FERC declares reliability jurisdiction over federal hydro operators

In a challenge to its authority by the Corps of Engineers, the Federal Energy Regulatory Commission declared Oct. 15, 2009, that, in cases of transmission grid reliability, it has jurisdiction over the Corps and other federal agencies that operate hydroelectric projects.

The North American Electric Reliability Corp., the FERC-designated Electric Reliability Organization to enforce grid standards, brought the matter before FERC, asking the commission to declare the Corps’ Tulsa, Okla., District is subject to mandatory reliability standards because it operates the 80-MW Denison Dam hydroelectric project in Texas, considered part of the national bulk power system. (HydroWorld 10/16/09)

The Corps’ Tulsa District had informed NERC’s regional subsidiary, the Texas Regional Entity, that it was not required to comply with the mandatory reliability standards because it is a separate federal agency, independent of Federal Energy Regulatory Commission control and with governmental immunity from any penalties for failure to comply. FERC normally only has jurisdiction over non-federal operators of hydroelectric projects and other electricity and natural gas infrastructure.

While not submitting to FERC jurisdiction, the Tulsa District said it would attempt to comply with reliability standards voluntarily, subject to funds from Congress and project operation requirements.

In a 16-page order, FERC disagreed, saying the Energy Policy Act of 2005 amended the Federal Power Act, expanding FERC’s authority over the nation’s transmission system to prevent blackouts. (HydroWorld 10/8/09)

“Congress instead specifically included within the commission’s (FPA) Section 215 jurisdiction each entity described in Section 201(f) that is a user, owner, or operator of the Bulk Power System,” the commission said. “Based on the expanded jurisdictional reach of the statute, the commission concludes that Congress intended Section 215 to be comprehensive; excluding federal agencies would create a significant gap in the ERO’s and the commission’s reliability oversight.”

FERC said the legislative history of the Energy Policy Act made it clear Congress added the reliability provisions to the Federal Power Act to prevent cascading blackouts.

“It would be contrary to congressional intent and likely ineffective to return to a voluntary system based on individual discretion as the Corps proposes with respect to federal entities,” the commission said.

FERC declined to rule in the current case whether NERC could impose monetary penalties on such federal agencies. Opponents argued federal agencies could not pay penalties unless the money was specifically appropriated by Congress. Additionally, wholesale customers of federal hydropower expressed concern that penalty costs would be passed through to them in the form of higher rates.

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