REP Energy Policy & Regulatory Compliance 3 — Questions and Answers
Question 1: Under NERC reliability standards, what is the purpose of the 'N-1' contingency planning requirement?
- Ensure the grid can withstand the loss of any single element without cascading failure (Correct answer)
- Mandate that utilities maintain one backup power plant at all times
- Require one spare transmission line for every active line
- Ensure renewable energy meets at least 1% of peak demand
Correct answer: Ensure the grid can withstand the loss of any single element without cascading failure
N-1 contingency planning requires that the bulk power system remain stable and within thermal limits after losing any single facility or element.
Question 2: Which federal law governs siting of interstate natural gas pipelines and gives FERC jurisdiction over their approval?
- Energy Policy Act of 2005
- Natural Gas Act of 1938 (Correct answer)
- Public Utility Regulatory Policies Act (PURPA)
- National Energy Policy Act of 1992
Correct answer: Natural Gas Act of 1938
The Natural Gas Act of 1938 grants FERC authority to approve the construction and operation of interstate natural gas pipelines under Section 7.
Question 3: A community solar project allows subscribers to receive bill credits. Under which regulatory framework are subscriber billing credits typically governed?
- Federal FERC tariff rules
- State public utility commission virtual net metering or bill crediting tariffs (Correct answer)
- IRS Section 48 tax credit provisions
- NERC reliability standards
Correct answer: State public utility commission virtual net metering or bill crediting tariffs
Community solar billing credits are typically established by state public utility commissions through virtual net metering or specific community solar tariff rules.
Question 4: What is 'avoided cost' in the context of PURPA and why is it significant for renewable energy?
- The cost a utility avoids by not building new transmission lines
- The rate utilities must pay qualifying facilities for power, equal to what the utility would have paid for the same power elsewhere (Correct answer)
- The cost savings from deploying energy efficiency instead of new generation
- The penalty a utility avoids by meeting its RPS target
Correct answer: The rate utilities must pay qualifying facilities for power, equal to what the utility would have paid for the same power elsewhere
Under PURPA, utilities must purchase power from qualifying facilities at the utility's avoided cost, providing a guaranteed market for small renewable generators.
Question 5: Which type of environmental review is typically required under NEPA for a utility-scale solar project on federal land?
- Categorical Exclusion (CE) only
- Environmental Assessment (EA) or Environmental Impact Statement (EIS) (Correct answer)
- State Environmental Quality Review (SEQR) only
- No federal review is required for solar projects
Correct answer: Environmental Assessment (EA) or Environmental Impact Statement (EIS)
Federal actions, including approving projects on federal land, require NEPA review—typically an EA or full EIS depending on the significance of potential impacts.
Question 6: Under FERC Order 888, what did FERC require regarding open access to the transmission system?
- All generators must sell power at wholesale prices set by FERC
- Utilities must provide non-discriminatory open access to their transmission systems to all eligible customers (Correct answer)
- States must adopt renewable portfolio standards
- Distributed energy resources must be allowed to participate in wholesale markets
Correct answer: Utilities must provide non-discriminatory open access to their transmission systems to all eligible customers
FERC Order 888 required public utilities to file open access transmission tariffs (OATTs) ensuring non-discriminatory access to the grid for all wholesale customers.
Question 7: Which provision of the Inflation Reduction Act (IRA) 2022 allows renewable energy developers to transfer their tax credits to a third party for cash?
- Direct pay election
- Transferability provision (Correct answer)
- Bonus depreciation rule
- Alternative Minimum Tax (AMT) credit offset
Correct answer: Transferability provision
The IRA's transferability provision allows eligible taxpayers to sell (transfer) their clean energy tax credits to unrelated parties for cash without using a tax equity partnership.
REP Energy Policy & Regulatory Compliance 3
Under NERC reliability standards, what is the purpose of the 'N-1' contingency planning requirement?