9. ELECTRICITY

FERC Order 2000

In an effort to further address shortcomings on competitive access in the electricity sector, FERC in 1999 issued Order 2000. Building upon the ISO framework, the order introduced the concept of RTOs and encouraged transmission owners to participate in them (on a voluntary basis). The order presented 12 criteria that an organisation must meet in order to qualify as an RTO. Generally speaking, ISOs and RTOs serve similar functions, though RTOs co-ordinate electricity transmission on a broader regional basis.

Energy Policy Act of 2005

Under the comprehensive Energy Policy Act of 2005 (EPAct 2005), Congress repealed the Public Utility Holding Company Act of 1935, thereby overhauling the federal regulatory regime for the electricity sector. In doing so, Congress granted unprecedented regulatory authority to FERC, including a requirement for FERC to set and enforce reliability standards for the entire transmission network (which it delegated to NERC). The law also rolled back some of the requirements under PURPA, specifically by not forcing utilities to enter into new contracts from PURPA-qualifying entities if the facility has non-discriminatory access to competitive markets. EPAct 2005 also granted FERC the authority to issue permits for transmission projects in areas under a “national electric transmission corridor”, as designated by the Department of Energy (DOE).

Electricity in the low-carbon transition

Federal environmental policy

Since 2017, the administration’s overarching energy policy is focused on rolling back a number of environmental regulations on the energy sector, including the power sector. The administration believes a number of existing regulations impose excessive costs on the sector. For the power sector, the main regulatory rollback proposal has been to repeal and replace the Clean Power Plan for greenhouse gas emissions.

On 21 August 2018, the administration introduced its proposal to replace the Clean Power Plan with the Affordable Clean Energy rule. Under Section 111(d) of the Clean Air Act, the Environmental Protection Agency (EPA) is required to regulate emissions at existing power plants through the best system of emissions reduction (BSER). The Clean Power Plan, which was suspended by a Supreme Court ruling and therefore never took effect, proposed statewide targets for power plant emissions that collectively added up to a 32% reduction from 2005 levels by 2030. Meeting the targets allowed for so-called “beyond the fence line” measures such as switching to cleaner power sources and demand-side management. In contrast, the replacement plan focuses on site-specific emissions cuts at individual power plants. The EPA’s latest rule – finalised in June 2019

– offers states several options for candidate technologies, though recommends heat-rate efficiency improvements at existing power plants as the BSER (Utility Dive, 2019a).

The administration in December 2018 also announced a proposal to revise New Source Performance Standards (NSPS) for CO2, applied under Section 111(b) of the Clean Air Act. The NSPS rule has been in effect since it was finalised in 2015. The previous rule established an emissions threshold of 1 400 pounds (635 kilogrammes) of carbon dioxide (CO2) per MWh for new coal-fired generators, which would require partial carbon capture and sequestration (CCS). The new proposal calls for a standard of 1 900 pounds

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ENERGY SECURITY

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