Dismissal of Low Carbon Fuel Standard (LCFS) Case Appealed Amidst Program Extension

By Latham & Watkins LLP on April 3, 2018 Posted in Environmental and approvals, Permitting

Appeal in POET II could complicate California Air Resources Board’s proposed LCFS amendments.

In the case commonly referred to as POET II, petitioner POET, LLC, a biofuels manufacturer, challenged the Low Carbon Fuel Standard (LCFS) and Alternative Diesel Fuels (ADF) regulations which the California Air Resources Board (ARB) adopted in 2015. After briefing had been completed, defendant-respondent ARB filed a motion for judgement on the pleadings (MJOP) on November 21, 2017, in an attempt to have the case dismissed in light of earlier rulings in the related POET I case. On January 5, 2018 the Fresno County Superior Court issued a ruling granting the MJOP with respect to all claims and dismissing the entire case as moot. On March 6, 2018, POET noticed an appeal of the Superior Court’s decision to the California Court of Appeal for the Fifth Appellate District, the same Court of Appeal that issued the decisions in POET I. In that decision, the court sharply criticized the ARB for not acting in good faith and found that ARB failed to comply with the California Environmental Quality Act (CEQA).

Also on March 6, 2018, ARB released proposed amendments to the LCFS that would, inter alia, extend the Program to 2030. Included in the amendment package is an analysis of nitrogen oxide (NOx) emissions attributable to the LCFS, prepared in an attempt to fulfill the writ of mandate issued in POET I. On March 12, 2018, ARB released Regulatory Guidance Document 18-01, which updates prior guidance regarding ARB’s plans to meet the requirements of the writ of mandate issued in POET I. The appeal in POET II carries important implications for the Regulatory Guidance, the amendment package, and potentially for the future of the LCFS Program. Continue Reading

FERC Narrowly Approves ISO-NE Proposal Regarding State-Sponsored Generation Resources

By Latham & Watkins on March 22, 2018 Posted in Energy storage

The split ruling may have broader implications for FERC’s stance toward state-sponsored resources.

By Michael J. Gergen, Tyler Brown, and Peter R. Viola

The Federal Energy Regulatory Commission (FERC) has approved ISO New England Inc.’s (ISO-NE’s) two-stage capacity market proposal, Competitive Auctions with Sponsored Policy Resources (CASPR), by a 3-2 vote, with Chairman Kevin McIntyre and Commissioners Cheryl LaFleur and Neil Chatterjee voting in support, and Commissioners Robert Powelson and Richard Glick voting against. FERC issued an order (CASPR Order) on March 9, 2018, accepting ISO-NE’s proposed tariff revisions largely unchanged. The bulk of the revisions took effect on March 9, 2018 and the remainder will take effect on June 1, 2018.

ISO-NE originally released CASPR as a set of proposed changes to its Transmission, Markets, and Services Tariff in April 2017. (Additional details can be found in this Latham blog post.) Following a series of stakeholder meetings, ISO-NE filed its proposed tariff revisions with FERC in January 2018 pursuant to section 205 of the Federal Power Act (FPA), arguing that the proposed revisions were just and reasonable and not unduly discriminatory. ISO-NE designed CASPR to balance competitive pricing in the organization’s three-year Forward Capacity Market (FCM) with the entry of state-sponsored renewable electric energy resources into the FCM. Continue Reading

BLM Begins Scoping Process to Consider Amendments to Desert Renewable Energy Conservation Plan

By Latham & Watkins on March 13, 2018 Posted in Finance and project development, Permitting

DRECP under review in an effort to alleviate burdens on energy development.

By Marc T. Campopiano, Joshua T. Bledsoe, Jennifer K. Roy, and James Erselius

The Bureau of Land Management (BLM) recently issued a notice of intent to review the Desert Renewable Energy Conservation Plan (DRECP) for potential burdens on domestic energy production in California. The BLM issued the notice on February 2, 2018, in response to Executive Order (EO) 13783, “Promoting Energy Independence and Economic Growth.” EO 13783 was issued on March 28, 2017, and requires the heads of federal agencies to review all existing agency actions that “potentially burden the development or use of domestically produced energy resources.”

Finalized in 2016, the DRECP established a framework to streamline permitting for renewable energy projects on public lands in the California Mojave and Colorado/Sonoran desert region. The DRECP covers renewable energy development activities, including solar, wind, and geothermal projects, as well as transmission facilities that service renewable energy projects. As discussed in a previous post, concerns from local agencies, industry, and environmental groups caused state and federal agencies to narrow DRECP’s focus to public lands only.

The corresponding Land Use Plan Amendment (LUPA), issued when the DRECP was finalized, affects land use planning decisions for all of the 10.8 million acres of federal lands within the 22 million total acres covered under the DRECP. The LUPA set aside certain BLM-managed lands for conservation and recreation, and identified priority areas for renewable energy development. As detailed in a prior post, the approved LUPA designates 388,000 acres of Development Focus Areas, which are lands identified as having high-quality solar, wind, and geothermal energy potential and access to transmission. In addition to Development Focus Areas, the approved LUPA designates: 40,000 acres of Variance Process Lands for renewable energy development; approximately 6.5 million acres for conservation; approximately 3.6 million acres for recreation; and 419,000 acres of General Public Lands, which lack a specific land allocation or designation. A land use plan amendment is needed to develop renewable energy in General Public Lands areas. Continue Reading

New York Releases Offshore Wind Master Plan

By Latham & Watkins on March 9, 2018 Posted in Finance and project development

Plan outlines next steps for procuring 2,400 MW by 2030, with a likely significant benefit for New York’s economic development.

By Tommy Beaudreau, Janice Schneider, Michael Gergen, and David Amerikaner

New York Governor Andrew Cuomo and the New York State Energy Research and Development Authority (NYSERDA) have released the New York State Offshore Wind Master Plan, an extensive document that highlights the state’s progress on offshore wind development while charting an ambitious path forward. The plan is designed to help meet the Governor’s previously announced goal of procuring 2,400 megawatts (MW) of offshore wind energy by 2030. The offshore wind goal is part of an overall strategy to generate at least 50% of New York’s electricity from renewables by 2030, as previously covered in this blog. Continue Reading

FERC Approves Landmark Rule on Electric Storage Resources

By Latham & Watkins on March 7, 2018 Posted in Energy storage

Federal Energy Regulatory Commission’s much-anticipated new rule will enhance the participation of electric storage resources in the organized wholesale electricity markets.

By Michael Gergen, David E. Pettit, and Peter Viola

Nearly a year and a half after issuing its original proposal, the Federal Energy Regulatory Commission (FERC or Commission) has unanimously adopted its final rule—Order No. 841—on Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators (Storage Rule). The Storage Rule is the culmination of FERC’s proceedings following the notice of proposed rulemaking issued in November 2016 (Storage NOPR) whereby FERC originally proposed enhancing the participation of electric storage resources in the organized capacity, energy, and ancillary service auction markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).

The Storage Rule recognizes the improving capabilities and cost-competitiveness of electric storage resources (such as batteries, flywheels, pumped-hydro, etc.) and is designed to further pave the way for such resources to participate in the organized wholesale electricity markets alongside conventional energy sources. At the same time, the Commission determined that further information is needed about proposed reforms related to market participation of aggregations of distributed energy resources (DERs) in the RTO/ISO markets. The Commission therefore directed FERC staff to convene a technical conference on April 10-11, 2018 to gather additional information before deciding what action to take on those proposals.
Continue Reading

CEQA Developments: How New Proposed Regulations and Streamlined Legislation Will Impact California Projects

By Latham & Watkins LLP on March 1, 2018 Posted in Environmental and approvals, Finance and project development

Webcast addresses recent developments involving the California Environment Quality Act.

By Marc Campopiano, Chris Garrett, and Winston Stromberg

The Project Siting & Approvals Practice hosted a 60-minute webcast on February 21, “CEQA Developments: How New Proposed Regulations and Streamlined Legislation Will Impact California Projects.” Speakers provided an overview of the proposed updates to the California Environmental Quality Act (CEQA) Guidelines, the implications of new proposed legislation to streamline CEQA (including S.B. 827), and the impact of the California Air Resources Board’s Scoping Plan on CEQA.

View the webcast or download the presentation slides on-demand by registering here.

Proposed CEQA Guidelines Amendments Proceed Through Rulemaking Process

By Latham & Watkins on February 27, 2018 Posted in Energy regulatory

Proposed changes include shifting the methodology for studying projects’ potential traffic impacts and clarifying the terms for deferred mitigation measures.

By Marc Campopiano, Winston Stromberg, and Samantha Seikkula

The California Natural Resources Agency (the Agency) has given notice that it intends to revise many of the regulations implementing the California Environmental Quality Act (the CEQA Guidelines). If adopted, the proposed rulemaking package would represent the most substantial amendments to the CEQA Guidelines in 20 years. The most significant proposed change shifts the methodology for studying projects’ potential traffic impacts and mitigation measures under CEQA. Continue Reading

Massachusetts Unveils Three Offshore Wind Farm Proposals

By Latham & Watkins on February 1, 2018 Posted in Finance and project development

New England wind farms poised to lead the way in utilities converting from fossil fuel to wind generation.

By Tommy Beaudreau, Janice Schneider, and David Amerikaner

The race is on to build the first utility-scale offshore wind farm in the United States (US) on the federal Outer Continental Shelf. In December, three companies — Bay State Wind, Deepwater Wind, and Vineyard Wind — submitted bids in response to the Request for Proposal (RFP) issued by the Massachusetts Electric Distribution Companies (Distribution Companies), in coordination with the Massachusetts Department of Energy Resources, to enter into long-term contracts for offshore wind energy generation off of the coast of Massachusetts. The RFP was issued pursuant to Section 83C of Massachusetts’ Act to Promote Energy Diversity. Under the RFP, the Distribution Companies required developers to submit projects of at least 400 megawatts (MW) of offshore wind power generation, while also considering projects generating up to 800 MW. This initial solicitation is part of a staggered procurement plan, in accordance with Section 83C, to acquire approximately 1,600 MW of aggregate offshore wind nameplate capacity by June 30, 2027.

Each of the submitting wind farm ventures holds a federal lease from the Bureau of Ocean and Energy Management (BOEM) for areas in federal waters 15 to 25 miles offshore. All three bids propose wind farms south of the island of Martha’s Vineyard that would provide 400 MW of power, though some bids include alternate proposals on smaller or larger scales. Each bid also includes storage and transmission proposals, as the RFP required. Continue Reading

Wholesale Capacity Market in New England Aims to Better Accommodate State-Sponsored Generation Resources

By Latham & Watkins on January 25, 2018 Posted in Energy regulatory

The regional transmission organization’s proposal seeks to reconcile the increasing deployment of state-sponsored subsidized clean energy resources with competitive forward auctions.

By Michael Gergen and Tyler Brown

Proposed New Auction Process in New England

energy pylon The ISO New England Inc. (ISO-NE), the regional transmission organization serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont has filed proposed changes to its Transmission, Markets and Services Tariff with the Federal Energy Regulatory Commission (FERC). The proposal would create a two-stage capacity auction designed to balance competitive pricing in its three-year Forward Capacity Market (FCM) with the entry of state-sponsored renewable electric energy resources into the FCM. ISO-NE’s proposal, known as Competitive Auctions with Sponsored Policy Resources (CASPR), emerged from the New England Power Pool (NEPOOL)’s Integrating Markets and Public Policy (IMAPP) initiative. IMAPP sought to reconcile states’ efforts to deploy new generation with existing generators’ concerns that resources receiving out-of-market revenues will suppress capacity prices. ISO-NE filed the CASPR proposal on January 8, 2018 even though it fell short of the support it needed to win endorsement by a vote of the ISO’s Participants Committee on December 8, 2017. Stakeholders have until January 29, 2018 to submit comments.

ISO-NE’s existing FCM rules subject new capacity resources to a Minimum Offer Price Rule (MOPR), which requires that subsidized generation resources bid into the FCM’s Forward Capacity Auction (FCA) at their unsubsidized cost. The FCM contains a Renewable Technology Resource (RTR) exemption to the MOPR, which allows for up to 200 MW per year of certain renewable resources to bid into the FCA at their subsidized (i.e., below market) cost. New England state regulators have argued that the MOPR can cause electricity consumers to “pay twice”: once for the cost of capacity that clears in the FCA, and a second time for additional capacity from subsidized resources that did not clear in the FCA (because those subsidized resources were required to bid at their unsubsidized cost). Continue Reading

California Adopts Rules for Evaluating Multiple-Use Energy Storage Resources

By Latham & Watkins on January 24, 2018 Posted in Energy storage

By Michael Gergen, David Pettit and Christopher Randall

The CPUC’s market-shaping decision provides guidance regarding the “stacking” of multiple electricity system services.

A new decision from the Public Utilities Commission of the State of California (CPUC) has set the stage for improved economic viability for California’s energy storage industry. The January 17 decision — Decision 18-01-003 in Rulemaking 15-03-011 (the Decision) — establishes a set of rules to guide utilities on how to “promote the ability of storage resources to realize their full economic value when they are capable of providing multiple [or ‘stacked’] benefits and services to the electricity system.”

To advance this objective, the CPUC has adopted 11 stacking rules to govern the evaluation of multiple-use energy storage applications, as well as associated definitions of services and service “domains.” The agency also established a working group to develop certain issues further and directed the CPUC’s Energy Division to prepare a report in 2018 on the state of the energy storage industry. Continue Reading