Revision to Power Marketing Policy Kerr-Philpott System of Projects

Published date19 June 2020
Citation85 FR 37092
Record Number2020-13106
SectionNotices
CourtSoutheastern Power Administration
Federal Register, Volume 85 Issue 119 (Friday, June 19, 2020)
[Federal Register Volume 85, Number 119 (Friday, June 19, 2020)]
                [Notices]
                [Pages 37092-37094]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-13106]
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                DEPARTMENT OF ENERGY
                Southeastern Power Administration
                Revision to Power Marketing Policy Kerr-Philpott System of
                Projects
                AGENCY: Southeastern Power Administration, DOE.
                ACTION: Notice of proposed revision to power marketing policy.
                -----------------------------------------------------------------------
                SUMMARY: Pursuant to its Procedure for Public Participation in the
                Formulation of Marketing Policy, published in the Federal Register of
                July 6, 1978, Southeastern Power Administration (Southeastern or SEPA)
                published on November 15, 2019, a notice of intent to revise its power
                marketing policy to include provisions regarding renewable energy
                certificates (RECs) from its Kerr-Philpott System of Projects (Kerr-
                Philpott System). The current power marketing policy was published on
                July 29, 1985, for the Kerr-Philpott System and is reflected in
                contracts for the sale of system power, which are maintained in
                Southeastern's headquarters office. The following is the proposed
                revision to the Kerr-Philpott System Power Marketing Policy to include
                a procedure for distribution of RECs to Preference Customers.
                Southeastern solicits written comments in formulating the final
                marketing policy revision.
                DATES: A public information and comment forum will be held in Boydton,
                Virginia, at 1:00 p.m. on August 18, 2020. Persons desiring to attend
                the forum should notify Southeastern by August 10, 2020, so that a list
                of forum participants can be prepared. Persons desiring to speak at the
                forum should specify this in their notification to Southeastern; others
                may speak if time permits. Written comments are due September 2, 2020,
                fifteen (15) days after the scheduled comment forum.
                ADDRESSES: Five copies of written comments should be submitted to:
                Herbert R. Nadler, Acting Administrator, Southeastern Power
                Administration, Department of Energy, 1166 Athens Tech Road, Elberton,
                Georgia 30635-6711, and emailed to [email protected]. The public
                information and comment forum for the revision of the Kerr-Philpott
                System power marketing policy to include provisions for renewable
                energy certificates will be at the U.S. Army Corps of Engineers, J. H.
                Kerr Reservoir Visitor Assistance Center, 1930 Mays Chapel Road,
                Boydton, Virginia 23917, Phone: (434) 738-6143. If travel restrictions
                occur due to the COVID-19 pandemic on August 18, 2020, the comment
                forum will be held as a webinar on the same date and time. Please
                register your intent to attend, including name, address, phone number,
                and email address, with Southeastern's Legal Assistant at
                [email protected], to receive updates on the meeting status of
                the comment forum. Registered attendees will be contacted on August 11,
                2020, regarding meeting updates and call-in information, if held by
                webinar.
                FOR FURTHER INFORMATION CONTACT: Leon Jourolmon IV, General Counsel,
                Southeastern Power Administration, 1166 Athens Tech Road, Elberton, GA
                30635, (706) 213-3800, [email protected].
                SUPPLEMENTARY INFORMATION: Background: Pursuant to its Procedure for
                ``Public Participation in Formulation of Marketing Policy'' published
                in the Federal Register on July 6, 1978, 43 FR 29186, Southeastern
                published a ``Notice of Issuance of Final Power Marketing Policy, Kerr-
                Philpott System of Projects'' in the Federal Register on July 29, 1985,
                50 FR 30751. The policy establishes the marketing area for system power
                and addresses the utilization of area utility systems for essential
                purposes. The policy also addresses wholesale rates, resale rates, and
                conservation measures, but does not address renewable energy
                certificates. Under Section 5 of the Flood Control Act of 1944 (16
                U.S.C. 825s), Southeastern is responsible for the transmission and
                disposition of electric power and energy from reservoir projects
                operated by the Department of the Army. Furthermore, Southeastern must
                transmit and dispose of such power and energy in such manner as to
                encourage the most widespread use at the lowest possible rates to
                consumers consistent with sound business principles. Rate schedules
                shall be drawn to recover all costs associated with producing and
                transmitting the power in accordance with repayment criteria
                 All documents introduced at the public information and comment
                forum, and all comments, questions and answers will be available for
                inspection and copying in accordance with the Freedom of Information
                Act (5 U.S.C. 552).
                Public Notice and Comment
                 On November 15, 2019, Southeastern published in the Federal
                Register, 84 FR 62519, a ``Notice of Intention to begin a public
                process'' to revise its marketing policy by including provisions
                regarding renewable energy certificates from its Kerr-Philpott System.
                The notice requested that written comments and proposals be submitted
                on or before January 14, 2020. All comments received are summarized and
                answered in the following section.
                Staff Review of Comments
                 Written comments were received from one source, Southeastern
                Federal Power Customers, Inc. (SeFPC), and are summarized below.
                Southeastern's response follows each comment.
                Comment 1: Precedential Effect
                 At the outset, the SeFPC recognizes that SEPA is only revising the
                marketing policy for the Kerr-Philpott system of
                [[Page 37093]]
                projects. However, the precedent set by these revisions may apply to
                other marketing areas which requires due care to ensure that the
                approach adopted by SEPA can be adopted and modified as appropriate for
                other marketing areas. Moreover, SEPA should explain that the
                development of a REC policy and allocation of RECs to existing
                customers does not change the Administrator's prior determinations on
                power allocations within the marketing area.
                 Response 1: Southeastern's proposal addresses only changes to the
                Kerr-Philpott System marketing policy. Revisions to other marketing
                policies would involve a similar public process to allow comments from
                interested parties. The revision would not change the Administrator's
                prior determinations regarding power allocations within the marketing
                area. Southeastern recognizes that policy decisions within the Kerr-
                Philpott System may be taken into account in Southeastern's development
                of subsequent proposals. Southeastern believes that many of the
                principles used may be used in other systems; however, as Renewable
                Energy Certificates are defined on a state-by-state basis with a
                variety of generation requirements and reporting systems, a uniform
                policy is not possible.
                Comment 2: Eligible Customers
                 The RECs which will be made available under this new policy should
                be offered to all eligible customers. Here, we suggest that SEPA
                clarify that eligible recipients of RECs are limited to existing power
                customers with an allocation in that specific marketing area.
                 Response 2: The Renewable Energy Certificates for the Kerr-Philpott
                System would be distributed to Kerr-Philpott preference customers based
                upon the amount of energy sold to each customer during a quarterly
                period.
                Comment 3: Flexibility and Optionality
                 The REC policy adopted by SEPA must incorporate flexibility to
                allow for customers to utilize RECs to the maximum benefit for each
                customer. As a starting premise, SEPA should offer RECs to each
                available customer to determine how to utilize the RECs for optimum
                benefit. If a customer declines to take possession of its REC
                entitlement, SEPA should offer to sell the RECs on behalf of that
                customer and credit the customer's bill accordingly. Additionally,
                SeFPC suggests SEPA offer individual customers the option to transfer
                RECs to wholesale power providers that meet the definition of a
                preference customer but are not the counterparty to the power supply
                contract with SEPA.
                 Response 3: The proposal would allow for flexibility while limiting
                the transactional costs for Southeastern. Customers would be able to
                accept RECs directly or designate third-parties to receive the REC
                distributions. Southeastern does not propose to sell any RECs at this
                time. Southeastern reserves the right to distribute RECs that have been
                declined at a later date.
                Comment 4: Relationship to Laws and Regulations
                 SEPA must ensure the revised Kerr-Philpott System power marketing
                policy adheres to current SEPA regulations and contracts, as well as
                current state, federal, and local laws. Such a practice will support
                consistency and clarity within SEPA's marketing areas. Additionally,
                SeFPC suggests SEPA work with individual customers to ensure that RECs
                sourced from a particular balancing/marketing area will be eligible to
                qualify under state programs.
                 Response 4: Southeastern will adhere to all applicable statutes,
                regulations, and contracts. Southeastern will assist Kerr-Philpott
                System customers in gaining value from REC distributions through state
                renewable energy programs by providing data for the registration of the
                generating resources with state programs where applicable.
                Comment 5: Term
                 The REC policy and availability of RECs should track the term of
                the power supply agreements in place with a power customer. In
                particular, RECs should be available for the duration of the agreement
                and subject to recall by SEPA only in the event that the power customer
                ceases to buy capacity and energy from SEPA.
                 Response 5: The proposal is for a distribution to preference
                customers based upon energy sales during the prior quarter.
                Comment 6: Billing and Costs
                 Because SEPA will incur no direct expense in allocating available
                RECs, the policy should clarify that RECs are provided at no cost to
                requesting customers. To the extent that a customer declines to take
                possession of a REC and relies on SEPA to sell the REC, a separate line
                item should be included on that customer's bill setting forth the
                benefit received and the costs directly attributable to sale of RECs
                for that particular customer.
                 Response 6: The administrative costs to maintain the PJM-GATS
                membership and fees for creation and distribution of the certificates
                would be allocated over the entire Kerr-Philpott System. Southeastern
                would not establish any rate schedules for RECs. Southeastern would not
                sell any RECs.
                Comment 7: Further Review and Comment
                 The recommendations set forth above provide a general framework for
                SEPA to consider in drafting the policy. As the policy is prepared in a
                more detailed format, the SeFPC reserves the right to provide
                additional comments and clarifications to the points raised above.
                 Response 7: Southeastern will accept comments from interested
                parties including SeFPC and its members until 15 days after the
                announced Public Information and Comment Forum. Written comments must
                be submitted on or before September 2, 2020.
                Proposed Revision to the Power Marketing Policy
                 Kerr-Philpott System: The Kerr-Philpott System consists of two
                projects, the John H. Kerr Project (Kerr) and the Philpott Project
                (Philpott). The power from the projects is currently marketed to
                Preference Customers located in the service areas of Dominion Energy,
                Duke Energy Progress, American Municipal Power and American Electric
                Power. Both projects are located within the current PJM
                Interconnection, L.L.C. (PJM) footprint. Southeastern owns no
                transmission assets and is reliant on PJM transmission resources to
                deliver power and energy from the projects. As such, Southeastern
                became a PJM market participant member in 2005.
                 Southeastern proposes to revise the Power Marketing Policy for the
                Kerr-Philpott System to include the following additional provisions for
                RECs associated with hydroelectric generation:
                 Renewable Energy Certificates: The Generation Attribute Tracking
                System (GATS) of PJM Environmental Information Services, Inc. (PJM-EIS)
                creates and tracks certificates reporting generation attributes, by
                generating unit, for each megawatt-hour (MWh) of energy produced by
                registered generators. PJM-EIS is a wholly-owned subsidiary of PJM
                Connext, L.L.C., itself a subsidiary of PJM. Both the Kerr and Philpott
                projects are registered generators within GATS. The RECs potentially
                satisfy Renewable Portfolio Standards, state policies, and other
                regulatory or voluntary clean energy standards in a number of states.
                Southeastern has subscribed to GATS and has an account in which RECs
                are collected and tracked for each MWh of energy produced from Kerr and
                [[Page 37094]]
                Philpott. Within GATS, certificates can be transferred to other GATS
                subscribers or to a third-party tracking system.
                 As defined by the PJM-GATS Terms, ``Certificates'' refers to a GATS
                electronic record of generation data representing all of the Attributes
                from one MWh of electricity generation from a Generating Unit
                registered with the GATS tracking system. The GATS will create exactly
                one Certificate per MWh of generation. These certificates may be used
                by electricity suppliers and other energy market participants to comply
                with relevant state policies and regulatory programs and to support
                voluntary ``green'' electricity markets.
                 Southeastern proposes distribution of the GATS-created REC to
                Preference Customers with allocations of power from the Kerr-Philpott
                System.
                 REC Distribution: Southeastern shall maintain an account with GATS
                and collect RECs from the generation at the Kerr and Philpott projects.
                Southeastern will verify the total amount of RECs each month.
                Preference Customers with an allocation of power from the Kerr-Philpott
                System are eligible to receive RECs by transfer from Southeastern's
                GATS account to their GATS account or that of their agent. GATS (or a
                successor application) will be the transfer mechanism for all RECs
                related to the Kerr-Philpott System. Any further transfer, sale, use,
                or trade transaction would be the sole responsibility of a Preference
                Customer. Southeastern will summarize RECs by month for calendar year,
                quarterly distribution to customers through GATS. Southeastern will
                determine a total number of RECs to transfer to each customer based on
                the customer's monthly invoices during the same three-month period.
                RECs will be project-specific based on the customer's applicable
                contractual arrangements. Thus, customers receiving energy from
                Philpott will receive equivalent RECs from Philpott, and customers
                receiving energy from Kerr will receive equivalent RECs from Kerr.
                 All RECs distributed by Southeastern shall be transferred within
                thirty days of the end of the calendar year quarter (quarterly
                distribution month). Each customer must submit to Southeastern, by the
                tenth day of a quarterly distribution month, the name, contact
                information, and identification number of the GATS account to which the
                RECs are to be transferred initially and for any quarterly distribution
                month in which the account for transfer changes. The account may be
                held by a third party. If the customer fails to designate an account by
                the tenth day of the quarterly distribution month, those RECs shall not
                be distributed until the following quarter. Any RECs that were not
                transferred because a transfer account was not provided to Southeastern
                will be forfeited if they become non-transferable in the GATS Terms of
                Use procedures, policies, or definitions of Reporting and Trading
                Periods, or any subsequent rules and procedures for transfers as
                established.
                 The initial transfer process in GATS will be accomplished by the
                thirtieth day after the end of the first completed calendar year
                quarter subsequent to publication of the final policy revision. Any
                balance of RECs that exist in Southeastern's GATS account, other than
                the first quarter after policy revision publication, may also be
                transferred to Preference Customers according to the customer's
                invoiced energy at the time of the REC creation.
                 Rates: No rates shall be established by Southeastern for RECs
                transferred to Preference Customers. Any cost to Southeastern, such as
                the GATS subscription, will be incorporated into marketing costs and
                included in recovery through the energy and capacity rates of the Kerr-
                Philpott System.
                Signing Authority
                 This document of the Department of Energy was signed on June 11,
                2020, by Herbert R. Nadler, Acting Administrator, Southeastern Power
                Administration, pursuant to delegated authority from the Secretary of
                Energy. That document, with the original signature and date, is
                maintained by DOE. For administrative purposes only, and in compliance
                with requirements of the Office of the Federal Register, the
                undersigned DOE Federal Register Liaison Officer has been authorized to
                sign and submit the document in electronic format for publication, as
                an official document of the Department of Energy. This administrative
                process in no way alters the legal effect of this document upon
                publication in the Federal Register.
                 Signed in Washington, DC, on June 12, 2020.
                Treena V. Garrett,
                Federal Register Liaison Officer, U.S. Department of Energy.
                [FR Doc. 2020-13106 Filed 6-18-20; 8:45 am]
                BILLING CODE 6450-01-P
                

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