November 2006 EDITORS NOTE by Clifford S. Sikora IN THIS ISSUE: - - PDF document

November 2006 IN THIS ISSUE: EDITOR’S NOTE EPACT 2005 IN PRACTICE – FEDERAL TRANSMISSION SITING AUTHORITY GETTING MIXED REVIEWS RELIABILITY ANALYSIS – PREPARING THE ELECTRIC UTILITY INDUSTRY FOR MANDATORY RELIABILITY STANDARDS COMPLIANCE TRANSMISSION PRICING INCENTIVES – FERC DOING ITS PART TO FOSTER INVESTMENT NERC RELIABILITY ASSESSMENT REFLECTS SENSE OF URGENCY ON TRANSMISSION – REPORT CHALLENGES INDUSTRY AND REGULATORS TO DO MORE Troutman Sanders Energy Practice Group

EDITOR’S NOTE

by Clifford S. Sikora Clifford.Sikora@troutmansanders.com

Welcome to the inaugural issue of Troutman Transmission

• Monthly. Troutman Sanders is distributing this monthly e-magazine

free of charge to its clients, colleagues and friends. Although we have been a leader in the transmission field for many years, we now see a critical need to supply timely information and analysis in a thought- provoking format to interested recipients. The nation appears on the precipice of a transmission development renaissance. We are pleased to provide you with key business information regarding the policy, legal and financial trends which are affecting asset maximization and transmission project development. We will focus not only on legal and policy issues, but will provide information and analysis regarding how utilities, contractors, and customers are faring with new projects and “lessons learned” along the way. read more

EPACT 2005 IN PRACTICE – FEDERAL TRANSMISSION SITING AUTHORITY GETTING MIXED REVIEWS Comments on DOE Study Reflect Divergent State Views and Possible Legal Battles

By Rebecca Roback and Jordan Abshire rebecca.roback@troutmansanders.com jordan.abshire@troutmansanders.com

Editor-in-Chief

Clifford S. Sikora

Executive Editor

Christopher R. Jones

As the federal government begins to address the issue of grid congestion and transmission siting under new legal authority, the transmission industry is asking for quick action while some states are warning Washington not to encroach on their jurisdiction. The Department of Energy’s new authority under the Energy Policy Act of 2005 (“EPAct 2005”) to designate National Interest Electric Transmission Corridors (“NIETC”) and the Federal Energy Regulatory Commission’s backstop authority to issue siting permits in these designated areas is giving rise to concerns about potential jurisdictional conflicts as some states seek to protect their traditional transmission planning roles, while other states welcome the federal help. A complete list of requests for NIETC designation can be found below. read more

RELIABILITY ANALYSIS Preparing the Electric Utility Industry for Mandatory Reliability Standards Compliance

by Bonnie Suchman bonnie.suchman@troutmansanders.com

Until the passage of the Energy Policy Act of 2005, compliance with the reliability standards for the bulk-power system was voluntary. While compliance with such standards was expected, there were no consequences for a failure to follow such standards. The failure to adequately trim trees that caused two power outages in the summer of 1996 resulted in no financial penalties from the failure to follow reliability standards. When a utility “leaned” on the system in 1999 by allowing power to bleed into its grid area from neighboring interconnected utility systems, there also were no financial consequences for such failure to follow reliability standards. And when certain East Coast utilities failed to follow the NERC reliability standards in August of 2003, causing the most significant failure in the history of the North American power grid, those utilities faced no penalties for failure to follow the standards. read more

TRANSMISSION PRICING INCENTIVES FERC Doing its Part to Foster Investment

by Anne Dailey Anne.Dailey@troutmansanders.com

Over a year has passed since President Bush signed EPAct 2005 into law, and FERC has acted decisively to authorize the rate levels that the industry has historically argued are necessary to mitigate the costs and risks of transmission investment. Industry observers are now watching state regulators to see how these costs will be treated at retail. As noted in Part II of this article, some have already submitted applications to put the agency’s new pricing policies to the test. read more

NERC RELIABILITY ASSESSMENT REFLECTS SENSE OF URGENCY ON TRANSMISSION Report Challenges Industry and Regulators to Do More

by Mary Ellen Stefanou maryellen.stefanou@troutmansanders.com NERC’s 2006 Long-Term Reliability Assessment released last month conveyed a level of concern about the nation’s transmission system not previously seen in such reports. The report conveys a simple message – load growth cannot continue to rapidly outpace transmission infrastructure development without seriously comprising the reliability of the nation’s electricity grid and, EPAct 2005 alone is not enough. read more back to top

This e-alert is intended to provide general legal information and does not render legal advice or legal opinion. Such advice may only be given when related to actual fact situations.