERC granted Alliance's request on March 30.
Regulatory Research Associates is a group within S&P Global Market Intelligence.
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