Previous month:
January 2018
Next month:
March 2018

February 2018

FERC Rule Seeks to Expand Role of Electric Storage Resources in Wholesale Electricity Markets

 By Matthew G. Lawson Image result for ferc electric storage

On February 15, 2018, the Federal Energy Regulatory Commission (“FERC”) unanimously voted to remove barriers for electric storage resources to participate in the capacity, energy, and ancillary services markets operated by regional transmission organizations (“RTOs”) and independent system operators (“ISOs”).  FERC’s Final Rule requires each of these RTOs and ISOs to develop a plan for revising its tariff structure that establishes a participation model for various electric storage resources.

Currently, electric storage resources, such as large-scale batteries, pumped hydro systems, and thermal energy storage, play a more limited role in RTO and ISO markets, often participating only in fast-responding frequency regulations markets.  FERC’s new rule seeks to expand energy storage’s participation beyond these roles by requiring RTOs and ISOs to develop a participation model that specifically accounts for the unique physical and operational characteristics of electric storage resources.

The Final Rule provides the following criteria for the participation models:

  • First, electric storage resources must be “eligible to provide all capacity, energy and ancillary services that it is technically capable of providing.”  This criteria will eliminate some wholesale market rules that limit the services electric storage resources may provide.
  • Second, the models must ensure that participating systems “can be dispatched and can set the wholesale market clearing price as both a wholesale seller and wholesale buyer consistent with rules that govern the conditions under which a resource can set the wholesale price.”  In other words, ISOs and RTOs must develop a participation model that accounts for the unique ability of electric storage resources to both purchase/store energy off the grid and to sell energy back to the grid.
  • Third, the models must “account for the physical and operational characteristics of electric storage resources through bidding parameters or other means.”  In other words, the markets must take into account electric storage resources’ duration and operating parameters.
  • Finally, the models must “establish a minimum size requirement for participation in the RTO and ISO markets that does not exceed 100kw.”

FERC’s Final Rule will go into effect 90 days after publication.  After this, each RTO and ISO is required to file its tariff modifications to comply with the Final Rule within 270 days of the publication date, and to implement the modifications within one year of the filing date.  This timeframe will allow various stakeholders and interested parties an opportunity to review and comment on the proposed tariff changes submitted by each RTO and ISO.

While pumped-storage hydro is currently the dominate form of electric energy storage in the United States' RTO and ISO markets, other technologies like batteries and flywheels are becoming more commercially viable, and will likely benefit from FERC’s order.  In issuing its Final Rule, FERC noted that the United States’ energy storage resource capacity is expected to grow more than sevenfold over the next five years, and FERC hopes to support this growth to enhance competition and promote greater efficiency in the national’s electric wholesale markets.


OSHA Makes a Statement on Hex Chrome Enforcement

Kenney_Anne_COLOR

By Andi Kenney  Hex chrome

On January 19, 2018, OSHA issued a citation to Spirit Aerosystems, Inc., alleging one willful and five serious violations of the OSHA hexavalent chromium standard (29 CFR 1910.1026) and assessing $194,006 in penalties.

In the citation, OSHA alleges that the manufacturer of aerostructures (including portions of fuselages) willfully failed to prevent employee exposures to levels above the permissible exposure limit (PEL) of 5.0 ug/m3 8 hour time weighted average (TWA) and to implement feasible engineering and work practice controls “to reduce employee exposure to the lowest achievable level.” The citation notes an employee who was sanding and grinding was exposed to hexavalent chromium at 9.0 ug/m3 on a time weighted average, 1.8 times the PEL.

The citation further alleges that Spirit Aerosystems did not perform periodic monitoring every three months, did not perform monitoring when process changed, did not demarcate a regulated area for hex chrome, allowed employees to leave the hex chrome work area without removing contaminated clothing and equipment, and did not adequately train employees regarding the OSHA hex chrome standard. 

The citation is notable for several reasons. First, it is an indication that OSHA is still actively enforcing the hex chrome standard. Second, it underscores OSHA’s position that an increased scheduled work load is a process change that would require additional exposure monitoring. Third, it affirms that the aircraft painting exception, which establishes a 25 ug/m3 exposure limit, does not apply to grinding and sanding operations. Finally, it raises questions about how far an employer has to go to reduce exposures—does the employer’s obligation to implement controls require it to reduce exposure “to the lowest achievable level” as alleged in the citation or does the employer meet its obligation if it reduces exposure to the PEL?

Proposed 2019 White House Budget “Trims” U.S. EPA Budget

Siros By Steven M. Siros White House

The White House rolled out its 2019 budget, which includes deep cuts to a number of federal agencies, including U.S. EPA. The proposed 2019 budget seeks to cut approximately $2.5 billion, or 23%, from U.S. EPA’s budget, including the elimination of approximately 20% of U.S. EPA’s workforce. The proposed budget also seeks to eliminate a number of programs, including programs that provide money to the Energy Star program and to international organizations and countries to fight climate change. Other programs on the cutting block include assistance to fund water system improvements, with significant reductions to the Great Lakes Restoration Initiative and the Chesapeake Bay Program.

The proposed budget places emphasis on the continued elimination of redundant programs and continues to focus on implementing the President’s Executive Order on a Comprehensive Plan for Reorganizing the Executive Branch. The Executive Order seeks to streamline U.S. EPA’s permit review process and reducing unnecessary burden on the regulated community. 

The budget plan faces a likely uphill battle in Congress with many of the same proposals that were rejected by Congress last year being recycled in the proposed 2019 budget. Please click here to go to U.S. EPA’s budget website. 

Will Last-Minute Petition for Review Keep Natural Gas Flowing?

FERC By Matthew G. Lawson  

On February 7, 2018, the Federal Energy Regulatory Commission (“FERC”) moved for a last-minute review to save the Sabal Trail natural gas pipeline just hours before it was scheduled to be shut down.  In a motion filed on Tuesday in the U.S. Court of Appeals for the District of Columbia, FERC asked the court for a 45-day stay of issuance of the court’s mandate to allow the agency to issue an order on remand reauthorizing certificates for the pipeline project.

The request stems from an August 22, 2017 D.C. Circuit opinion concluding that FERC did not adequately analyze the impacts of greenhouse gas (“GHGs”) emissions that would result from the construction and operation of the $3.5 billion pipeline.  The court concluded that FERC had failed to comply with the requirements of the National Environmental Policy Act (“NEPA”) because the agency’s Environmental Impact Statement (“EIS”) did not consider the indirect environmental effects of authorizing the transportation of natural gas to be burned, which in turn generates GHG emissions.  The court remanded the matter back to FERC to give a quantitative estimate of the downstream GHG emissions that will stem from the pipeline or explain specifically why it was not able to do so.

On January 31, 2018, the D.C. Circuit court denied FERC’s petition to rehear the issue, setting the stage for a one week countdown to the shutdown of the major gas network, which has been operating since June 2017.  On Monday, FERC took a major step to keeping the pipeline in service by issuing a revised supplemental environmental impact statement (“SEIS”), but neglected to state whether it would issue an emergency order to prevent shutdown of the Sabal Trail pipeline.  However, it is unclear if FERC has the authority to immediately reissue certificates to the pipeline prior to a thirty day wait period following the issuance of the SEIS.  This may explain why the agency elected to request a short stay from the court for it to reauthorize the pipeline.

In its February 7th motion, FERC asserted that “[i]f pipeline service is halted, Florida Power & Light may not be able to meet its customers’ electricity needs efficiently or reliably.”  The utility services an estimated 4.9 million households in Florida.  FERC’s motion automatically stays the court’s mandate until February 16, which is when responses to the motion are due.

It is also unclear whether the D.C. Circuit will ultimately approve FERC’s SEIS.  The document provides an estimate that the pipeline could increase Florida’s GHG emissions by 3.6 to 9.9% over 2015 levels.  However, the agency declined to comment on the potential environmental effects from that increase, noting there was no “suitable” scientific method for doing so. We will continue to follow this issue and will provide updates as events warrant.

 

 

 

FAA Proposes Record $1.1M Fine for Shipment of Lithium Batteries

Siros By Steven M. Siros  Faa

In what should be a wake-up call for companies that ship lithium batteries, the U.S. Transportation Department’s Federal Aviation Administration (“FAA”) recently levied a $1.1 million civil penalty for alleged violations of DOT shipping regulations. According to the FAA, on June 1, 2016, a Florida-based battery distribution company offered four shipments of 24-volt lithium batteries to FedEx for air transport. One of the batteries is alleged to have caught fire while being transported on a FedEx truck after having been shipped on an aircraft, destroying the truck. FAA contends that the shipped batteries failed both UN and U.S. testing standards, were not equipped to prevent reverse current flow, and were improperly packaged. FAA also alleges that the company did not provide proper training to its employees.

Although the $1.1M penalty has not been finalized, companies that ship lithium should ensure that their shipments are in full compliance with all applicable DOT shipping regulations. The transportation of lithium batteries in aircraft is the subject of ongoing evaluation and scrutiny by the FAA and companies that are deemed to be in violation of these requirements are likely to face significant penalties as evidenced by the $1.1M fine referenced above.