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FERC hikes maximum penalty for violations; EPA backs off SO2 designations

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FERC hikes maximum penalty for violations; EPA backs off SO2 designations

A congressional hearing on U.S. EPA regulations wentsour after a subcommittee member called the agency's regulatory actions "un-American"and another questioned an EPA official's credentials. Thetumult began with comments from Rep. Bill Johnson, R-Ohio, who asked JanetMcCabe, the EPA's acting assistant administrator for the office of air andradiation, repeatedly if the EPA had fulfilled its duties under the Clean AirAct to study the wider economic impacts of regulations. Johnson asked McCabeseveral times if her agency intended to enlist the Clean Air ScientificAdvisory Committee, which provides independent advice to the EPA administrator,to do so.

Inkeeping with a law passed by Congress in 2015, FERC issued Order 826, aninterim final rule amending the agency's regulations governing the maximumcivil monetary penalties it can assess for violations of statutes, rules andorders within its jurisdiction. Most significantly, FERC raised the caps on theamounts it can fine entities for certain violations of the Federal Power Act,the Natural Gas Act and the Natural Gas Policy Act of 1978 to $1,193,970 perviolation per day.

A U.S. appeals court upheld a FERC order that removedutilities' right of first refusal to build new transmission facilities in theirservice territories, saying the order was "legally valid" and couldimprove competition in wholesale power markets.

The same FERC administrative law judge who just sixmonths ago said the base return on equity for transmission-owning members ofthe Midcontinent IndependentSystem Operator Inc. should be lowered from 12.38% to 10.32% hasnow recommended that it be dropped even further, to 9.7%. JudgeDavid Coffman found that the base ROE for all MISO transmission owners shouldbe set halfway between the midpoint and the top of a zone of reasonablenessranging from 6.76% to 10.68% that was determined based on a discounted caseflow, or DCF, analysis of a proxy group of similarly situated utilities.

The EPA announced that parts of Illinois, Maryland andMichigan were out of attainment with the 2010 National Ambient Air QualityStandards for SO2. The agency had originally proposed 12 areas for non-attainmentdesignations in February but ultimately trimmed the list down in finalizing thedesignations. Power plants subject to NAAQS for SO2 are those that exceed anemission of 16,000 tons of the pollutant in 2012, or 2,600 tons with an averageemissions rate of at least 0.45 lbs of SO2/MMBtu, according to the EPA.

Fears of New York's growing dependency on natural gasfor power generation and the need to replace and significantly expand electrictransmission lines across the state topped the issues in the 's "Power Trends2016: The Changing Energy Landscape" report. Incontrast to the 2014 report's forecast of a 0.16% annual growth in electricityusage, the 2016 report projected overall electricity usage to decline at anannual rate of -0.16% from 2016 through 2026.

FERC spent the second day of its recent two-daytechnical conference gathering stakeholder input on whether its Order 1000processes concerning rates and interregional coordination need reforming toease competitive transmission development. Among other things, the commissionheard participants' views on whether new transmission projects that areselected by grid operators should be able to receive transmission incentivesand how any such incentives should interact with cost containment measures thatserve to limit risks to customers.

The Massachusetts Senate unanimously passedlegislation that would require utilities within the state to procure 2,000 MWof offshore wind by 2030 and nearly 12.5 million MWh of a mix of hydropower andnew Class I renewables by 2019. Gov. Charlie Baker, who wants toimport Canadian hydropower via Hydro-Québecas a means to cut regional greenhouse gas emissions, support Massachusetts'climate goals, and ease ISO NewEngland Inc.'s dependency on natural gas, is expected to sign thefinal bill.

FERC has accepted a series of changes proposed by theCalifornia ISO toboost functionality and address issues that cropped up during the first year ofits energy imbalance market.

Four areas across Illinois, Maryland and Michigan areout of attainment with the U.S. EPA's 2010 National Ambient Air QualityStandard for sulfur dioxide, according to the agency's latest round of finaldesignations for the rule. Those states will have 18 monthsfrom the effective date of the designations to submit to the EPA state implementationplans for meeting the standard. The 2010 rule established a one-hour primarySO2 standard of 75 parts per billion.