The Energy Regulation and Markets Review - Stikeman Elliott

United States
utilities or third parties to finance the full cost of end-use efficiency investments for
a retail utility customer and then recover of and on these investments through special
charges included on the customer’s retail utility bill. A similar type financing arrangement
is possible under federally authorised property-assessed clean energy (‘PACE’) bonding
authority for local governments, which use PACE bond proceeds to finance the upfront
costs of energy efficiency investments in homes and small businesses and have the loans
secured by an annual assessment on the home or business property tax bill, although this
programme has so far been limited to commercial properties because of federal home
mortgage insurance policies.
VI
THE YEAR IN REVIEW
FERC’s Order No. 1000 adopted significant reforms of FERC’s transmission planning
and cost-allocation rules established previously in Order No. 890. Order No. 1,000
seeks to address significant recent changes in the bulk power industry, including an
increased emphasis on integrating renewable generation and reducing congestion, by
implementing new policies to push transmission providers and planners to seek the most
reliable, efficient and cost-efficient solutions. The major reforms of Order No. 1,000
include:
a requiring each public utility transmission provider to participate in a regional
transmission planning process that produces a regional transmission plan and
regional and interregional cost allocation methods for planned projects;
b requiring each public utility transmission provider to amend its OATT to
describe procedures for considering transmission needs driven by public policy
requirements established by state or federal laws or regulations, such as state
renewable portfolio standards;
c removing from FERC-approved tariffs and agreements any federal right of first
refusal for incumbent utilities to build certain new transmission facilities; and
d improving coordination between neighboring transmission planning regions.
FERC’s Order No. 745 was adopted in 2011 to encourage demand responsiveness
through market pricing mechanisms. In Order No. 745 FERC required that the RTO
energy markets adopt market rules that treat demand reduction (i.e., ‘Negawatts’) in the
same way as supply alternatives (i.e., Megawatts) for the purpose of bidding into the
energy markets; however, the RTOs were still given flexibility as to how to implement
these market incentives. In April 2011, the California legislature approved Senate Bill 2,
which codified California’s ambitious renewable portfolio standard (‘RPS’) requirement
of 33 per cent by the end of 2020 (and 20 per cent by the end of 2013, and 25 per cent
by the end of 2016). Originally enacted in 2002, California’s RPS previously set a 20 per
cent requirement by 2010. The 33 per cent RPS requirement applies to both investorowned
and publicly owned utilities (which were not subject to the prior requirement).
Eligible technologies include solar, wind, geothermal, ocean wave, thermal and tidal
energy, fuel cells using renewable fuels, landfill gas, municipal solid waste conversion,
and certain biomass and hydroelectric resources. California also allows utilities to
comply with its standard through tradeable renewable energy credits, though a utility’s
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