In this program, Carolyn Elefant, owner of the Law Offices of Carolyn Elefant, counsel to the Ocean Renewable Energy Coalition (OREC), seasoned FERC practitioner and legal advisor to innovative law and technology companies identifies and discusses the regulatory market pull incentives developed by FERC over the past 2 years that are creating robust green technology markets and enormous opportunities for entrepreneurs and investors.

1. From Silicon Valley to Wall Street To Foggy Bottom
FERC MARKET PULL
MECHANISMS FOR MHK
AND OTHER SMALL
RENEWABLES
Presented by Carolyn Elefant
Sponsored by The Ocean Law Offices of Carolyn Elefant,
Renewable Energy Coalition Washington DC
October 23, 2012:

2. FACT: FERC Order 679
resulted in proposed
$23 billion
of transmission investment
between 2008 and 2012

3. What is the
potential
impact of
FERC policies
on
investment in
renewables
markets?

4. OVERVIEW
•Market push v. market pull
•FERC’s role in “market pull”
•Specific FERC policies

5. PUSH V. PULL
Credit: Mirko Previsic, ReVision Consulting LLC*
*GMREC Presentation 2009, 0online at
http://www.globalmarinerenewable.com/images/stories/2009Presentations/MirkoPrevisic-
2009GMRE.pdf

6. FERC Federal
FERC Federal Power Act Part II:
Power Act Part I:
MARKET
MARKET PULL
PUSH
Jurisdiction over
Licensing & siting wholesale power
for MHK and other sales &
water-powered transmission in
technologies interstate

7. FEDERAL POWER ACT
PART II
•Jurisdiction over rates and contracts for wholesale power
sales in interstate commerce
•Jurisdiction over rates and contracts for transmission (and
ancillary services), including interconnection to
transmission or distribution facilities serving transmission
functions and QF interconnection where QFs serve 3rd
parties
•Jurisdiction over enforcement of PURPA and parameters
for avoided cost rates
•Jurisdiction over demand response in wholesale markets
•Generally, NO jurisdiction over net-metering or distributed
generation sales; limited jurisdiction in Alaska and Hawaii
due to lack of interstate grid

8. RELATIONSHIP OF MHK
TO FPA PART II
•MHK (and other small renewables) eligible for QF
certification under PURPA and FERC rules
•MHK sale of power to utility = wholesale transaction
(unless QF sale)
•Some MHK interconnection may be to distribution
qua transmission
•MHK providers potentially provide storage or
ancillary services that support transmission
•Merger policy (investment in renewables =
potential hedge on market power)
•Transmission policy - Order No. 1000 to allow
transmission for “public policy” - Atlantic Grid
Connection

9. SPECIFIC FERC POLICIES
•PURPA and QF avoided cost rates/mandatory
purchase obligations
•VERS (integration of variable energy resources into
the grid)
•FERC ruling on net metering
•Order No. 1000 and transmission for “public policy,”
Order No. 679 (green transmission incentives)
•NOPR Re: ancillary services and storage

10. PURPA
•Public Utilities Regulatory Policies Act of 1978
•Creates category of QF (qualifying facility) -
small power (CHP, renewables) and cogen
•Mandatory purchase of renewables
•Avoided cost rates (I.e., cost of power from
alternatives avoided by QF purchase)

11. From Silicon Valley to Wall Street To Foggy Bottom
FERC MARKET PULL
MECHANIMS FOR MHK
AND OTHER SMALL
RENEWABLES
Presented by Carolyn Elefant
Sponsored by The Ocean Law Offices of Carolyn Elefant,
Renewable Energy Coalition Washington DC
October 23, 2012:

12. PURPA
•What is a QF?
•FERC Rules Part 292
•Small renewable 80 MW or less(or cogen at
certain efficiency ratings)
•QF can only sell wholesale not retail (to end
user)
•Can self-certify upon meeting requirements
•Entitled to avoided cost rates (set by states
pursuant to parameters established by FERC)

13. PURPA
•EPAct 2005 amendments to PURPA
•Allow utilities to terminate mandatory purchase
•To terminate, must be in competitive markets
•Requests for termination of >20 MW generally
granted

14. PURPA
•What is avoided cost?
•Up until 2010, avoided cost viewed as costs
avoided by purchase of all power sources
(which are potentially inexpensive)(Southern
California Edison ruling)
•2010 CPUC ruling
•No FIT but
•Sole source rates for renewables allowed by
PURPA
•Can account for verifiable avoided costs
(e.g., CAA compliance)

15. PURPA
•Other recent PURPA decisions
•West Virginia - FERC affirms that giving QFs RECs
(renewable energy credits) does NOT violate
avoided cost caps
•Idaho Power - cannot curtail wind power under
QF contract even where it will pay more for
purchase than if it didn’t buy power. Prices
under long term PPAs calculated at time of
purchase reflect all capacity and energy
charges under Ks.

16. PURPA
•Summary: Impact of PURPA for MHK and small
renewables
•Potential avenue for FIT-type rates;
opportunities with CAA compliance costs rising
•Long term Ks with renewables under PURPA can
hedge against volatile gas prices
•Mandatory purchases still available for small
renewables
•Negotiating REC ownership for QFs increases
value of rates

17. NET METERING
•What is net metering?
•Power sales back to the grid by retail owners
•FERC Ruling July 2010 - net metering not subject to PURPA
•Impact: states can set any charges to encourage net-
metering and are not bound by avoided cost caps
•Net metering/DG incentives are driving small solar.
Potential opportunities for MHK (irrigation and other)

18. INTEGRATION OF VERS
•Problem: intermittent nature of variable energy
resources (VERS) can potentially complicate grid
integration
•Solution: FERC rOrder 764 ule on VERS (July 2012)
•15 minute intra-hour scheduling
•Generators interconnecting under LGIA (large
generator interconnection rule) must provide
meteorologic and forced outage data to
transmission provider if necessary to support
forecasting
•More modest than initial proposal but creates
certainty re: interconnection. Lays the foundation for
when MHK grows up

19. SMALL
INTERCONNECTION RULES
•FERC small interconnection rules
•Applicable to
•Up to 20 MWgenerators connected to transmission or
distribution facilities that support tmission functions
(FERC has 7-part test) [*note - not applicable to non-
juris muni utilities or AL/Hawaii]
•QFs selling excess power to third party (I.e., nonhost)
utilities)
•More simplified process for 10 kw-2 MW (fast track, no
system impact studies) and special process for10 kw
inverter systems
•FERC to consider new small interconnect rules
following series of technical conferences - should
further facilitate interconnection

20. ANCILLARY SERVICES AND
STORAGE
•FERC RM11-24 Ancillary services and storage
rulemaking
•Anciallary services support transmission (regulation
and frequency, imbalance, etc…)
•Proposed rule would allow market rates for
frequency and regulation services (correct for
variation w/additonal tmission)
•Possible market for MHK since it doesn’t require
ramping.

21. ANCILLARY SERVICES AND
STORAGE
•Rulemaking also proposes methodology for
classifying storage functions so that utilities can
recover investment
•Storage has transmission and generation
components - should be accounted for based
on function provided and be transparent
•MHK and other small facilities can provide storage
(battery power, etc…) Depending upon function
can qualify for cost of service, market rates or even
trmission incentive

22. Transmission Policy
•Transmission incentives (Order 679) - incentive for
investment for certain tmission including “green”
trmission functions (some battery technologies
qualify for incentives)
•Order No. 1000
•Tmission providers must consider “public policy”
in making tmission decisions
•Atlantic Grid connection is potential
beneficiary
•Other innovative tmission to support MHK?

23. Where to Find US ONLINE
www.oceanrenewable.com
@oceanrenewable
carolyn@carolynelefant.com
http://www.facebook.com/pages/Ocean-
Renewable-Energy-Coalition/102294079850780
JOIN OREC TODAY!