USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner and Dennis W. Elsenbeck, Phillips Lytle LLP
• established rules for determining whether facilities are presumed to be at the same site for purposes of establishing whether they exceed the 80 MW cap for QFs. In July 2023, FERC issued Order 2023, which reformed the pro forma generator interconnec- tion procedures. Among other things, Order 2023 eliminated the one-by-one interconnec- tion study, replacing it instead with a first-ready, first-served “cluster” study process. A cluster study process allows for the study of a group of interconnection requests by multiple generating facilities at the same time, rather than sequen- tially. Order 2023 also implemented enhanced financial commitments and withdrawal penalties, and established firm study deadlines to address the unjust and unreasonable rates resulting from interconnection queue delays. In March 2024, FERC further issued Order 2023-A to continu- ously streamline the generator interconnection process. Order 2023-A maintained the findings of Order 2023, clarified transmission provider obligations and extended the compliance filing deadline. 1.7 Announcements Regarding New Policies The Trump administration has issued a number of policy decisions and executive orders to elimi- nate or roll back a number of the Biden adminis- tration’s efforts to promote renewable energy and decarbonise the US economy. These redirected efforts reflect a government-wide approach to climate change initiatives and include the poten- tial repeal of the Inflation Reduction Act of 2022. 1.8 Unique Aspects of the Power Industry Investors and market participants should con- sider the powerful role played by state utility commissions in the architecture, pricing and
development of the US power industry – particu- larly as technology applications trend towards smaller-scale distributed energy resources (DERs), intermittent generation and locational value-based pricing mechanisms. 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market The Role of FERC The wholesale electricity market in the United States is generally regulated by FERC, an inde- pendent regulatory agency within the US Depart- ment of Energy (DOE), which implements the FPA, the Natural Gas Act (NGA), the Natural Gas Policy Act (NGPA) and the EPAct, among other statutes. According to Section 201 of the FPA, the wholesale market encompasses all sales of electrical energy made to any person for resale (16 USC Section 824). The FPA requires that all rates for wholesale sales of electrical energy in interstate commerce be just and reasonable and not unduly discriminatory or preferential. FERC oversees three methods for setting whole- sale rates. • First, Section 205 of the FPA, codified at 16 USC Section 824 (d), requires public utilities to file their rates with FERC. • Second, Section 206 of the FPA, codified at 16 USC Section 824 (e), empowers FERC, upon complaint or its own investigation, to fix a new rate based on the cost of service when it determines that the existing rate is not just and reasonable, or is unduly discriminatory or preferential. • A third method of rate-setting in wholesale markets is by an avoided cost under PURPA. Under PURPA, certain co-generation and
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