USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner, Dennis W. Elsenbeck and Zachary R. Hirschfeld, Phillips Lytle LLP
1.5 Central Planning Authorities The USA does not have a central planning authority that oversees and administers the electricity supply and development of transmission and distribution facilities. The USA is broadly divided into three elec- tricity grids – the Eastern Interconnection, the Western Interconnection and the Electric Reliability Council of Texas. Across those three grids are seven competitive wholesale power markets operated by the following FERC-regulated operators, which provide non-dis- criminatory access to the transmission network:
President of the USA, through the inter-agency Com- mittee on Foreign Investment (CFIUS), to review and restrict foreign investments (particularly foreign states of concern) that may impact national security. The Foreign Investment and National Security Act of 2007 (FINSA) enhances the Exon-Florio Amendment by broadly defining the type of infrastructure trans- actions covered and adding more stringent rules pertaining to the review and investigation of foreign investments. In 2018, Congress enacted the Foreign Investment Risk Review Modernization Act (FIRRMA), which expands the scope of transactions covered under CFIUS’s jurisdiction. Currently, there is growing concern at the federal level as to the role (and related control) of a number of foreign-owned/controlled enti- ties in this sector, suggesting further restrictions may be forthcoming. 1.4 Sale of Power Industry Assets The sale of generation, storage, transmission and distribution system assets as well as the merger of industry entities generally requires federal and state approval. At the federal level, FERC approval is gener- ally required under Section 203 of the FPA for the sale, lease or disposition of: • facilities valued at over USD10 million under FERC’s jurisdiction that are used for the transmis- sion or sale of electrical energy in interstate com- merce; and • generation assets making wholesale sales. FERC approval is also required to effectuate mergers, acquisitions, or change in control of jurisdictional facil- ities. In examining such transactions, FERC reviews the effect on competition, rates and cross-subsidisa- tion and whether the transaction is consistent with the public interest. Additional requirements may apply to transactions involving nuclear generation facilities, where approval from the US Nuclear Regulatory Commission (NRC) or others is required to effectuate an asset transfer. At the state level, state utility commissions are often required to approve acquisition or divestiture of power assets.
• the New York ISO; • the California ISO; • the Electric Reliability Council of Texas; • New England ISO; • PJM Interconnection; • Southwest Power Pool; and • the Midcontinent ISO.
These seven regional transmission organisations/ independent system operators (ISOs), collectively known as regional system operators (RSOs) serve roughly two thirds of the USA. Certain states in the South, Mountain West and Northwest did not join an RSO and continue to operate independently. RSOs are responsible for maintaining operation of the grid; they ensure that demand meets supply through capacity auctions and market mechanisms, and they are gov- erned by FERC tariffs, rules and regulations. Neither FERC nor the RSOs are responsible for mak- ing resource mix decisions, as such authority lies solely with each state. Some states require utilities to perform integrated resource planning and to dem- onstrate how utility infrastructure and investment will meet the needs of customers. Other states impose legislation and/or regulation to mandate or incentivise a certain resource adequacy mix. 1.6 Recent Changes in Law or Regulation Material changes in law or regulation seemingly occur almost daily at the state level, particularly with respect to the role of decentralised, alternative energy resources. This increasing pace of change continues. At least 20 states and territories have passed legisla- tion or taken executive action to achieve 100% renew- able energy and/or zero greenhouse gas emissions in
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